The process that tech leaders typically follow to measure digital transformation is antiquated and must change. The reason? They tend to concentrate on IT performance metrics that aren’t tied to business outcomes.
By falling into the trap of focusing on IT-centric performance metrics—such as uptime, system availability, and IT spending — without linking them to broader business outcomes like revenue growth, customer experience, and innovation, tech leaders struggle to justify investments, CIOs lack visibility into true impact, and digital transformation stagnates.
To break free from this outdated approach, IT leaders must rethink how they define and measure the outcomes achieved through digital transformation.
Designing, planning, initiating, funding, implementing, and continuously driving an organization’s digital transformation are essential tasks, but tech leaders must also continue the momentum for collaboration with technical and business stakeholders. This is done by measuring outcomes to see progress. The CIO plays a critical role here; they must facilitate and lead digital transformation with KPIs that show progress and outcomes.
Here is what we recommend.
Step 1: Shift Your Thinking and Your Team’s Culture from Measuring IT Metrics to Business-Aligned KPIs
Measuring infrastructure uptime, number of deployments, or IT costs in isolation is an obsolete approach as these details will not show the necessary alignment of tech investments with the changes necessary to transform the organization into a digital leadership position. Different approaches to change thinking are to align technology investments with defined digital initiatives that are intended to improve business value such as revenue impact, operational efficiency, and customer satisfaction, just to mention a few.
How do you do that? First, engage your team to define business outcomes. In other words, identify what IT success looks like to business stakeholders. For example, for IT operations, it could be improvements in customer satisfaction, measured by Net Promoter Score and digital experience data. For application design and development, it could be faster time to market for new digital products, measured by speed of product innovation cycles. And for project and portfolio management, it could be the revenue or cost savings directly attributable to digital initiatives.
Why this matters: Traditional IT metrics measure efficiency, but they don’t tell the full story of digital transformation success. Instead, CIOs and tech buyers must demonstrate how technology investments drive real business impact, and that requires a cultural shift to let go of old approaches that measure IT without connection to the business.
Step 2: Build a Digital Transformation Index (DXI)
A digital transformation index (DXI) is a set of key objectives with associated key performance indicators (KPIs) used to evaluate and measure an organization’s progress on the different strategic objectives and goals defined within the digital transformation strategy.
The following are key strategic objectives for making progress in your digital transformation but should be adjusted to your specific digital business strategy.
- Development and guidance of the organization through digital strategy and leadership: This objective is specifically focused on ensuring that there is a digital vision and a strategic road map, as well as commitment and support from executive leadership to drive digital initiatives that are part of the organization’s vision and road map. You’d likely want to set measures around certain milestones achieved as well as key ongoing initiatives.
- Changes in business models to achieve business outcomes: When selecting and creating business model objectives, start thinking about how your organization with its people, processes, and technology diversifies and grows revenue streams, grows shareholder value, manages costs, or improves profitability.
- Transformation progress to leverage strategic technology assets toward superior customer value: This objective should include measurements in terms of transformations on technological aspects defining value for customers in your respective market. Example metrics could be investments into core and emerging technology; architecture and data; or progress in the adoption of AI, cloud, automation, and security strategies, all for delivering superior customer value.
- Improvements around organization, culture, and innovation: This objective includes the strategic approach to optimize or reengineer existing processes, for example leveraging DevSecOps or Agile. Additional pursuits are agility improvements of the overall workforce; upskilling initiatives to improve digital skills development; and collaboration and cross-functional teamwork in pursuing new digital productions, solutions, or services to solve problems of your customers.
- Operational excellence to scale and accelerate innovation: Operational excellence includes the ability to minimize overhead, reduce costs, and introduce automation optimizations to shift funding toward innovation. The measures could be technical debt removal, intelligent automation while managing cost, security, and agility, all balanced with new technology adoptions accelerating digital innovations.
Why this matters: Organizations that fail to track holistic digital transformation progress risk making decisions in silos. A DXI with key measurement objectives provides clarity, accountability, and a connected approach to measuring digital transformation success. Some best practices are to track only the most meaningful transformation metrics that align with business goals; set baseline measurements and monitor improvements over time; and align IT, finance, and business units to ensure shared ownership of KPIs.
Step 3: Make KPIs Actionable for Meaningful Progress
One of the most common mistakes CIOs make is tracking digital transformation progress without taking corrective action. Collecting data is only half of the journey — what matters is using it to drive real-time decision-making. Leveraging real-time dashboards that provide visibility across teams, enabling data-driven course corrections, are a good first step.
Other important tasks are to make sure there is KPI ownership by involving both the business and IT leaders who can drive accountability and alignment, and to safeguard that there are structured review cycles to assess performance, adjust strategies, and ensure digital initiatives stay on track.
Why this matters: Metrics should not exist in a vacuum. CIOs must embed digital transformation measurements into business decision-making, ensuring that KPIs drive agility, adaptability, and impact.
Step 4: Future-Proof Your Measurement Strategy
Digital transformation isn’t static, and, therefore, its objectives must evolve as technology and business need change. It is important to regularly reassess objectives and the associated KPIs to ensure they remain relevant as new technologies, good practices or market changes occur. If possible, initiate benchmarks against industry peers and competitors to identify strengths and gaps.
Why this matters: A rigid approach to measurement can stall innovation. The most successful organizations continuously refine their digital transformation objectives and KPIs, ensuring they remain aligned with changing business priorities or changes in their respective industry.
Now It Is Your Turn to Shift from IT Metrics to Measurable Impact
CIOs and IT leaders have a unique opportunity to redefine how digital transformation is measured. By shifting from IT-centric metrics to business-driven KPIs, organizations can prove the value of technology investments, drive innovation, and maintain competitive advantage. Start by changing your and your team’s thinking toward business outcomes.
Next, define your DXI objectives and relative KPIs for an end-to-end view of how well your organization is driving business growth, improving efficiency, and accelerating customer value. Then, ensure that the DXI KPIs drive real-time decision making and corrective action, with metrics owned by and responsibilities tasked to business stakeholders and IT. Finally, establish a schedule to reassess objectives and KPIs to keep pace with technological and business change.
