CHAPTER 4 (MGT300)

Measuring the Success of Strategic Initiatives
  • Key performance indicator- measures that are tied to business drivers. 
  • Metrics are detailed measures that feed KPIs
Efficiency and Effectiveness
  • Efficiency IT metric- measures the performance of the IT system itself including throughput, speed and availability.
  • Effectiveness IT metric- measures the impact IT has on business processes and activities including customer satisfaction, conversion rates, and sell-through increases. 
Bench marking - Base lining Metrics 
  • Benchmarks- baseline values the system seeks to attain
  • Bench marking- 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. 
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 and 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 number of page views, the number of unique visitors
  • Response time- the time it takes to respond to user interactions such as a mouse click
  • Effectiveness IT metric focus on organization's goals, strategies, and objectives and include usability, customer satisfaction, conversion rates and financial. 
  • Usability- the ease with which people perform transaction and 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 and organization 'touches' for the first time and persuades to purchase its products or services. 
  • Financial- such as return on investment, cost-benefit analysis and break-even analysis. 
  • Security is an issue for any organization offering products or services over the internet.


Metrics for Strategic Initiatives
  • Metrics for measuring and managing strategic initiatives include website metrics, supply chain management metrics, customer relationship management metrics and enterprise resource planning metrics. 
WEB SITE METRICS
  • Abandoned registrations- number of visitors who start the process of completing a registration page and the abandon the activity
  • Abandoned shopping carts- number of visitors who create 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 the 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- sales dollars generated per dollar of advertising 
  • Page exposures- average number of page exposures to an individual visitor
  • Total hits- number of visits to a web sit, many of which may be the same visitor
  • Unique visitors- number of unique visitors to a site in a given time
SUPPLY CHAIN MANAGEMENT METRICS
  • Back order- an unfilled customer order. A back order is demand against an item whose current stock level is insufficient to satisfy demand
  • 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 turnover- the number of times that a company's inventory cycles or turns over per year. 
CUSTOMER RELATIONSHIP MANAGEMENT METRICS
  • Sales metrics
  • Service metrics
  • Marketing metrics
BPR AND ERP METRICS
  • The balanced scorecard enables organization to measure and manage strategic initiatives




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