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