Chapter 4 : Measuring The Success Of Strategic Initiatives

Measuring Information Technology's Success

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

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
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.

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 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 organization's goals, strategies, and 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 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 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

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

Include :

• Abandoned registrations.
• Abandoned shopping cards.
• Click-through.
• Conversion rate.
• Cost-per-thousand.
• Page exposures.
• Total hits.
• Unique visitors.