CHAPTER 4: MEASURING THE SUCCESS OF STRATEGIC INITIATIVES

MEASURING INFORMATION TECNOLOGY'S SUCCESS

Key Performance Indicator

· Measures that are tied to business drivers

· Metrics are detailed measures that feed KPI's

· Performances 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

Measures the performance of the IT system itself including throghput,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- BASE LINING METRICS

·      Regardless of what is measured, how it is measured, and whether it is for the sake of efficiency or effectiveness, there must be

benchmarks- baseline values the system seeks to attain

·      Benchmarking- a process of continuously measuring system results, comparing those results to optimal system performance (benchmark values) and identifying steps and procedures to improve system performance.

EFFICIENCY IT METRICS

Efficiency IT metrics focus on technology and include:

·      Througput

The amount of information that can can travel through a system at any point

·      Transaction speed

The amount of time a system takes to perform a transaction eg-Online banking

·      System availability

The number of hours  system is available for users

·      Information accuracy

The extent to which generates the correct results when executing the same transaction numerous times

·      Web traffic

Includes a hosts 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 atisfaction surveys, percentage of existing customrs retained, and increases in revenue dollars per customer.

· Conversion rates

The number of customers an organization "touches"  for the first products or services. This is a popular metric for evaluating the effectiveness of banner , pop-up, and pop=under ads on the internets.

· Financial

Such as return on investment (the earning power of an organization's assets), cost-benefits analysis( the comparison of projected revenues and costss including variable), and break-even analysis (the point at which constant revenues equal ongoing costs)

THE INTERRELATIONSHIPS OF EFFICIENCY AND EFFECTIVENESS IT METRICS

· Secutity is an issue for any organization offering products or services over the internet

· It is inefficienct for an organization to iplement Internet security, since it slows down processing

ü  However, to be effective it must implement internet security

ü  Secure Internet connectin must offer encryption and Secure Sockets Laayers (SSL dented by the lock symbol in the lower right corner of a browser)

METRICS FOR STRATEGIC INITIATIVES

Metrics for measuring and managing strategic initiatives include:

o  Web site metrics

o  Supply chain management(SCM) METRICS

o  Customer relationship management (CRM) metrics

o  Business process reengineering (BPR) metrics

o  Enterprise ressource planning (EPR) metrics

WEB SITE METRICS

Web site metrics include:

ü Abandoned registrations

Number of visitors who start the process of completing a reistration page and then abandon the activity.

ü Click-throgh

Number of visitors who creates a shopping cart and start shopping and then abandon the activity before paying for the merchandise

ü Conversion rate

Count of the numer of people who visit a site, click on and, and are taken to the site of the advertiser.

ü Cost-per-thousand

Percentage of potentiol customers who visit a site and actually buy something.

ü page exposures

Sales dollars generated per dollar of advertising This is commonly ussed to make the case for spending money to appear on search engine.

ü Total hits

Number of visits to a web site, many of which may be by the same visitor.

ü Unique visitors

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 sites.

SUPPLY CHAIN MANAGEMENT METRICS

Back order

An unfilled customer order.A back order is demandd (immediate or pat due) against an item whose current stock level is insufficient to satisfy demand.

Customer order promised cycle time

The antipated or agrred upon cycle time of a purchase order. It is agap between the purchase order creation date and the requested delivery date.

Customer order actual cycle time

The average time it takes to actualy fill a customer's purchase order. Tis measure can be viewed on an order or an order line level

Inventory replenishment cycle time

Measure of the manufacturing cycle time plus the time inluded to deploy the product to the appropriate distribution center.

Inventory turns

The number f times that a company's inventry cycless or turns over per year.It is one of the mst commonly udes supply chain metrics.