Chapter 4
Measuring The Success of Strategic Initiatives

MEASURING INFORMATION TECHNOLOGY'S SUCCESS

• key performance indicator - measures that are tied to business drivers
• metrics are detailed measures that feed KPIs
• performances metrics fall into the nebulous area of business intelligence that is neither technology, nor business centred, but requires input from both IT and business professionals

EFFICIENCY AND EFFECTIVENESS

• efficiency IT metrics - measures the performances of the IT system itself including throughput, speed , and availability
• effectiveness IT metrics - measures the impact IT has on business processes and activities including customer satisfaction, conversation rates, and sell-through increases.

BENCHMARKING - BASELINING METRICS

• regardless of 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 seeks to attain
• benchmarking - 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. 
• E-government benchmarks......

efficiency	effectiveness
1.       United states (3.11)	1.       Canada
1.       Australian (2.60)	2.       Singapore
2.       New Zealand (2.59)	3.       United States
3.       Singapore (2.58)	4.       Denmark
4.       Norway (2.55)	5.       Australian
5.       Canada (2.52)	6.       Finland
6.       United Kingdom (2.52)	7.       Hong Kong
7.       Netherlands (2.51)	8.       United Kingdom
8.       Denmark (2.47)	9.       Germany
9.       Germany (2.46)	10.   Ireland

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 of 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 organisation's goal 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 click required to find desired information.
• customer satisfaction - measured by such benchmarks as satisfaction surveys, percentage is existing customers retained, and increases revenue dollars per customer.
• conversation rates - the number of customers an organisation "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 organisation's assets), cost-benefit analysis (the comparison of projected revenues and costs including development, maintenance, fixed and variables), and break-even analysis (the point at which constant revenues equal ongoing costs).
• security is an issue for any organisation offering products and services over the Internet
• it is inefficient for an organisation to implement Internet security, since it slows down processing 
• however, to be effective it must implement Internet security
• secure Internet connections must offer encryption and Secure Sockets Layers (SSL denoted by the lock symbol in the lower right corner of a browser)
• interrelationships between efficiency and effectiveness........

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 and include:          

BUSINESS PROCESS RE ENGINEERING AND ENTERPRISE RESOURCE PLANNING METRICS

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