CHAPTER 4
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 – measure the performance of the IT system itself including
throughout speed and availability
·
Effectiveness IT metric – measures the impact IT has on business
processes and activities including
customers satisfaction conversion rates and self-through increases
BENCHMARKING – BASELINING METRICS
· Regardless or what is measured, how it is measured and
whether it is for the sake of efficiency or effectiveness, there must be
benchmarks – beseline values the system seek to attain
· Benchmarking
– a process of continuously measuring system results, comparing those results
to optimal system performance and identifying to improve system performance
THE INTERRELATIONSHIPS OF EFFICIENCY AND EFFECTIVENESS IT
METRICS
·Efficiency IT metrics focus on technology and include :
* Throughput -
the amount of information that can travel trough 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 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 numbers 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 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 corner of a browser) .
· Web Site 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 – people who visit a site, click on an ad, and
are taken to the site of the advertiser.
* Conversion rate – potential customers who visit a site and
actually buy something.
* Cost-per-thousand (CPM) – sales dollar 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 exposure to an
individual visitor.
* Total hits – number of visits to a web site, many of which
may be by the same visitor.
* Unique visitor – 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
site.
SUPPLY CHAIN
MANAGEMENT METRICS
* Back order – an unfilled customer order.
* Customer order promised cycle time – the
anticipated or agreed upon cycle time of a purchase order.
* Customer order actual cycle time – to
actually fill a customer’s purchase order.
* 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.
·
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