In our previous article, we explored how to leverage different technologies to achieve tangible benefits through digital transformation. In this article, we’ll discuss how to measure these benefits.
Key Performance Indicators
To measure progress in certain business areas, many organizations use key performance indicators (KPIs). While definitions of KPI vary, a KPI for digital transformation can be considered a measurable goal used to indicate how an organization is performing relative to this goal.
For example, a business that outsources a significant portion of its work due to technological limitations may have a goal to reduce outsourcing and perform this work in-house. The technological limitation could be in a specific area such as building information modeling (BIM). To measure success, the organization may set a goal of reducing outsourcing by 20% in a calendar year by increasing in-house capabilities in this area.
Image source: everythingpossible/stock.adobe.com.
Another way of measuring digital transformation is by analyzing the adoption of new technologies or systems. An engineering firm that primarily conducts design and plan preparation with traditional CAD technology may set a goal of moving 25% of all projects to a BIM platform by the end of a year. This could be measured by tracking the number of projects using traditional CAD software versus BIM technology (e.g., Revit or Civil 3D). Some consideration of project size might be needed, as many firms find BIM impractical to implement on small projects with limited budgets. For this reason, the comparison may be more suitable for projects of a certain size.
Efficiency gains can also be measured. Automation, artificial intelligence, and other tools can help reduce time spent on repetitive tasks. By measuring the time required to perform these tasks before and after implementing the new technology, organizations can estimate the time savings.
However you choose to measure success, use clear metrics to see that improvement. Image source: See Less/stock.adobe.com.
Success can also be measured by quality metrics. For a design firm, this might mean how much rework was required on a set of plans after submittal, or perhaps how many field issues were reported in the construction phase of a project. Technologies such as digital twins can often have a positive impact on quality. By tracking quality metrics over time, firms can determine if digital transformation has helped improve performance.
For a manufacturing organization, quality improvements might be measured by yield — the percentage of products that pass quality control on the first try. Scrap rate — the percentage of materials allocated but not used in production might be another useful metric. The number of customer complaints might also be used. Basically, any parameter that can be measured can be used to determine if digital transformation is having meaningful impacts.
Use project charters to help you clearly define your improvement. Compare and contrast two projects before and after implementation. Image source: aa_amie/stock.adobe.com.
Project Charters
Project charters provide another means of measuring digital transformation benefits. The Project Management Institute defines a project charter as “a document issued by the project initiator or sponsor that formally authorizes the existence of a project, and provides the project manager with the authority to apply organizational resources to project activities.” It often defines the general scope, schedule, and budget for the project and may identify key milestones, deliverables, and expected outcomes.
By developing a project charter specifically for a digital transformation program, an organization can identify and document the KPIs most appropriate for measuring success. The organization can review the status of those KPIs at key intervals.
Project charters for specific client projects can also be used to measure digital transformation benefits. For example, if an agency has two construction projects with similar project charters, but Project A was completed before the digital transformation and Project B was completed after the transformation, how well did each project achieve its specific goals?
Change Management
Along with developing a project charter, a change management process is helpful in conducting a digital transformation. Change management, as defined by the American Society for Quality, is “the methods and manners in which a company describes and implements change within both its internal and external processes.”
In the context of digital transformation, change management can help an organization implement new technology and related changes in a structured manner. Rather than just adopting a certain technology and hoping for the best, a well-planned digital transformation includes specific plans for tracking progress of the technology implementation and making adjustments as needed.
Change management means making sure all parties understand the goals of any changes and help mitigate disruption. Image source: Donson/peopleimages.com/stock.adobe.com.
Because a digital transformation generally requires cooperation of different groups within an organization, a structured approach provides a higher likelihood of success while mitigating disruption. Change management practices can help overcome resistance to change and promote clear communication among team members.
Change management might take on different forms based on organizational size. A large utility company might have hundreds of people affected by digital transformation and plan in five-year increments. Consequently, a change management plan might include multiple phases, with check-in points along the way.
A small AE firm might have far fewer people affected, but similar principles apply. Key staff members may wear multiple hats, but still need to clearly communicate with others involved in a digital transformation. While a smaller firm might be more agile in adopting new technology, the firm should still have key milestones and check-in points.
Downstream Data Value
Digital transformation can also provide benefits to parties outside the organization conducting the transformation. For example, a design firm that provides services to a manufacturing company might produce benefits for both itself and the client by introducing digital twins and BIM. These technologies can help designers produce more intelligent designs, and they can also generate downstream data that benefits the client. A digital twin might contain specifications and other data related to pumps, motors, and other equipment that can help owners plan operations and maintenance activities. Sensors and IoT technology can help owners monitor performance of equipment in real time. All of this information can aid startup processes and provide value after handover.
In another example, a utility company subdivided by region may have a corporate engineering team handling substation design. After design is complete, it is handed off to a construction team that works within that region. The construction team may have multiple construction firms performing work and coordinate multiple contracts to complete the construction. After completion, information can be handed over to the operating company responsible for maintenance. More intelligent designs using BIM technology convey information downstream and provide value to that operating company for years to come.
Similarly, a large AEC firm that does both design and construction might introduce new technologies to improve design practices, and also find that the construction arm of the company benefits. Technologies such as BIM provide more opportunities to provide constructability input during design, track construction progress against a detailed 3D model, and identify issues before construction occurs.
Technologies such as virtual reality can also aid collaboration between design and construction personnel. When construction staff can experience a design model in an immersive environment, they can more readily identify potential issues and collaborate with designers on solutions. Sometimes these downstream benefits can be difficult to quantify, but when they help avoid issues in the field and provide benefits to the owner, the value can be immense.
Next Steps
If your organization is contemplating a digital transformation, work with a qualified solutions provider, such as IMAGINiT Technologies, to implement technologies most beneficial your situation. A partner with industry experience can help evaluate the benefits of new technologies and quantify those benefits during and after implementation.
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ARTICLE SPONSORED BY IMAGINiT Technologies.
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