chapter 4 question.. hahaha..

CHAPTER 4: MEASURING THE SUCCESS OF STRATEGIC INITIATIVES..

Define metrics and describe the relationship between efficiency IT metrics and effectiveness IT metrics..

Ø  Efficiency IT metrics from the table is the important to monitor, do not always guarantee effectiveness…

Ø  For effectiveness IT metrics, it is determined according to an organization’s goals, strategies and objectives…

	EFFICIENCY IT METRICS
Throughput	The amount of information that can travel trough 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 security	The extent to which a system generates the correct results when executing the same transaction numerous times…
Web traffic	Includes a host of brenchmarks such as the number of pages 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
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 branchmarks as satisfaction surveys, percentage of existing customers retained and increases in revenue dollars percustomer…
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 comparisonof projected revenues and costs including development, maintenance fixed, and variable), and break-even analysis (the point at which constant revenues equal ongoing costs)…

Explain why a business would use metrics to measure the success of strategic initiatives…

Ø  A metric is nothing more than a standardmeasure to assess performance in a particular area…

Ø  Metrics are the heart of a good, customer-focused management system and any program directed at continuous improvement…

Ø  Companies can gain additional insight into their performance by comparing financial ratios against other companies in their industry…

Ø  A few of the more common financial ratios include:

v  Internal rate of return (IRR) - the rate at which the net present value of an investment equals zero…

v  Return on investment (ROI) – indicates the earning power of a project and is measured by dividing the benefits of a project by the investment…

v  Payback method – number of years to recoup the cost of an initiatives based on projected annual net cash flow…

v  Break-even analysis – determines the value of business required to make a profit at the current prices charged for the products or services…

Ø  Most managers are familiar with familiar with financial metrics but unfamiliar with information system metrics…

Ø  The following metrics will help managers measure and manage their strategies initiatives:

v  Website metrics…

v  Supply chain management (SCM) metrics…

v  Customer relationship management (CRM) metrics…

v  Business process reengineering (BPR) metrics…

v  Enterprise resource planning (ERP) metrics…