The business case for digital transformation

This is how digital adoption affects ROI.
Written by Dan Bieler, Contributing Analyst

Digital transformation investments are ultimately about business survival through disruption. Such investments have a direct impact on customer expectations and go beyond the traditional ROI. The scope for disruption spans the entire customer life cycle, affecting everything from the supply chain to after-sales support. Forrester recently researched the impact of digital adoption on CX and ROI and some of our key takeaways are below:

  • Disruptive transformation must be viewed as a strategic investment. The real value of digital transformation investments relates to long-term revenue growth, not short-term technology ROI. Bolt-on digital projects do not change the fundamental value relationship that you have with your customer. To maximize the impact of digital investments, business and technology leaders must learn to value such investments through the eyes of the company's customers.
  • A classic ROI calculation is neither always feasible nor desirable for digital investments. Digital transformation changes business processes and models. ROI works for single digital initiatives, but not for shifts in business models. Digital investments aimed at disruptive change across the enterprise challenge traditional ROI calculations. Attributing benefits like customer satisfaction, group productivity, and group revenues -- let alone business survival -- to a single digital investment is impossible because so much of the impact of digital transformation is cumulative.
  • Outcome- and experience-based investments take budget away from point-solution capex. Companies start allocating funds based on outcomes and experience development instead of identifying bolt-on projects. Leading businesses are building their business case for digital investments on supporting ongoing changes in support of a customer journey. These businesses are starting to allocate funds based on continuously evolving customer experiences and outcomes in place of many traditional technology and digital bolt-on projects.

While digital transformation initiatives focus on delivering specific outcomes to the customer, the process of digital transformation affects all aspects of business. It is imperative to use the customer lifecycle to make the business case for digital investments.

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Dan Bieler is a principal analyst at Forrester, serving CIOs. Follow Dan on Twiter: @DSBieler.

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