Measuring the Success of Strategic Initiatives

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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 & business professionals

Efficiency & Effectiveness

Efficiency IT metric - measures the performance of the IT system itself including throughput, speed & availability

• 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 & 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 metric - measures the impact IT has on business processes & activities including customer satisfaction, conversion rates & sell-through increases

• 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 number of clicks required to find desired information
• Customer satisfaction - measured by such benchmarks as satisfaction surveys, percentage of existing customer retained & increases inrevenue dollars per customer
• Conversion rates - the number of customers an organization 'touches" for the first & persuades to purchase its products/services. This is a popular metric for evaluating the effectiveness of banner, pop-up & 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 & costs including development, maintenance, fixed & variable) & break-even analysis (the point at which constant revenues equal ongoing costs)

Metrics for Strategic Initiatives

Web site metrics

• Abandoned registrations - number of visitors who start the process of completing a registration page & then abandon the activity
• Abandoned shopping cards - number of visitors who create a shopping cart & start shopping & then abandon the activity before paying for the merchandise
• cost-per-thousand - 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
• conversion rate - percentage of potential customers who visit a site & actually buy something
• click-through - count of the number of people who visit a site, click on an ad & are taken to the site of the advertiser
• 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

SCM Metrics 

• Pre oder/ Back order - an unfilled customer order
• Customer order promised cycle time - the anticipated or agree upon cycle time of a purchase order. It is a gap between the purchase order creation date & 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 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