chapter 4 : measuring the success of strategic initiatives

CHAPTER 4: MEASURING THE SUCCESS OF STRATEGIC INITIATIVES

       Efficiency IT metrics measures the performance of the IT system itself including throughput, 
       speed and availability

       Efficiency focuses on the extent to which an organization is using its resources in an optimal 
       way

       Effectiveness IT metrics measure the impact IT has on business processes and activities 
       including customer satisfaction, conversion rates and sell-through increases

       Effectiveness focuses on how well an organization is achieving its goal and objectives

      Common types of efficiency IT metrics

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 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

      Common types of effectiveness IT metrics

Effectiveness IT metrics
Usability	The ease with which people perform transaction and/or find                information. A popular usability metrics 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 customer 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 following metrics will help manager measure and manage their strategic initiatives:

      Websites metrics

      Supply chain management (SCM) metrics

      Customer relationship management (CRM) metrics

      Business process reengineering (BPR) metrics

      Enterprise resources planning (ERP) metrics

WEBSITES METRICS

v    Abandoned registrations: number of visitors who start the process of     completing a registration page and then abandoned the activity

v    Abandoned shopping carts: number of visitors who create a shopping cart and      start shopping and then abandon the activity before paying for the merchandise

v    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

v    Conversion rate: percentage of potential customers who visit a site and actually       buy something

v    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

v    Page exposure: average number of page exposures to an individual visitor

v     Total hits: number of visits to a website, many of which may be by the same      Visitor

v      Unique visitors: number of unique visitors to a site in a given time. This is      commonly used by Nielson/Net ratings to rank the most popular websites

SUPPLY CHAIN MANAGEMENT

Back order: an unfilled customer order. A back order is demand (immediate or past due)          against an item whose current stock level 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
SALES METRICS	SERVICE METRICS	MARKETING METRICS
ü  Number of new customer	ü  Number of cases handled by     agent	ü  New customer retention
ü  Number of prospective     customers	ü  Cases close same day	ü  Number of marketing     campaign
ü  Number of proposal given	ü  Customer satisfaction level	ü  Number of new leads by      product

      Business process reengineering (BPR) and enterprise resources planning (ERP) metrics:

      Are large, organization wide initiatives. One of the best methods is the balanced scorecard

      Balanced scorecard is a management system, in addition to a measure system that enables 
       organizations to clarify their vision and strategy and translate them into action

       The balanced scorecard views the organization from 4 perspectives and user should develop 
       metrics, collect data, and analyze their business relatives to each of these perspective :

      The learning and growth perspective

      The internal business process perspective

      The customer perspective

      The financial perspective