CHAPTER 4: Measuring the Success of Strategic Initiait

Measuring Information Technology's Success

• Key performance idicator- measures that are tied to business drivers.
• Metrics are detailed measures that feed KPIs
• Performance metrics fall into the nebelous area of business inteligence that is neither technology, nor business b=centered, but requires input from both IT nd 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 - Baselining 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 thse results to optimal system performance (benchmark values), and identifying steps and procedues to improve system performance.

The Interrelationship of Efficiency and Effectiveness IT Metrics

• Efficiency IT metrics focus on technology and include:

           - Throughput

           - Transaction speed

           - System availability

           - Information accurancy

           - Web traffic

           - Response time

• Efficiency IT metrics:

           - Throuhput - 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 accurancy - the extend to which a system generates the corret 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

• The effectiveness IT metrics  focus on an organization's goals, strategies, and objectives and include:

           - Usability

           - Customer satisfaction

           - Conversion rates

           - FInancial

•  Effectiveness IT metrics 

           - Usability - The ease with which people perform transacion 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.

           - Coversion 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, cost-benefit analysis and break-even analysis.

•  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 

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 reeegineering (BPR) metrics

          - Enterprise resource planning (ERP) metrics.

WEBSITE METRICS

• Abandoned registrations: Number of visiotrs 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 the abandon the activity before paying for the merchandise.
• Click-through: Count og the number oof people who visit a site, click on 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 follar of advertising 
• 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 visiotrs to a site in a given time. This is commonly used by net ratings to rank the most popular web sites

SUPPLY CHAIN MANAGEMENT METRICS.

• Back order: A unfilled customer order. A back order is demand against an item whose current stovk 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 averrage 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 appropiate 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.