Measuring the Success of Strategic Initiatives

CHAPTER 4

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Designing metrics requires an expertise that neither IT nor business professional usually possess.Metrics are about neither technology nor business strategy.

Key Perfomance Indicator (KPIs)
The measures that are tied to business drivers. Metrics are the detailed measures that feed those KPIs.

Efficiency and Effectiveness

• Efficiency IT metrics : Measure the perfomance of the IT system itself including throughput, speed, and availability.
• Effectiveness  IT metrics : Measure the impact IT has on business processes and activities including customer satisfaction, conversion rates, and self-through increases.

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 perfomance (benchmark values), and identifying steps and procedures to improve system perfomance.

The Interrelationship of  Efficiency and Effectiveness  IT Metrics

Efficiency IT Metrics focus on technology and include :

1. Throughput – amount of information that can travel through a system at any point in time
2. Speed – amount of time to perform a transaction
3. Availability – number of hours a system is available
4. Accuracy – extent to which a system generates correct results
5. Web traffic – includes number of pageviews, number of unique visitors, and time spent on a web page
6. Response time – time to respond to user interactions

Effectiveness  IT Metrics focus on an organization's goals, strategies and objectives.

1. Usability – the ease with which people perform transactions and/or find information
2. Customer satisfaction –  such as the percentage of existing customers retained
3. Conversion rates – number of customers an organization “touches” for the first time and convinces to purchase products or services
4. Financial – such as return on investment, cost-benefit analysis, etc

 Metrics for Strategic Initiatives
A metric is nothing more than a standard measure to assess perfomance in a particular area. Most managers are familiar with financial metrics but unfamiliar with information system metrics. The following metrics will help managers measure and manage their strategic initiatives : 

• Website Metrics

Most companies measure the traffic on a website as the primary deterinant of the website's success. A company can use web traffic analysis or web analytics to determine the revenue generated, the number of new customers acquired, and so on.

• Supply Chain Management (SCM) Metrics

Can help an organization understand how it's operating over a given time period. SCM can cover many areas including procurement, production, distribution, inventory, transportation

• Customer Relationship Management (CRM) Metrics

Wondering what CRM metrics to track and monitor using reporting and real-time perfomance dashboards?

• Business Process Reengineering (BPR) and Enterprise Resource Planning (ERP) Metrics.

Addressing some of the weaknesses and vagueness of previous measurement techniques, the balanced scorecard approach provides a clear prescription as to what companies should measure in order to balance the financial perspective. 

The balanced scorecard is a management system, that enables organizations to clarify their vision and strategy and translate them into action. It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic perfomance and results