MEASURING THE SUCCESS OF STRATEGIC INITIATIVES
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 & 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 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
THE INTERRELATIONSHIPS OF EFFICIENCY & EFFECTIVENESS IT METRICS :
- Efficiency IT metrics focus on technology and include :
* 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 focus on an organization's goals, strategies, and objectives and include :
* 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 purchaseits 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
- Secure Internet connections must offer encryption and Secure Sockets Layers
- Interrelationships of Efficiency & Effectiveness
METRICS FOR STRATEGIC INITIATIVES :
- Metrics for measuring & managing strategic initiatives include :
- WEB SITE METRICS
- SUPPLY CHAIN MANAGEMENTS (SCM) METRICS
- CUSTOMER RELATIONSHIP MANAGEMENT (CRM) METRICS
- BUSINESS PROCESS REENGINEERING (BPR) METRICS
- ENTERPRISE RESOURCE PLANNING (ERP) METRICS
- Web site metrics include :
* Abandoned shopping cards - 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 - 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 - 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 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 measure user satisfaction and interaction and include
* Service metrics
* Marketing metrics
BPR & ERP METRICS
- The balanced scorecard enables organizations to measure and manage strategic initiatives
