CHAPTER 4 : MEASURING THE SUCCESS OF STRATEGIC INITIATIVES
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 IT metric
↪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.
↪E-government benchmarks.
↪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 availabtlity - 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 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 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)
↪Interrelationships
between efficiency and effectiveness
Metrics for Strategic Initiatives
↪Metrics
for measuring and managing strategic initiatives include:
➤Web
site 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 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 - 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 (SCM) 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 to 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 (CRM) metrics - measure
user satisfaction and interaction and include:
➠Sales
metrics
➠Service
metrics
➠Marketing
metrics
Sales Metrics
•Number
of prospective customers
•Number
of new customers
•Number
of retained customers
•Number
of open leads
•Number
of sales calls
•Number
of sales call per lead
•Amount
of new revenue
•Amount
of recurring revenue
•Number
of proposals given
|
Service Metrics
•Cases
closed same day
•Number
of cases handled by agent
•Number
of service calls
•Average
number of service requests by type
•Average
time to resolution
•Average
number of service calls per day
•Percentage
compliance with service-level agreement
•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
|
➤Business
process reengineering (BPR) metrics
➤Enterprise
resource planning (ERP) metrics
↪BPR and erp metrics is the
balanced scorecard enables organizations to measure and manage strategic
initiatives.
