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 :
ü Throughput - the amount of information that can travel trough a
system at any point
ü Transaction speed - the amount of time a system takes to perform a
transaction
ü System availability – the number of hours a system is available for
users
ü Information accuracy – the extent to which a system generates the
correct results when executing the same transaction numerous times
ü 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
ü 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:
ü 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.
ü Customer satisfaction – Measured by such benchmarks as satisfaction
surveys, percentage of existing customers retained, and increases in revenue
dollars per customer.
ü 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.
ü 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
v However, to be effective it must implement Internet security
v 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:
ü Abandoned registrations – Number of visitors who start the process
of completing a registration page and then abandon the activity.
ü Abandoned shopping carts – Number of visitors who create a shopping
cart and start shopping and then abandon the activity before paying for the
merchandise.
ü Click-through – people who visit a site, click on an ad, and are
taken to the site of the advertiser.
ü Conversion rate – potential customers who visit a site and actually
buy something.
ü 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.
ü Page exposures – average number of page exposure to an individual
visitor.
ü Total hits – number of visits to a web site, many of which may be by
the same visitor.
ü 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
ü Back order – an unfilled customer order.
ü Customer order promised cycle time – the anticipated or agreed upon
cycle time of a purchase order.
ü Customer order actual cycle time – to actually fill a customer’s
purchase order.
ü Inventory replenishment cycle time – measure of the manufacturing
cycle time plus the time included to
deploy the product to the appropriate distribution center.
ü Inventory turns ( inventory turnover ) – the number of times that a
company’s inventory cycles or turns over per year.
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