How are you measuring the business value of your digital product?

When you are led by values, it doesn’t cost your business, it helps your business. Votes: Jerry Greenfield

Digital transformation — the adoption of technology to radically improve performance or ability of enterprises. It helps maximize productivity and enhance the customer experience.

Digital transformation should produce something unique.

As Forester suggests, genuine transformation is a journey, not a destination.

Digital transformation includes Transforming Operations, Transforming the Customer Experience, Transforming Processes, Transforming Business Models

According to Forbes, 70% of all digital transformation initiatives fail.

Recent reports by Gartner back this up: they explain that approximately 50% of CEOs have no metric for digital business transformation.

Digital transformation involves using digital technologies to transform a process to become more efficient or effective.

Digital transformation can comprise many diverse technologies, but the hottest topics right now are cloud computing, the Internet of Things, big data, Blockcahin, Computing power, Machine Learning and artificial intelligence.

Digital transformations require cultural and behavioral modifications such as a measured risk-taking, increased collaboration, and customer-centricity.

A true digital transformation project involves fundamentally rethinking business models and processes.

The business value is the standard value measure used in business valuation.

PMBOK® defines business value as the entire value of the business, the total sum of all tangible and intangible elements.

Business value consists of:

• Increase revenue
• Decrease cost
• Improve productivity
• Differentiate the company
• Improve client satisfaction

How would we characterize the progress achieved in becoming a digital business?

Most marketing KPIs are “vanity metrics,” said Jen Grant, CMO of business intelligence software maker, in an interview with CMO.com. They “feel good but don’t really give you a good view of whether your business is healthy or in trouble.”

According to Gartner, the best metrics:

• Have a clearly defined and defensible causal relationship to a business outcome
• Work as a leading, not lagging, indicator
• Address a specific, defined audience
• Can be understood by a non-IT audience
• Drive action when they change from green to yellow to red.

Business leaders must rely on fresh KPIs for effective IT measurement.

Traditional IT measurement, with its long-term focus on efficiency metrics for the managing infrastructure, applications, and components, is no longer acceptable.

Is there a clear cause and effect relationship between the change and the resulting gain that can be quantified and measured on the income statement?

• Key elements of digital transformation include focusing on the digital experiences of both customers and employees.
• The number of licenses department purchased to the number of employees who are actually utilizing the software.
• How department digital tools are being used will give you a clearer picture of how effectively your employees have adopted the tools and actually achieve meaningful benefits.
• Change in customer behavior over time across channels
• Number of customer touch points addressed to improve customer experience positively
• Reduction in time to market new products to customers
• Number of innovative ideas reach concept to implementation
• Percentage of revenue from new products/services introduced
• Percentage of the profit from new ideas implemented
• New on boarding to the platform, new users are using this platform, they are growing or stagnant
• How new Digital platform is enabling customer/user KPI
• Survey user satisfaction
• Responsiveness of the user
• Data Volume (TB), Variety (Types of data source), velocity (Data generated/analyzed per time period), What is the cost savings due to these easy data usages?

Mckinsey’s survey showed that organizations with successful transformations deploy more technologies than others do.
Traditional web technologies, cloud-based service, mobile internet technologies etc shows a significant increase of digital technologies, tools methods and they are very successful

Leading indicators measure change. They deal with immediate progress and show the likelihood that you will achieve your goals.

• Unique visitors
• Daily active users
• Time spent on the website
• The average revenue per user

Lagging indicators measure results. This means they are the direct result or output of your organization’s activity.

• Brand recognition
• ROI
• Customer acquisition costs
• Customer renewal rate
• Churn rate

Success requires consistent monitoring and course correction based on what we find out.

We are Transformation Change agents; we need to guide the team to come out with better KPI to measure the transformation initiatives.

Artists change how we see the world — and that can have value in the way people do business. Votes: — John Maeda

One of the major challenging questions every product owner face during the product backlog creation is Business Value for each feature they introduced.
How to simplify these steps?
Though product owners prepare a lot of homework to come to inference about the business value, essentially this is a collaboration activity with many stakeholders in the product development team.
This is a checklist that mainly product owner and scrum master use for constructing product backlog.

Step No 1:

For preparing feature product backlog, the Product owner and later team members go through all these questions
Question 1: Who are our stakeholders? For our offering (We list down all the information if required for each feature we are expanding)
Question 2: What are our business drivers? (Based on this information, many potential features can be derived)
Question 3: What is our business vision?
Question 4: Who are our users (We filled separate persona for all the users to understand their needs and aspirations)
Questions 5: What do our products need to accomplish? What problem our product solves?

Question 6: What Features hold the maximum Business Value? (Our investment decision, features around those features, influence us)

Step No 2:

First few steps to which can help Product owners and the team to set up the discussion.

Considering there are new products or product features team members is seeking to build up, these question to be asked for each EPIC or Features planned for.

3 Questions to be asked

Question 1: What is the Major purpose of this Feature/EPIC?

Question 2: What are the various considerations team is factoring into?

Question 3: What are the cost and benefits of this feature/Epic?

Based on the brainstorming, decision, Actions, and Intentions need to capture.

e.g., Feature A — Number of Page visitors of our website, Feature B- Number of Page visitor our website who has clicked many of our offerings and converted into a buyer for our product.

For each feature, we have all these 3 questions filled and shared as a whole team.

Step 3:

We walkthrough all these sources of value generation at a specific iteration to discover specific features from these areas connected to products

1. Expand Market Value:

• Functionality that draws in a new group of customers. Expansion of the user base.
• Porting an application to the other platform that increases product usability, performance, and ease of use.
• Adding features that competitor does not have
• Sell more unit by reaching maximum users
• Charge higher price to obtain more revenue
• Reduce the cost by providing better product features and service

2. Expand Customer Value:

• Improving the usability of the product and solutions
• Adding features which most of the customers are seeking for

3. Expand Efficiency Value:

• Reduce the amount of an error in a task or increase speed
• Increase the usability or quality of an application to reduce the load
• Reduce the amount of time required to set up new customer environments
• Decrease time to market

4. Expand Commercial Value:

• A new version of a software package
• A New piece of functionality
• Changes that reduce operating cost
• The customer will pay to acquire

5. Generate Future Value:

• Investing in new (Custom or open source) Framework
• Reducing technical debt in code to make future changes easy

6. Risk reduction:

• Develop or refine the hypothesis about the market
• Prove technical assumption

7. Capability Building

• Enable our team to do something we could not do before
• Reduce or eliminate the need for low-value activity

With the above structural thought, we can come out with many features.

We also ask our customer, if there is only 1 user story to complete for a sprint, which that could be?

All the product features will be rank based on the

1 Critical

2 High

3 Moderate

4 Low

These steps help us to maintain our product backlog effectively sprint on sprint.

“Technology requires constant hands-on management to ensure that the business is adapting to the change in its DNA — and to ensure that future shifts, both internal and external, are accompanied by the appropriate flex of its tech stack.” — Maria Martinez, Chief Operating Officer, Cisco

Please share your thoughts….