Chapter 4-Measuring the Success of Strategic Initiatives

Measuring Information Technology's Success

• Key performance indicator-measures that are tied to business drivers.
• Performance metrics fall into the  nebulous area of business intelligence that is neither techonolgy, nor business centered, but requires input from both IT and business professionals.

Efficiency IT metic-measures the performance of the IT system itself including throughput, speed, and availability.

Effectiveness IT metric-measures the impact IT has on business processes and activities including customer satisfaction, conversion rates, and sell-through increases.


Benchmarking-Baselining Metrics

• Benchmarks-baseline values the system seeks to attain
• Benchmarking-a process of continuously measuring system results, comparing those results to optimal system performance, and identifying steps and procedures to improve system performance.

Efficiency IT metrics focus on technology and include:

• Throughput, Transaction speed, System availability, web traffic.

Efficiency IT metrics

• Throughput-the amount of information that can travel through a system at any point.
• Transaction speed-the amount of the time a system takes to perform a transaction.
• System availability-the number of hours a system is available for users.
• Information accuracy-the extent to which a system generates the correct results when executing the same transaction numerous times.
• 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.
• Response time-the time it takes to respond to user interactions such as a mouse click.

 

Effectiveness IT metrics

• Usability-The ease with which people perform transactions and find information. A popular usability metric on the internet is degrees of freedom, which measures the number of clicks required to find desired information.
• Customer satisfaction-Measured by such benchmarks as sactisfaction surveys, percentage of existing customers retained and increases in revenue dollars per customers.
• Conversion rates-the number of customers an organization ''touches'' for the firstime 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.
• Financial-such as return on investment, cost-benefit analysis and break-even analysis.

 

The Interrelationships of Efficiency and Effectiveness IT metrics.

• Security is an issue for any organization offering products or services over the Internet.
• It is inefficient for organization to implement Internet security, sinces it slows down processing.
• Security Internet connections must offer encryption and Secure Sockets Layers.

Metrics for measuring and managing strategic initiatives included:
-web site metric, supply chain management (SCM) metrics


Web Site Metrics

• Abandoned registrations: Number of visitors who start the process of completing a registration page and then abandon the activity.
• Abandoned shopping carts: Number of visitors who create a shopping cart and start shopping and then abandon the activity before paying for the merchandise.
• Click-through: Count of the number of people who visit a site, click on add and are taken to the site of the adversiter.

Supply Chain Management Metric

• Back order: An unfilled customer order. A back order is demand against an item whose current stock level is insufficient to satisfy demand.
• Customer order promised cycle time: The anticipated or agreed upon cycle time of a purchase order. It is a gap between the purchase order creation date and the requested delivery date.
• Customer order actual cycle time: The average time it takes to actually fill a customer's purchase order. This mesure can be viewed on an order line level.

Customer relationship management metrics-sales metric (number of new customers),services metric (customer satisfaction level),marketing metrics (customer retention rate).

BPR and ERP Metrics-the balanced scorecard enables organization to measure and manage strategic initiatives.