Measuring Information Technology's Success
Key Performance Indicator (KPI) - 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 throughout, speed, and availability
* doing things right
Effectiveness IT metrics - measures the impact of IT has on business processes and activities including customer satisfaction, conversion rates, and sell-through increases
* doing right things
Benchmarking - Baselining Metrics
Benchmarks - baseline values the system seeks to attain
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
Efficiency IT Metrics
" focus on technology include :
- Throughput
- Transaction speed
- System availability
- Information accuracy
- Web traffic
- Response time
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
" focus on an organization's goals, strategies, and objectives and include :
i) Usability
ii) Customer satisfaction
iii) Conversion rates
iv) Financial
Usability
" The ease with which people perform transactions and/or find 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 of 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 Interrelationships of Efficiency and Effectiveness IT Metrics
- 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.
- Secure Internet connections must offer encryption and Secure Sockets Layers (SL denoted by the lock symbol in the lower right corner of a browser).
Metrics for Strategic Initiatives
- Web site metrics
- Supply chain management (SCM) metrics
- Customer relationship management (CRM) metrics
- Business process reengineering ( BPR) metrics
- Enterprise resource planning (ERP) metrics
Web Site Metrics
" include : "
- Abandoned registrations
- Abandoned shopping carts
- Click-through
- Conversion rate
- Cost-per-thousand
- Page exposures
- Total hits
- Unique visitors
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 Web site, 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 Web sites. "
Supply Chain Management Metrics
- Back order
- Customer order promised cycle time
- Customer order actual cycle time
- Inventory replenishment cycle time
- Inventory turns (inventory turnover)
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
" The average time it takes 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. "
Customer Relationship Management Metrics" measure user satisfaction and interaction "
include :
- Sales metrics
- Service metrics
- Marketing metrics
Sales Metrics- Number of prospective customers
- Number of new customers
- Number of retained customers
- Number of open leads
- Number of sales calls
Service Metrics- Customer satisfaction level
- Percentage of service renewals
- Average number of service calls per day
- Number of service calls
- Average time to resolution
Marketing Metrics- Number of marketing campaigns
- New customer retention rates
- Number of responses by marketing campaign
- Number of purchases by marketing campaign
- Revenue generated by marketing campaign
Business Process Reengineering (BPR) and Enterprise Resource Planning (ERP) Metrics" The balanced scorecard enables organizations to measure and manage strategic initiatives "
