CHAPTER 4 : MEASURING THE SUCCESS OF STRATEGIC INITIATIVES

MEASURING INFORMATION TECHNOLOGY'S SUCCESS

Key performance indicator - Measures that are tied to business drivers.

EFFICIENCY & EFFECTIVENESS

Efficiency IT Metric - Measures the performance of the IT system 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

A process of continuously measuring system results, comparing those results to optimal sysrem performance and identifying steps and procedures to improve system performance.

EFFICIENCY IT METRICS

• Throughput - The amount of information that can travel through a system
• 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 - System generates the correct results when executing same transaction
• Web traffic - Includes a host of benchmark 
• Response time - The time it takes to respond to user interactions 

EFFECTIVENESS IT METRICS

• Usability - The ease with which people perform transactions and find information
• Customer satisfaction - Measured by such benchmarks as satisfaction surveys
• Conversion rates - The number of customers an organization touches for the first time
• Financial - Return on investment, cost benefit analysis and break-even analysis

THE INTERRELATIONSHIPS OF EFFICIENCY & EFFECTIVENESS IT METRICS

METRICS FOR STRATEGIC INITIATIVE

Web site metrics 

• Abandoned registrations - Number of visitors who start the process of completing a registratio 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 the merchandise.
• Click-through - Count the number of people who visit a site, click on an ad, are taken to the site of the advertiser.
• Conversion rate - Percentage of potential customers who visit a site and buy something.
• Cost-per-thousand - Sales dollars generated per dollar of advertising.
• 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.

SUPPLY CHAIN MANAGEMENT METRICS

• Back order - An unfilled customer order. A back order is demand against an item. 
• Customer order promised cycle time - The anticipated or agreed upon cycle time of a purchase order.
• Customer order actual cycle time - The average time it takes to fill a customer's purchase order.
• 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 turn over per year.

CUSTOMER RELATIONSHIP MANAGEMENT METRICS

• Sales metrics
• Service metrics
• Marketing metrics