MGT300 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

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

Example : E-Government Benchmark

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 :

1. 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.
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).

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 

• 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, also include :

                ❤ sales metrics

                ❤ service metrics

                ❤ marketing metrics

Sales Metrics	Service Metrics	Marketing 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	~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	~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

✌ Business Process Reengineering (BPR) metrics

✌ Enterprise Resource Planning (ERP) metrics 

• BPR and ERP metrics is the balanced scorecard which enables organizations to measure and manage strategic initiatives.

THE END OF CHAPTER 4 👍👍