CHAPTER 4 MEASURING THE SUCCESS OF STRATEGIC INITIATIVES

MEASURING THE SUCCESS OF STRATEGIC INITIATIVES

Key performance indicators(KPIs)- are the measure that are tied to business drivers. Metrics are detailed measures that fed those KPIs.

EFFICIENCY AND EFFECTIVENESS

Efficiency IT metrics- measure the performance of the IT systems itself including throughout speed and availability. It focus on the extent to which an organization is using its resources in an optimal way.

Effectiveness IT metrics- measure the impact IT has on business processes and activities including customer satisfaction, conversation rates, and self-through increases. It focuses on how well an organization is achieving its goals and objectives.

BENCHMARKING-BASELINE METRICS

Benchmarking- is a process of continuously measuring system result, comparing those results to optimal system performance (benchmark value), and identifying steps and procedures to improve system performance.

THE INTERRELATIONSHIPS OF EFFICIENCY AND EFFECTIVENESS IT METRICS

Efficiency IT metrics focus on the technology itself. There are the most common types of efficiency IT metrics.

EFFICIENCY IT METRICS

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 mouse click.

Effectiveness IT metrics are determined according to an organization’s goals, strategies, and objectives.

EFFECTIVENESS IT METRICS

Usability	The ease with which people perform transactions and/or find information. A popular usability metric on the internet 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 customers.
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-benefits 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

·       A company can gain additional insight into their performance by comparing financial ratios against other companies in their company.

·       A few of more common financial ratios include:

                     i.        Internal rate of return(IRR)

                   ii.        Return on investment(ROI)

                 iii.        Payback method

                 iv.        Break-even analysis

 

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

WEBSITE METRIC

     i.        Most companies measure the traffic on a website as the primary determinant of the website’s success.

   ii.        A company can used web traffic analysis or web analytics to determine the revenue generated, the number of customer acquired, any reductions  in customer service calls and so on.

WEBSITE METRICS

·       Abandoned registrations: number of visitors who start the process of completing a registration page and then abandon the activity.

·       Abandoned shopping carts: number of visitors who create a shopping cart and start shopping and then abandon the activity before paying for the merchandise.

·       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.

·       Conversation 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 a commonly used to make the case for spending money to appear on a search engine.

·       Page exposures: average number of page exposures to an individual visitor.

·       Total hits: number of visits to a website, many may be the same visitor.

·       Unique visitors: number of unique visitors to a site in a given time.

SUPPLY CHAIN MANAGEMENT (SCM) METRICS.

     i.        Can help an organization understand how it’s operation over a given time period.

   ii.        Can cover many areas including procurement, production, distribution, warehousing, inventory, transportation, and customer service.

SUPPLY CHAIN MANAGEMENT METRICS

·         Back order: an unfilled customer order. A back order is demand (immediate or past due) against an item whose current stock level is insufficient to satisfy demand.

·       Customer order promised cycle time: the anticipated or agreed upon cycle time of a purchase order. It is gap between the purchase order creation date and requested delivery date.

·         Customer order actual cycle time: the average times it takes to actually fill a customer’s purchase order. This measure can be viewed on an order line level.

·         Inventory replenishment cycle time: measure of the manufacturing cycle time plus the time included to deploy the product to the appropriate distribution center.

·         Inventory turns(inventory turnover): the number of times that a company’s inventory cycles or turns over per year. It is one of the most commonly used supply chain metrics.

CUSTOMER RELATIONSHIP MANAGEMENT (CRM) METRICS

SALES METRICS	SERVICE METRICS	MARKETING METRICS
o   Number of prospective customers	o   Cases closed same day	o   Number of marketing campaigns
o   Number of new customers	o   Number of cases handled by agent	o   New customer retention rates
o   Number of retained customers	o   Number of service calls	o   Number responses by marketing campaign
o   Number of open leads	o   Average number of service request by type	o   Number of purchases by marketing campaign
o   Number of sales calls	o   Average time to resolution	o   Revenue generated by marketing campaign
o   Number of sales calls per lead	o   Average number of service calls per day	o   Cost per interaction by marketing campaign
o   Amount of new revenue	o   Percentage compliance with service-level agreement	o   Number of new customer acquired by marketing campaign
o   Amount of recurring revenue	o   Percentage of service renewals	o   Customer retention rate
o   Number of proposals given	o   Customer satisfaction level	o   Number of new leads by product

BUSINESS PROCSS REENGINEERING (BPR) AND ENTERPRISE RESOURCE PLANNING (ERP) METRICS

·         The balanced scoreboard is management system, in addition to a measurement system, that enables organizations to clarify their vision and strategy and translate them into action.

·         Provides both internal and external business processes in order to continuously improve strategic performance and results.

·         The balanced scoreboard views organization from four perspectives:

      

  1. The learning and growth perspectives.

2. the internal business perspectives.

3. the customer perspectives.

4. the financial perspectives.

END OF CHAPTER 4........ :)