BUSINESS DRIVEN TECHNOLOGY

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BUSINESS DRIVEN TECHNOLOGY Chapter Four
Measuring the Success of Strategic Initiatives
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LEARNING OUTCOMES

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

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CHAPTER FOUR 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.

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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

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BENCHMARKING BASELINING METRICS

• E-governement benchmarks for IT efficiency and
  effectiveness

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THE INTERRELATIONSHIPS OF EFFICIENCY AND
EFFECTIVENESS IT METRICS

• 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

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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 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.

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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 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)

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THE INTERRELATIONSHIPS OF EFFICIENCY AND
EFFECTIVENESS IT METRICS

• The interrelationships between efficiency and
  effectiveness

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DETERMINING IT EFFICIENCY AND EFFECTIVENESS

• Customer metrics 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

• 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

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Behavioral Metrics

• Visitor Web site metrics

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Behavioral Metrics

• Exposure, visit, and hit Web site metrics

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OPENING CASE STUDY QUESTIONSHow 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

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CHAPTER FOUR CASEHow 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 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