1) Key Terms :
Project - temporary activity a company undertakes to create a unique product, service or result.
Metrics - measurements that evaluate results to determine whether a project is meeting its goals. There are two core metrics :
*Critical Success Factors (CFS) = crucial steps companies perform to achieve their goals and objectives and implement their strategies.
*Key Performance Indicators (KPI) = the quantifiable metrics a company uses to evaluate progress toward critical success factors.
2) Efficiency and Effectiveness :
EFFICIENCY IT METRICS :
Meaning - measures the performance of the IT system itself including throughput, speed, and availability.
Common Type of IT Metrics
- 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 :
Meaning - measures the impact IT has on business processes and activities including customer satisfaction, conversion rates, and sell-through increases.
Common Type of IT Metrics
- 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 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 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).
3) 3)Interrelationship Between Efficiency and Effectiveness IT Metrics
Efficiency and effectiveness are definitely related but somehow, success in one area does not mean that there is success in another.
Ideally, organization must want to operate in the upper-right hand corner of the graph, realizing both significant increases in efficiency and effectiveness.
Though there is an ideal or optimal measures given, each organization must have benchmarks. Benchmarks provide baseline values in which the system seeks to attain.
Benchmarks : 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.
4) Metrics for Strategic Initiatives
Web site metrics
a) Abandoned registrations
- Number of visitors who start the process of completing a registration page and then abandon the activity
b) Abandoned shopping carts
- Number of visitors who create a shopping cart and start shopping and then abandon the activity before paying for the merchandise.
c) 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.
d) Conversion rate
- Percentage of potential customers who visit a site and actually buy something.
e) 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.
f) Page exposure
- Average number of page exposures to an individual visitor.
g) Total hits
- Number of visits to a Web site, many of which may be by the same visitor.
h) 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 (SCM) Metrics
a) Back order
- An unfilled customer order. A back order is demand (immediate or past due) against an item whose current stock level is insufficient to satisfy demand.
b) 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.
c) 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.
d) Inventory replenishment cycle time
- Measure of the manufacturing cycle time plus the time included to deploy the product to the appropriate distribution center.
e) 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
a) Sales metrics
- number of new customers
- number of retained customers
- amount of recurring revenue
b) Service metrics
- cases closed on the same day
- number of service calls
- customer satisfaction levels
c) Marketing metrics
- number of marketing campaigns
- revenue generated by marketing campaign
- number of new customers acquired by marketing campaign
Business Process Reengineering (BPR) and Enterprise Resource Planning (ERP)
a) Balanced scorecard
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