MGT 300 - CHAPTER 4

CHAPTER 4 👉 MEASURING THE SUCCESS OF STRATEGIC INITIATIVES



     Measuring Information Technology’s Success

             💛 Key performance indicator – measures that are tied to business drivers  
             💜 Metrics – detailed measures that feed KPIs
             💙 Performances metric fall into the nebolous area 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   

• Bencmarking – 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 :

1. Throughput ⇝ amount of infomation that can travel through a system at any point
2. Transaction speed ⇝ amount of time a system takes to perform a transaction
3. System availability ⇝ number of hours a system is available for users
4. Information accurancy ⇝ the extent to which a system generates the correct results when executing the same transaction numerous time
5. Web Traffic ⇝ Includes host of benchmarks such as the no of page view, no of unique visitors, average time spent viewing Web page
6. Response Time ⇝ 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, also include :

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).

   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)

                                      

                                         

            

                 Metrics for Strategic Initiatives 

               Web site metrics include :

• 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 (SCM)

• 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 (CRM) Metrics 

                💙 Measure user satisfaction and interaction, and include :

                          

                           😺 sales metrics

                           😺 service metrics

                           😺 marketing metrics

                                 

               BPR AND ERP METRICS

          💨Business Process Reengineering (BPR) metrics

          💨 Enterprise Resource Planning (ERP) metrics