Measuring the Success of Strategic Initiatives

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Measuring the Success of Strategic Initiatives

• Dr. Alisha D. Malloy
• MIS 200 Spring 2007
• January 25, 2007

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Learning Outcomes

• Compare efficiency IT metrics and effectiveness
  IT metrics
• List and describe five common types of efficiency
  IT metrics
• List and describe four types of effectiveness IT
  metrics
• Explain customer metrics and their importance to
  an organization

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Measuring Information Technologys 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

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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

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Benchmarking Baselining 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

How would you determine if the system
was performing faster or slower than expected if
they were not any benchmarks?
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Benchmarking Baselining Metrics

• E-governement benchmarks

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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

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The Interrelationships of Efficiency and
Effectiveness IT Metrics

• Effectiveness IT metrics focus on an
  organizations goals, strategies, and objectives
  and include
• Usability
• Customer satisfaction
• Conversion rates
• Financial

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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)

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The Interrelationships of Efficiency and
Effectiveness IT Metrics

• Interrelationships between efficiency and
  effectiveness

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Determining IT Efficiency and Effectiveness

• Customer metric assess the management of
  customer relationships by the organization and
  include
• Market share
• Customer acquisition
• Customer satisfaction
• Customer profitability

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Web Traffic Analysis

• Most companies measure the traffic on a Web site
  as the primary determinant of the Web sites
  success
• However, a large amount of Web site traffic does
  not necessarily equate to large sales
• Many organizations with high Web site traffic
  have low sales volumes

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Web Traffic Analysis

• Web site traffic analysis can include
• Cookie a small file deposited on a hard drive
  by a Web site containing information about
  customers and their Web activities
• Click-through a count of the number of people
  who visit one site and click on an advertisement
  that takes them to the site of the advertiser
• Banner ad a small ad on one Web site that
  advertises the products and services of another
  business, usually another dot-com business
• Interactivity visitor interactions with the
  target ad

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Behavioral Metrics

• Clickstream data tracks the exact pattern of a
  consumers navigation through a Web site
• Clickstream data can reveal the following
• Number of pageviews
• Pattern of Web sites visited
• Length of stay on a Web site
• Date and time visited
• Number of customers with shopping carts
• Number of abandoned shopping carts

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Behavioral Metrics

• Visitor Web site metrics include
• Unidentified visitor
• Unique visitor
• Session visitor
• Tracked visitor
• Identified visitor

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Behavioral Metrics

• Exposure metrics include
• Page exposure
• Site exposure
• Visit metrics include
• Stickiness
• Raw visit depth
• Visit depth
• Hit metrics include
• Hits
• Qualified hits

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Apple Merging Technology, Business, and
Entertainment

• Formulate a strategy describing how Apple can use
  efficiency IT metrics to improve its business
• Formulate a strategy describing how Apple can use
  effectiveness IT metrics to improve its business

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How Do You Value Friendster?

• Friendster specializes in social networking
• Friendster received over 13 million in VC
  capital
• Google recently offered to buy Friendster for 30
  million
• A venture capital company recently valued
  Friendster at 53 million
• Friendster has yet to generate any revenue

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Chapter Four Case Questions

• How could you use efficiency IT metrics to help
  place a value on Friendster?
• How could you use effectiveness IT metrics to
  help place a value on Friendster?
• Explain how a venture capital company can value
  Friendster at 53 million when the company has
  yet to generate any revenue
• Explain why Google would be interested in buying
  Friendster for 30 million when the company has
  yet to generate any revenue

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Questions