MEASURING THE SUCCESS OF STRATEGIC INITIATIVE (CHAPTER 4)

MEASURING INFORMATION TECHNOLOGY’S SUCCESS

·         Key performance indicator – measures that are tied to business drivers

·         Metrics are detailed measures that feed KPIs

·         Performance metrics fall into the nebulous area of business intelligence that is neither technology, nor business centered, but requires input from both IT and business professionals

EFFICIENCY AND EFFECTIVENESS

·         Efficiency IT metric – measure the performance of the IT system itself including throughout speed and availability

·         Effectiveness IT metric – measures the impact IT has on business processes  and activities including customers satisfaction conversion rates and self-through increases

BENCHMARKING – BASELINING METRICS

·         Regardless or what is measured, how it is measured and whether it is for the sake of efficiency or effectiveness, there must be benchmarks – beseline values the system seek to attain

·         Benchmarking – a process of continuously measuring system results, comparing those results to optimal system performance and identifying to improve system performance

THE INTERRELATIONSHIPS OF EFFICIENCY AND EFFECTIVENESS IT METRICS

·         Efficiency IT metrics focus on technology and include :

ü  Throughput - the amount of information that can travel trough a system at any point

ü  Transaction speed - the amount of time a system takes to perform a transaction

ü  System availability – the number of hours a system is available for users

ü  Information accuracy – the extent to which a system generates the correct results when executing the same transaction numerous times

ü  Web traffic – includes a host of benchmarks such as the number of page views, the number of unique visitors, and the average time spent viewing a Web page

ü  Response time –the time it takes to respond to user interactions such as a mouse click

·         Effectiveness IT metrics focus on an organization’s goals, strategies, and objectives and include:

ü  Usability – The ease with which people perform transactions and/or find information. A popular usability metric on the Internet is degrees of freedom, which measures the numbers of clicks required to find desired information.

ü  Customer satisfaction – Measured by such benchmarks as satisfaction surveys, percentage of existing customers retained, and increases in revenue dollars per customer.

ü  Conversion rates – The number of customers an organization “touches” for the first time and persuades to purchase its products or services. This is a popular metric for evaluating the effectiveness of banner, pop-up, and pop-under ads on the Internet.

ü  Financial – Such as return on investment (the earning power of an organization’s assets), cost-benefit analysis (the comparison of projected revenues  and costs including development, maintenance, fixed, and variable), and break-even analysis (the point at which constant revenues equal ongoing costs).

·         Security is an issue for any organization offering products or services over the Internet.

·         It is inefficient for an organization to implement Internet security, since it slows down processing

v  However, to be effective it must implement Internet security

v  Secure Internet connections must offer encryption and Secure Sockets Layers (SSL denoted by the lock symbol in the lower corner of a browser) .

·         Web Site Metrics:

ü  Abandoned registrations – Number of visitors who start the process of completing a registration page and then abandon the activity.

ü  Abandoned shopping carts – Number of visitors who create a shopping cart and start shopping and then abandon the activity before paying for the merchandise.

ü  Click-through – people who visit a site, click on an ad, and are taken to the site of the advertiser.

ü  Conversion rate – potential customers who visit a site and actually buy something.

ü  Cost-per-thousand (CPM) – sales dollar generated per dollar of advertising. This is commonly used to make the case for spending money to appear on a search engine.

ü  Page exposures – average number of page exposure to an individual visitor.

ü  Total hits – number of visits to a web site, many of which may be by the same visitor.

ü  Unique visitor – number of unique visitors to a site in a given time. This is commonly used by Nielsen/Net ratings to rank the most popular Web site.

SUPPLY CHAIN MANAGEMENT METRICS

ü  Back order – an unfilled customer order.

ü  Customer order promised cycle time – the anticipated or agreed upon cycle time of a purchase order.

ü  Customer order actual cycle time – to actually fill a customer’s purchase order.

ü  Inventory replenishment cycle time – measure of the manufacturing cycle time plus  the time included to deploy the product to the appropriate distribution center.

ü  Inventory turns ( inventory turnover ) – the number of times that a company’s inventory cycles or turns over per year.

CUSTOMER RELATIONSHIP MANAGEMENT METRICS

• Customer relationship management metrics measure user satisfaction and interaction and include :

-          Sales metrics

-          Service metrics

-          Marketing metrics

BPR and ERP METRICS

• The balanced scorecard enables organizations to measures and manage strategic initiatives