MGT 300 - Chapter 4

❤Measuring the Success of Strategic Initiatives 

Measuring Information Technology's Success

• key performances indicator - measures that are tied to business drivers
• Metrics are detailed measures that feed KPIs
• Performances metric fall into the nebolous area 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

➤ Efficiency IT metric focus on technology and include :

• Throughput
• Transaction speed
• System availability
• Information accuracy
• Web traffic
• Response time

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

⧪ Effectiveness IT metric focus on an organization's goals, strategies and objectives and include :

• Usability
• Customer satisfaction
• Conversion rates
• Financial

Usability

- The ease with which people perform transaction and/or find information. A popular usability metric on the Internet is degrees of freedom, which measures the number of clicks required to fing desired information
Customer satisfaction
- Measured by such benchmarks as satisfaction surveys, percentage of existing customers retained, and increase in revenue dollars per customer.
Conversion rates
- The number of customer an organization ''touches'' for the first time and persuades to purchase its products or services.
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 constant revenues equal ongoing costs)

The Interrelationships of Efficiency and Effectiveness IT Metrics

⧭ security is an issue for any organization offering products or services over the internet

Metric for Strategy Initiatives

❤ Metrics for measuring and managing strategic initiatives include :

• 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

☺Web site metrics include :

• Abandoned registrations
• Abandoned shopping carts
• Click-through
• Conversion rate
• Cost-per-thousand
• Page exposures
• Total hits
• Unique visitors

Abandoned registrations

❤ Number of visitors who start the process of completing a registration page and then abandon the activity.

Abandoned shopping carts

❤ Number of visitor 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 or advertising. This is commonly used to make the case for spending money to appear on a search engine.

Page exposure

❤ 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
• Customer order promised cycle time
• Customer order actual cycle time
• Inventory replenishment cycle time
• Inventory turns (inventory turnover)

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 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 customers 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. Its 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

BPR AND ERP METRICS

                                     THE END CHAPTER 4