CHAPTER 4

MEASURING INFORMATION TECHNOLOGY'S SUCCESS

• Key performance indicator-measure that are tied with business drivers.
• Metrics are detailed measures that fed KPI.

EFFICIENCY AND EFFECTIVENESS

• Efficiency IT metric-measures the performance of IT system.
• Effectiveness IT metric-measures the impact of IT on business process and activities.

BENCHMARKING-BASELINES METRICS

• Benchmarks are baselines values that system seek to attain.
• Benchmarking- a process of continously measuring system result to optimal system performance, identify step and procedure to improve system performance.

THE INTERRELATIONSHIPS OF EFFICIENCY AND EFFECTIVENESS IT METRICS

• Efficiency IT metric focus on technology and included:

- Usability

- Customer satisfaction

- Conversion rates

- Financial

EFFECTIVENESS IT METRICS

• Usability-The ease with which people perform transaction or find information, which measures the number of clicks required to find desired information.
• Customer satisfaction- Measures by benchmarks as satisfaction survey, percentage by existing customer retained and increase in revenue per customer.
• Conversion rates- The number of customer an organization "touches" for the first time and persuades to purchase its product or services.
• Financial- Such as return on investment,cost-benefit analysis (the comparison of project revenue and cost including development, maintenance, fixed and variable) and break even analysis (point at constant revenue equal to ongoing cost.) 

1.  Security is issue for organization offering products or services over the internet.

- However to be effective , it must implement Internet security.

- Secure Internet connection must offers 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 included:  

- Web site metrics

- Supply Chain Management metrics (SCM)

- Customer Relationship Management metrics (CRM)

- Business process reengineering metrics ((BPR)

 - Enterprise Resource Planning metrics (ERP)

Web Sites Metrics

Web sites metrics included:

- Abandoned shopping card

- Click through

- Conversion rates

- Cost per thousand

- Page exposures

- Total hits

- Unique visitors

• Abandoned registrations- number of visitors who starts the process of completing a registration page and then abandon the activity.
• Abandoned shopping carts- number of visitors  who create a shopping carts, start shopping and then abandon the activity before paying for the merchandise.
• Click through- count the number of people of visit a sites, click on ad and taken to the sites of the advertiser.
• Conversion rates- percentage of potential customer who visit a sites  and actually buys 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 pages exposures to individual visitor.
• Total hits- number of visits to a web sites,many may be by the same visitor.
• Unique visitors- number of unique visitors of a sites in a time given. It commonly used to rank the most popular web sites.

Supply Chain Management metrics

• Back order-is demand against an item whose current stock level is insufficient to satisfy demand.
• Customer order promised cycle time- the anticipated or agree upon cycle time of a purchase order.
• Customer order actual cycle time- the average time it takes  to fill a customer 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 turnover- the number  of times that company inventory cycles or turn over per year.It is one of the most commonly used supply chain management.

Customer Relationship Management Metrics

• Measures  user satisfaction and interaction and include:

- Sales metrics

- Service metrics

- Marketing metrics

BPR and ERP metrics

• The balanced scorecard enables organizations to measures and manage strategic initiatives.