Measuring
the Success of Strategic Initiatives
LEARNING OUTCOMES
- Compare efficiency IT metrics and effectiveness IT metrics.
- List and describe five common types of efficiency IT metrics.
- List and describe four types of effectiveness IT metrics.
- Explain customer metrics and their importance to an organization.
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.
Efficiency
and Effectiveness
- Efficiency
IT metric – 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
– 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.
- E-government benchmarks :
Efficiency
IT Metrics
- Efficiency IT metrics focus on technology
and include:
*Throughput
*Transaction
speed
*System
availability
*Information
accuracy
*Web
traffic
*Response
time
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
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
- Customer satisfaction
- Conversion rates
- Financial
Usability
The
ease with which people perform transactions and/or 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.
denoted by the lock symbol in the lower right corner of a browser.
- Interrelationships
between efficiency and effectiveness.
Metrics
for Strategic Initiatives
Metrics for measuring and managing
strategic initiatives 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
Web site metrics include:
- Abandoned
registrations.
- Abandoned
shopping cards.
- Click-through.
- Conversion
rate.
- Cost-per-thousand.
- Page
exposures.
- Total
hits.
- Unique
visitors.
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 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)
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.
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 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
center.
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
Sales
Metrics
•Number
of prospective customers
•Number
of new customers
•Number
of retained customers
•Number
of open leads
•Number
of sales calls
•Number
of sales call per lead
•Amount
of new revenue
•Amount
of recurring revenue
•Number
of proposals given
Service
Metrics
•Cases
closed same day
•Number
of cases handled by agent
•Number
of service calls
•Average
number of service requests by type
•Average
time to resolution
•Average
number of service calls per day
•Percentage
compliance with service-level agreement
•Percentage
of service renewals
•Customer
satisfaction level
Marketing
Metrics
•Number
of marketing campaigns
•New
customer retention rates
•Number
of responses by marketing campaign
•Number
of purchases by marketing campaign
•Revenue
generated by marketing campaign
•Cost
per interaction by marketing campaign
•Number
of new customers acquired by marketing campaign
•Customer
retention rate
•Number
of new leads by product
BPR
AND ERP METRICS
The balanced scorecard enables
organizations to measure
and manage strategic initiatives.
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