First State Super chief digital officer Mary Murphy explains why it’s important to measure the return on investment for digital transformation projects and shares her top tips for getting it right.
‘Proving ROI on Digital Transformation’ was the subject of a panel Murphy chaired at the Australian Institute of Superannuation Trustees’ Conference of Major Superannuation Funds 2017. Ahead of the conference, she answered a few questions to set the scene for Investment Magazine.
IM: Why is it so important to measure return on investment (ROI) on digital transformation?
MM: Being digital, as opposed to doing digital, is now a must for any organisation that wants to remain competitive and relevant to its customers. The demand for digital transformation is driven by the needs and expectations of a changing consumer (including employees). It is no longer a case of if funds will transform, but when.
Digital transformation means different things to different organisations. For some, it is about processes, for others it about marketing and channels. A true transformation is about infusing digital into the whole of the business, where digital becomes a part of an organisation’s DNA.
The biggest challenge for super funds looking to achieve a whole-of-business digital transformation is often that the change is seen as a project with a finite end date, rather than a new way of thinking, working and responding that continually evolves.
At its core, digital transformation must provide value to a business’s bottom line and demonstrate return on investment. ROI can be measured in a variety of ways: via cost efficiencies or cost reduction; growth in customer acquisition; increase in customer retention; or increase in the percentage of value-rich ‘moments that matter’ for both customers and employees. What’s most important is that the ROI aligns and delivers to the strategic direction and purpose of the organisation.
What is the most surprising thing you have learnt by doing this?
Narrative is critical. Without the right narrative, it is easy for the organisation to forget the purpose of transformation, and priorities can get out of sync because people don’t understand the direction. Essentially, transformation is about change: change in process, people or technology. Change programs require strong, continuous narratives.
Transformation and agile delivery need to co-exist. The ability to test and learn, to prototype, to engage in customer stories, rather than requirements, to focus on the experience not on the solutions, enables creative consumer-led design to evolve.
Teams can get side-tracked by the new initiative because that’s where the fun or excitement happens and the foundational work required, or the work that will provide the highest ROI, is ignored because it seems to be boring or basic. Remember, the value for customer is important.
Often, the outcome is not about saving money or resources, but providing more valued services. Taking transactions out of a contact centre through automaton does not necessarily mean that call numbers will drop; instead, the calls that continue to be managed through this channel will deliver more valued experiences to the customer and the employee.
What are your top tips for fund executives on how to talk to their board about ROI on digital?
- Develop your program narrative and bring everyone along on the journey. Communicate, communicate and communicate!
- Have peer-level support for the program.
- Quantify how the digital transformation program will help respond to strategic challenges and opportunities ahead, how it will deliver on the strategic priorities, and how it will be measured. Then report back on both success and failure.
- Ensure that the board’s risk and governance requirements are taken care of. Start to change the board’s view of digital transformation from a project to the new way of doing business. Ensure that clear benchmarks are established and ROI is estimated against these benchmarks. Change the way you estimate and report on ROI as the transformation process matures and evolves.
- Ensure that directors understand it is not all about leading-edge innovation. Some of the most basic process improvements will deliver the greatest ROI.
- Don’t underestimate the power of a well-designed prototype. Sometimes concepts being tackled in a digital transformation program are abstract and hard to grasp. A prototype that people can touch and feel and experience for themselves can go a long way.
- In discussing ROI, don’t underestimate the value of non-tangible benefits. The impact on brand, on employee engagement and retention, and on customers’ perception of relevance and trustworthiness are also valuable. These factors sometimes tip the scales in favour of one initiative over another.
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