1. CHAPTER 04 Measuring the Success of Strategic Initiatives
McGraw-Hill/Irwin
Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

2. LEARNING OUTCOMES
Define metrics and describe the relationship between efficiency IT metrics and effectiveness IT metrics.
Explain why a business would use metrics to measure the success of strategic initiatives.
4-2

3. MEASURING INFORMATION TECHNOLOGY’S SUCCESS
A few questions that banking executives recently raised regarding their IT systems include:
Is the internal IT operation performing satisfactorily?
Should the company outsource some or all of the IT operations?
How is the outsourcing company performing?
What are the risk factors to consider in an IT project?
What questions should be asked to ensure an IT project proposal is realistic?
What are the characteristics of a healthy project?
Which factors are most critical to measure to ensure the project achieves success?
4-3

4. MEASURING INFORMATION TECHNOLOGY’S SUCCESS
Key Performance Indicators —Measures that are tied to business drivers
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
4-4

5. EFFICIENCY AND EFFECTIVENESS
Efficiency IT Metrics—Measures the performance of the IT system itself including throughput, speed, and availability
Effectiveness IT Metrics—Measures the impact IT has on business processes and activities including customer satisfaction, conversion rates, and sell-through increases
4-5

6. BENCHMARKING BASELINE 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
4-6

7. THE INTERRELATIONSHIPS OF EFFICIENCY AND EFFECTIVENESS IT METRICS
Efficiency IT metrics focus on technology and include:
Throughput
Transaction speed
System availability
Information accuracy
Web traffic
Response time
4-7

8. THE INTERRELATIONSHIPS OF EFFICIENCY AND EFFECTIVENESS IT METRICS
Effectiveness IT metrics focus on an organization’s goals, strategies, and objectives and include:
Usability
Customer satisfaction
Conversion rates
Financial
4-8

9. 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 however, to be effective it must implement Internet security
Secure Internet connections must offer encryption and Secure Sockets Layers (SSL denoted by the lock symbol in the lower right corner of a browser)
4-9

10. METRICS FOR STRATEGIC INITIATIVES
What is a metric?
A metric is nothing more than a standard measure to assess performance in a particular area
Metrics for measuring and managing strategic initiatives include:
Website metrics
Supply chain management (SCM) metrics
Customer relationship management (CRM) metrics
Business process reengineering (BPR) metrics
Enterprise resource planning (ERP) metrics
4-10

11. WEBSITE METRICS Website metrics include: Abandoned registrations
Abandoned shopping carts
Click-through
Conversion rate
Cost-per-thousand
Page exposures
Total hits
Unique visitors
4-11

12. SUPPLY CHAIN MANAGEMENT METRICS
A supply chain is only as strong as its weakest link. The solution is to measure all key areas, which include:
Back order
Customer order promised cycle time
Customer order actual cycle time
Inventory replenishment cycle time
Inventory turns (inventory turnover)
4-12

13. CUSTOMER RELATIONSHIP MANAGEMENT METRICS
Customer relationship management metrics measure user satisfaction and interaction and include:
Sales metrics
Service metrics
Marketing metrics
4-13

14. BPR AND ERP METRICS
The balanced scorecard enables organizations to measure and manage strategic initiatives
The balanced scorecard views the organization from four perspectives:
The learning and growth perspective
The internal business process perspective
The customer perspective
The financial perspective
4-14

15. BPR AND ERP METRICS
Users should develop metrics, collect data, and analyze their business relative to each of these perspectives
4-15