MGT 300

IT in BUSINESS
PN. INTAN LIANA SUHAIME
 Chapter 4
Measuring the Success of Strategic Initiatives
 Learning Outcomes

4.1 Compare efficiency IT metrics and effectiveness

IT metrics

4.2 List and describe five common types of efficiency

IT metrics
 Learning Outcomes
4.3 List and describe four types of effectiveness IT
metrics

4.4 Explain customer metrics and their importance to

an organization
 Measuring Information
Technologys Success
Key performance indicator measures that are tied
to business drivers

Metrics are 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 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
Benchmarking Base lining 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
Benchmarking Baselining Metrics
E-government benchmarks
 Efficiency IT Metrics
Efficiency IT metrics 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 metrics focus on an
organizations goals, strategies, and objectives
and include:
Usability
Customer satisfaction
Conversion rates
Financial
 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 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 organizations 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

It is inefficient for an organization 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)
 The Interrelationships of Efficiency and
Effectiveness IT Metrics
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 reengineering (BPR) metrics
Enterprise resource planning (ERP) metrics
 WEB SITE METRICS
Web site metrics include:
Abandoned registrations
Abandoned shopping cards
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 visitors 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 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
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 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 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 companys

inventory cycles or turns over per year. It
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
Sales Metrics Service Metrics
Number of prospective Cases closed same day
customers Number of cases handled
Number of new customers by agent
Number of retained Number of service calls
customers Average number of service
Number of open leads requests by type
Number of sales calls Average time to resolution
Number of sales call per Average number of service
lead calls per day
Amount of new revenue Percentage compliance
Amount of recurring with service-level
revenue agreement
Number of proposals given Percentage of service
renewals
Customer satisfaction level
Marketing Metrics
Number of marketing
campaigns
New customer retention
rates
Number of responses by
marketing campaign
Number of purchases by
marketing campaign
Revenue generated by
marketing campaign
Cost per interaction by
marketing campaign
Number of new customers
acquired by marketing
campaign
Customer retention rate
Number of new leads by
product
 BPR AND ERP METRICS
The balanced
scorecard enables
organizations to
measure and manage
strategic initiatives