CHAPTER 4 MEASURING THE SUCESS 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 centered, but requires input from both IT and business professionals.

Benchmarkin-Baselining Metrics

Benchmarking- a process of continuously measuring system results

-       Comparing those results to optimal system performance(benchmark values)

-       Identifying steps and procedures to improve system performance.

The Interrelationships of Efficiency and Effectiveness IT Metrics

o   Throughput

o   Transaction speed

o   System availability

o   Information accuracy

o   Web traffic

o   Response time

Efficiency IT metrics

§  Throughput- 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- time it takes to respond to user interactions such as a mouse click

The Interrelationships of Efficiency and Effectiveness IT Metrics

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

-       Usability

-       Customer satisfaction

-       Conversion rates

-       Financial

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)

Metrics for Strategic Initiatives

ü  Web site metrics

ü  Supply chain management (SCM) metrics

ü  Customer relationship management (CRM) metrics

ü  Business process reengineering (BPR) metrics

ü  Enterprise resource planning (ERP) metrics

Web site Metrics

Ø  Abandoned registrations

Ø  Abandoned shopping cards

Ø  Click-through

Ø  Conversion rate

Ø  Cost-per-thousand

Ø  Page exposures

Ø  Total hits

Ø  Unique visitors

Supply Chain Management Metrics

ü  Back order- an unfilled customer order. A back order is demand against an item whose current stock level is insufficient to satisfy demand.

ü  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.

ü  Customer or actual cycle time- the average time it takes to actually fill a customer’s d purchase order. This measure can be viewed on an order or an order line level.

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

ü  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.