MEASURING
INFORMATION TECHNOLOGY’S SUCCESS
Key performance indicator - measures that are tied to business drivers
Metrics - 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 - measure the
performance of the IT system itself including throughout speed and availability
Effectiveness
IT metric - measures the
impact IT has on business processes and activities including customers
satisfaction conversion rates and self-through increases
BENCHMARKING
– BASELINING METRICS
Regardless
or 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 seek
to attain
Benchmarking – a process of continuously measuring
system results, comparing those results to optimal system performance and
identifying to improve system performance
THE
INTERRELATIONSHIPS OF EFFICIENCY AND EFFECTIVENESS IT METRICS
a) Efficiency IT metrics focuses on technology and includes
:
Throughput - the amount of information that
can travel trough 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
b) Effectiveness IT metrics focuses on an organization’s goals,
strategies, and objectives and includes:
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 numbers 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 costs including development, maintenance, fixed, and
variable), and break-even analysis (the point at which constant 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
a) However,
to be effective it must implement Internet security
b) Secure
Internet connections must offer encryption and Secure Sockets Layers (SSL
denoted by the lock symbol in the lower corner of a browser) .
c) Web Site Metrics:
Abandoned registrations – Number of visitors who start the
process of completing a registration page 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
for the merchandise.
Click-through – people who visit a site, click on
an ad, and are taken to the site of the advertiser.
Conversion rate – potential customers who visit a
site and actually buy something.
Cost-per-thousand (CPM) – sales dollar 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 exposure
to an individual visitor.
Total hits – number of visits to a web site,
many of which may be by the same visitor.
Unique visitor – 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 site.
SUPPLY
CHAIN MANAGEMENT METRICS
Back order – an unfilled customer order.
Customer order promised cycle time – the anticipated or agreed upon
cycle time of a purchase order.
Customer order actual cycle time – to actually 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 turns over per year.
CUSTOMER
RELATIONSHIP MANAGEMENT METRICS
• Customer relationship management metrics
measure user satisfaction and interaction and includes :
- Sales metrics
- Service metrics
- Marketing metrics
BPR
and ERP METRICS
The
balanced scorecard enables organizations to measures and manage strategic
initiatives
