MEASURING THE SUCCESS OF STRATEGIC INITIATIVES
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 centred, but requires input from both IT and business professionals
EFFICIENCY AND EFFECTIVENESS
- Efficiency IT metric - measures 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 customer satisfaction, conversion rates, and sell-through increases
Benchmarking - Base Lining Metrics
- Regardless of what is measured, how it 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:
- throughput
- transaction speed
- system availability
- information accuracy
- web traffic
- response time
Throughout
- The amount of information that can travel through a system at any point
Transaction speed
- The amount of 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
- Effectiveness IT metrics focus on an organization's goals, strategies, and objectives and include:
- Usability
- customer satisfaction
- conversion rates
- financial
- 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 satisfaction surveys, percentage of existing customers retained, and increases in revenue dollars per customer.
- 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.
- 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 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 an organization to implement internet security, since it slows down processing
- However, to be effective it must implement internet security
- Secure internet connections must offer encryption and Secure Sockets Layers (SSL denoted by the lock symbol in the lower right corner of a browser)
- Interrelationship between efficiency and effectiveness
METRICS FOR STRATEGIC INITIATIVES
- Metrics for measuring and managing strategic initiative include:
- Web site metrics
- supply chain management (SCM) metrics
- Customer relationship management (CRM) metrics
- Business process reengineering (BPR) metrics
- Enterprise resource planning (ERP) metrics
- Web site metrics include:
- Abandoned registrations
- Abandoned shopping cards
- Click-through
- Conversion rate
- Cost-per-thousand
- Page exposures
- Total hits
- Unique visitors
- Number of visitors who start the process of completing a registration page and then abandon the activity
Abandoned shopping cards
- 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 an ad, and are taken to the site of the advertiser.
Conversion rate
- Percentage of potential customers who visit a site and actually buy something
Cost-per-thousand (CPM)
- Sales dollars generated per dollar of advertising. This is commonly used to make the case for spending money to appear on a search engine
Page exposures
- Average number of page exposures to an individual visitor
Total hits
- Number of visits to a web site, many of which may be by the same visitor
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
- Customer order promised cycle time
- Customer order actual cycle time
- Inventory replenishment cycle time
- Inventory turns (inventory turnover)
- 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..
Customer order promised cycle time
- The anticipated or agreed upon cycle time of a purchase order. It is a gap between the 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 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 included to deploy the product to the appropriate distribution centre.
Inventory turns (inventory turnover)
- The number of times that a company's inventory cycles or turns over per year. It is one of the most commonly used supply chain metrics.
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 measure and manage strategic initiatives
- The balanced scorecard enables organizations to measure and manage strategic initiatives
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