CHAPTER 4: MEASURING THE SUCCESS OF STRATEGIC INITIATIVES

MEASURING THE SUCCESS OF STRATEGIC INITIATIVES

Measuring Information Technology's Success
  • Key performance indicator- measures that are tied to business drivers.
  • Metric are detailed measures that feed KPIs
  • Performance metric 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-Baselining Metrics
  • Benchmarking- a process of continuously measuring system results, comparing those results to optimal system performance (benchmark value), and identifying steps and procedures to improve system performance 
  • E-government benchmarks
The Interrelationships of Efficiency and Effectiveness IT Metrics

Efficiency IT metrics focus on technology and include:
  • 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 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:
  • 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. 
  • 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 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 cost including development, maintanance, fixed, and variable), and break-even analysis (the point at which constant revenues equal ongoing costs).
Metric for Strategic Initiatives
  • Metrics for measuring and managing strategic initiatives includes:
    • Web site metrics
    • Supply chain management (SCM) metrics
    • Customer relationship management (CRM) metrics
    • Business process reengineering (BPR) metrics
    • Enterprise resource planning (ERP) metrics
  • Web site metrics include:
    • Abandoned registrations: Number of visitors who start the process of completing a registration page and then abandon the activity.
    • Abandoned shopping: 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:
    • 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. (Dominos delivery order)
    • 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. (McD' waiting line.)
    • 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:
    • customer relationship management metrics measure user satisfaction and interaction and include.
      • Sales metrics
        • number of prospectives customers
        • number of new customers
        • number of retained customers
        • number of open leads 
        • number of sales calls
        • number of sales calls per lead
        • amount of new revenue
        • amount of recurring revene
        • number of proposals given
      • Services metrics
        • cases closed same day 
        • number of cases handled by agent
        • number of services calls 
        • average number of service requests by type
        • average time to resolution 
        • average number of services calls per day
        • percentage compliance with service-level agreement
        • percentages of service renewals
        • customer satisfaction level
      • Marketing metrics
        • 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 
BPR AND ERP METRICS
  • The balanced scorecard enables organizations to measure and manage strategic initiatives.





11 OCTOBER 2017
WEDNESDAY






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