Chapter 4 – 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 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 – BASELINE 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 those results to optimal system performance (benchmark values), and identifying steps and producers to improve system performance

-          Comparing efficiency IT and effectiveness IT metrics for the government initiatives 

THE INTERRELATIONSHIPS OF EFFICIENCY AND EFFECTIVESS IT METRICS

-          Common types of efficiency IT metrics

	Efficiency IT Metrics
Throughput	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 at 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…

	Effectiveness IT Metrics
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.
Customers 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 content revenues equal ongoing costs).

-          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 browser)

-          Interrelationships between efficiency and effectiveness. 

METRICS FOR STRATEGIC INITIATIVES

-          Metrics for measuring and managing strategic initiatives include;

·         Website metrics.

·         Supply chain management (SCM) metrics

·         Customer relationship management (CRM) metrics

·         Business process reengineering (BPR) metrics

·         Enterprise resource planning (ERP) metrics 

WEBSITE METRICS

SUPPLY CHAIN MANAGEMENT METRICS 

CUSTOMER RELATIONSHIP MANAGEMENT METRICS

BPR and ERP Metrics

-          The balanced scorecard enables organizations to measure and manage strategic initiatives. 

Question?

1.       Define metrics and describe the relationship between efficiency IT metric and effectiveness IT metrics

2.       Explain why a business would use metrics to measure the success of strategic initiatives