CHAPTER 4 > Measuring the Success of Strategic Initiatives

Efficiency and Effectiveness

• Efficiency IT metrics measure the performances of the IT system itself including throughput ,speed and availability.

• Effectiveness IT metrics measure the impacts IT has on business processes and activities including customer satisfaction, conversion rates, and sell-trough increase.

> doing thing right addresses efficiency - getting the most from the most resources.

> doing the right things addresses effectiveness - setting the right goals and objectives and ensuring they are      accomplish.

Benchmarking - Baseline Metrics

• benchmarking is 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.

The Interrelationships of efficiency and effectiveness 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 performs 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 takes to respond to user interactions such as a mouse click.
• Usability - The ease with which people perform transaction or find information. A popular usability metric on the internet is degrees of freedom, which measure the number of clicks required to find desired information.
•  Customer Satisfaction - Measured by such benchmarks as satisfaction surveys, percentages of existing customer retained, increases in revenue dollars per customer.
• Conversion Rates - the number of customers an organization "touches" for the first time and persuade 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- benefits analysis (the comparison of projected revenue and costs including development, maintenance, constant revenues equal ongoing costs).  

METRICS FOR STRATEGIC INITIATIVES

· metrics for measuring and managing strategic initiatives include:

·web site metrics

· supply chain management (SCM) metrics

· customer relationship management (CRM) metrics

·business process re engineering (BPR)

· enterprise resource planning (ERP) metrics

WEBSITE METRICS

·abandoned registrations

*   number of visitors who start the process of completing a registration page and then abandon the activity.

·abandoned shopping cards

*  number of visitors who create a shopping card 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.

·conversation 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.

·   customer order actual cycle time

*  the average time it takes toi 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

· customer relationships management metrics measure user satisfaction and interaction        

BUSINESS PROCESS RE ENGINEERING AND ENTERPRISE RESOURCE PLANNING METRICS

·   the balanced scorecard enables organizations to measure and manage strategic initiatives