Sunday, 26 July 2015

Chapter 4: Measuring Information Technology Success

Measuring Information Technology 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 and business professionals

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

Benchmarking - Base Lining Metrics

Regardless of what is measured, how it is measured, and whether it is for the sake of efficiency or effectiveness, there must be 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 and include:

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 : 
1) Effectiveness IT metrics focus on an organization’s goals, strategies, and objectives and include:
Customer satisfaction
Conversion rates

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).

Metrics for Strategic Initiatives : 
1) Metrics for measuring and managing strategic initiatives include:
Web site metrics
Supply chain management (SCM) metrics
Customer relationship management (CRM) metrics
Business process reengineering (BPR) metrics
Enterprise resource planning (ERP) metrics   

Web sites Metrics include : 
Abandoned registrations
Abandoned shopping cards
Conversion rate
Page exposures
Total hits
Unique visitors

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 : Sales dollars generated per dollar of advertising. This is commonly used to make the case for spending money to appear on a search engine.

Customer Relationship Management :
1)  Customer relationship management metrics measure user satisfaction and interaction and include
Sales metrics
Service metrics
Marketing metrics

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