MEASURING
INFORMATION TECHNOLOGY’S 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 –
BASELINE METRICS
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
THE
INTERRELATIONSHIPS OF EFFICIENCY AND EFFECTIVENESS IT METRICS
Common types of efficiency IT metrics
•
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
•
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).
Security – 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).
METRICS FOR STRATEGIC INITIATIVES
Metrics for measuring and managing
strategic initiatives include:
•
Website metrics
•
Supply chain management (SCM) metrics
•
Customer relationship management (CRM) metrics
•
Business process reengineering (BPR) metrics
•
Enterprise resource planning (ERP) metrics
Website Metrics
•
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 website, 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 websites.
Supply Chain Management 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.
BPR And ERP Metrics
•
The balanced scorecard enables organizations to
measure and manage strategic initiatives
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