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1. Chapter 4 Measuring the Success of Strategic Initiatives
3. 3 Overview Efficiency and effectiveness IT metrics are two ways to measure the success of IT strategic initiatives
Efficiency IT metrics measure the performance of the IT system itself including throughput, speed, availability, etc.
Effectiveness IT metrics measure the impact IT has on business processes and activities including customer satisfaction, conversion rates, sell-through increases, etc.
4. 4 Benchmarking - Baselining Metrics 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
6. 6 Efficiency IT metrics focus on technology and include: Throughput amount of information that can travel through a system at any point in time
Speed amount of time to perform a transaction
Availability number of hours a system is available
Accuracy extent to which a system generates correct results
Web traffic includes number of pageviews, number of unique visitors, and time spent on a Web page
Response time time to respond to user interactions
7. 7 Effectiveness IT metrics focus on an organizations goals, strategies, & objectives Usability the ease with which people perform transactions and/or find information
Customer satisfaction such as the percentage of existing customers retained
Conversion rates number of customers an organization touches for the first time and convinces to purchase products or services
Financial such as return on investment, cost-benefit analysis, etc.
8. The interrelationships between efficiency and effectiveness
9. 9 The interrelationships between efficiency and effectiveness 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 time. 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)
10. 10 Determining IT Efficiency and Effectiveness Customer metrics assess the management of customer relationships by the organization and include:
12. 12 Web Traffic Analysis 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
13. 13 Behavioral Metrics Click-stream data tracks the exact pattern of a consumers navigation through a Web site
Click-stream data can reveal:
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
16. 16 How Levis Got Its Jeans into Wal-Mart Formulate a strategy for how Levis can use efficiency metrics to improve its business
Formulate a strategy for how Levis can use effectiveness metrics to improve its business
17. 17 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
18. 18 Case Questions How could you use efficiency metrics to help place a value on Friendster?
How could you use effectiveness 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