CHAPTER 4 : Measuring the Success of Strategic Initiative

Measuring Information Technology's Success

- Key performance indicator - measures that are tied to business drivers

- Metrics are detailed measures that feel 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 - measured 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 increase. 

Benchmarking-Baselining Metrics

• Benchmarks-baseline values the system seeks to attain
• Benchmarking -a process of continuously measuring system results, comparing those results to optimal system performance, and identifying steps and procedures to improve system performance.
  
  Efficiency IT metrics focus on technology and include:  
• Throughput, Transaction speed, System availability, web traffic

Efficiency IT metrics :

• Throughput-the amount of information that can travel through a system at any point.
• Transaction speed-the amount of the 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 :

• Usability-The ease with which people perform transactions 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 sactisfaction surveys, percentage of existing customers retained and increases in revenue dollars per customers.
• Conversion rates-the number of customers an organization ''touches'' for the firstime 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.

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 organization to implement Internet security, sinces it slows down processing.
• Security Internet connections must offer encryption and Secure Sockets Layers.Metrics for measuring and managing strategic initiatives included:-web site metric, supply chain management (SCM) metrics

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 add and are taken to the site of the adversiter.

Supply Chain Management Metric

• Back order: An unfilled customer order. A back order is demand 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 mesure can be viewed on an order line level.

Customer relationship management metrics-sales metric (number of new customers),services metric (customer satisfaction level),marketing metrics (customer retention rate).

BPR and ERP Metrics-the balanced scorecard enables organization to measure and manage strategic initiatives.