MGT300 - CHAPTER 4

               CHAPTER 4 : MEASURING THE SUCCESS OF STRATEGIC INITIATIVES


Measuring Information Technology's Success

• Key Performance Indicator (KPI) - measures that are tied to business drivers
• Metrics are detailed measures that feed KPIs
• Performance metrics fall into the nebulous area of business intelligent that is neither technology, nor business centered, but it requires input from both IT and business professionals

Efficiency and Effectiveness

• Efficiency IT metrics - measures the performances of the IT system itself including throughput, speed and availability
• Effectiness IT metrics - measures the impact IT has on business process and activities including customer satisfaction, conversation rates, and sell-through increases

Benchmarking - Base lining metrics

• Regardless of what is measured, how it is measured, and weather it is for the sake efficiency or effectiveness, there must be benchmarks - baseline values the system seeks to attain
• Benchmarking - a process of continuously measuring system results, comparing those result to optimal system performances (benchmarks value ) and identifying step and procedure to improve system performance

Efficiency IT Metrics

• Efficiency It metrics focus on technology and include :

          - throughput
          - transaction speed
          - system availability
          - information accuracy
          - wed traffic
          - response time

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

2. Transaction speed
    The amount of time a system takes to perform a transaction

3. System availability
    The number of hours a system is available for users

4. Information accuracy
    The extent to which a system generates the correct results when executing the same transaction numerous times

5. 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 webpage

6. Response Time
    The time it takes to respond to users interaction such as a mouse click


Effectiveness IT Metrics

• Effectiveness IT Metrics focus on an organization's goals, strategies and objectives and include :

          - Usability
          - Customer satisfaction
          - Conversation rates
          - Financial

1. Usability
    The ease with which people perform transactions and / or find information. A usability metrics on the internet is degrees of freedom, which measures the number of click required to find desired information

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

3. 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.

4. 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 ).


The Interrelationship of Efficiency and Effectiveness IT Metrics

•  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

          - However, to be effective it must implement internet security
          - Secure internet connection must offer encryption an secure sockets layer ( SSL denoted by the lock symbol in the lower right corner of a browser )

Metrics for Strategic Initiative

• Metrics for measuring and managing strategic initiative include :

          - web site metrics
          - supply change management (SCM ) metrics
          - business process reengineering (BPR ) metrics
          - customer relationship management (CRM) metrics
          - enterprise resources planning (ERP ) metrics

Web Site Metrics

• web site metrics include :

          - abandoned registrations
          - abandoned shopping cards
          - click-through
          - conversion rate
          - cost-per-thousand
          - page exposures
          - total hits
          - unique visitors

1. Abandoned registrations
    Number of visitors who create a shopping cart and start shopping and the abandon the activity before paying for the merchandise

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

3. Conversation rate
    Percentage of potential customers who visit a site and actually buy something

4. Cost-per-thousand (CPM )
    Sales dollars generated per dollar of advertising . This is commonly used to make the case foor spending money to appear on a  search engine

5. Page exposures
    Average number of page exposure to an individual visitors

6. Total hits
    Number of visit to a website, ,many of which may be by the same visitors

7. Unique visitors
    Number of unit visitor to a site in a given time. This is commonly used by Nielsen / Net ratings to rank the most popular website

Supply Chain Management Metrics

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

2. Customer order promise 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

3. Customer order actual cycle time
    The average  time it takes to actually fill a customer's purchase order. This measure can be viewed on and order or an order line level

4. Inventory replenishment cycle time
    Measure of the manufacturing cycle time plus the time included to display the product to the appropriate distribution center

5. Inventory turns ( inventory turn over )
    The number of times that a company's inventory cycle or turn over per year. It is one of the most commonly used supply chain metrics

Customer Relationship Management Metrics