Performance Management in Digital Transformation: A Strategy for Sustainability

Introduction

The enormous potential and omnipresent usage of digital technology have encouraged organizations to gain sustainable competitive advantages and increase their capacity to take full advantage of the benefits of digital transformation. Digital transformation (DT) has emerged as a significant topic in strategic information systems research (Günther et al., 2017; Loebbecke & Picot, 2015; Vial, 2019) and also for practitioners in recent years. To put it simply, digital transformation is the result of the significant changes occurring in society and industry as a result of the widespread use of digital technologies at the highest levels of the organization. As suggested by some researchers such as Matt et al. (2015) and Kaplan & Norton (1996), organizations need to discover methods to innovate through these technologies by devising “strategies that embrace the implications of digital transformation and drive better operational performance”. Consumer expectations and behaviors have been fundamentally changed due to digital transformation (Kelley, 2018) and the resulting business model innovation, which has put pressure on conventional businesses and disrupted many industries (Shrivastava, 2017).

Every customer leaves a “digital footprint” (Günther et al., 2017). Compilation of their day-to-day online activities that accumulate across many platforms and devices provides firms with unprecedented insights into customer behavior and underlying opportunities. For example, purchasing history may be linked with similar customers’ purchasing behavior to recommend online shoppers what they may want and when (Elvy, 2018). Digital technologies empower end-users by availing more information at their disposal (Verhoef et al., 2017). Their expectations go up as they see their capabilities go up in terms of communication and options to browse and process more information to make informed decisions. This technological penetration, a paradigm shift of services and digital readiness of consumers’ cause change in consumer behavior as well as expectations. The growing demand of getting things done as much as possible from mobile applications, less use of hard cash, online ordering and delivery, and online customization of services are examples of how people change their behaviors (Wasan, 2018) and expect firms to meet those requirements.

Digitalization has an impact on overall customer service. Great customer experience requires a rapid response time to customer inquiries, which is possible by consolidating client data throughout the company into a single source (Pappas et al., 2018). With the collection and centralization of all accessible data, customer support services can easily and promptly answer customer’s queries. Therefore, customer satisfaction improves because of the improvements in customer service and assistance. On the other hand, organizations may get a better knowledge of their client base by analyzing customer inquiries and responding to them. Organizations may profit from process digitalization in addition to the change of the customer experience (Blumenthal, 2017). However, although the digital transformation of internal processes may not immediately result in apparent improvements in profitability, it will provide many advantages to the company in the long run (Scott et al., 2017). The goal of digital transformation is to increase efficiency while also increasing connectivity. One of the most important goals for businesses is to improve business performance. When it comes to an organization’s operations, automation of transactions, supply chain and human resource activities are common. Businesses that want to take their digital strategic vision to the next level should focus on improving cooperation among workers at all levels, as well as improving performance management. The digital transformation framework allows substantial gains in efficiency for transactional supply chain operations (Sundaram et al., 2020).