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.

Chapter 3 : Strategic Initiatives for Implementing Competitive Advantages

Strategic Initiatives
Organizations can undertake high-profile strategic initiatives including :

• Supply Chain Management (SCM)
• Customer Relationship Management (CRM)
• Business Process Reengineering (BPR)
• Enterprise Resource Planning (ERP)                                                                                     

Supply Chain Management (SCM)

Involves the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability.

Four basic components of supply chain management include :

1. Supply chain strategy.
2. Supply chain partner.
3. Supply chain operation.
4. Supply chain logistics.

 

Effective and efficient SCM systems can enable an organization to :

• Decrease the power of its buyers.
• Increase its own supplier power.
• Create entry barriers thereby reducing the threat of new entrants.

Customer Relationship Management (CRM)

Involves managing all aspects of a customer's relationship with an organization to increase customer loyalty and retention and an organization's profitability.

CRM is not just technology, but a strategy, process, and business goal that an organization must embrace on an enterprisewide level.

CRM can enable an organization to :

• Identify types of customers.
• Design individual customer marketing campaigns.
• Treat each customer as an individual.
• Understand customer buying behaviors.

Business Process Reengineering (BPR)

The analysis and redesign of workflow within and between enterprises.

The purpose of BPR is to make all business processes best-in-class.

Business process - a standardized set of activities that accomplish a specific task, such as processing a customer's order.

Finding Opportunity Using BPR

A company can improve the way it travels the road by moving from foot to horse and then horse to car.

BPR looks at taking a different path, such as all airplane which ignore the road completely.

Types of change an organization can achieve, along with the magnitudes of change and the potential business benefit.       

                                       

Enterprise Resource Planning (ERP)

Integrates all departments and functions throughout an organization into a single IT system so that employees can make decisions by viewing enterprisewide information on all business operations.

Keyword in ERP is 'enterprise'.

 

Chapter Three Case

Consolidating Touchpoints for Saab

Saab required a consolidated customer view among its three primary channels : 

• Dealer network.
• Customer assistance center. 
• Lead manegement center.

Chapter 2 : Identifying Competitive Advantages

Competitive Advantage
= A product or service that an organization's customers place a greater value on than similar offerings from a competitor.

The Five Forces Model - Evaluating Business Segment

Buyer power.

         * Customers can grow large and powerful as a result of their market share. 

         * Many choices of whom to buy from.

         * Low when comes to limited items.

Supplier power.

Threat of substitute products or services.

         * To the extent that customers can use different products to fulfill the same need, the threat of                 substitutes exists.

         * Switching cost - costs can make customer reluctant to switch to another product or service.

Threats of new entrants.

         * Many threats come from companies that do not yet exist or have a presence in a given                         industry or market.

         * The threat of new entrants forces top management to monitor the trends, especially in                           technology, that might give rise to new competitors.

 

Rivalry among existing companies.

        * Existing competitors are not much of the threat : typically each firm has found its "niche".

        * However, changes in management, ownership or, "the rules of the game" can give rise to                     serious threats to long term survival from existing firms. 

Porter's Three Generis Strategies

Cost Leadership

• Becoming a low-cost producer in the industry allows the company to lower prices to customers.
• Competitors with higher costs cannot afford to compete with the low-cost leader on price.

 Differentiation

• Create competitive advantage by distinguishing their products on one or more features important to their customers.
• Unique features or benefits may justify price differences and/or stimulate demand.

Focused Strategy

• Target to a niche market.
• Concentrates on either cost leadership or differentiation.

Chapter 1 : Business Driven Technology

Information Technology's Role In Business
 =Information technology is everywhere in business.

Information Technology's Impact On Business Operations

• Organizations typically operate by functional areas or functional silos.
• Functional areas are interdependent.                                                                                                

Information Technology Basics

• Information technology (IT) - a field concerned with the use of technology in managing and processing information.
• Management information systems (MIS) - a general name for the business function and academic discipline covering the application of people, technologies, and procedures to solve business problems.

Information

• Data - raw facts that describe the characteristic of an event.
• Information - data converted into a meaningful and useful context.
• Business intelligence - applications and technologies that are used to support decision-making efforts.

IT Resources

• People use.
• Information technology to work with.
• Information. 

IT Cultures

• Information-Functional Culture - employees use information as a means of exercising influence or power over others. For example, a manager in sales refuses to share information with marketing. This causes marketing to need the sales manager's input each time a new sales strategy is developed. 
• Information-Sharing Culture - employees across departments trust each other to use information (especially about problems and failures) to improve performance.
• Information-Inquiring Culture - employees across departments search for information to better understand the future and align themselves with current trends and new directions.
• Information-Discovery Culture -   employees across departments are open to new insights about crisis and radical changes and seek ways to create competitive advantages.