CHAPTER 4: MEASURING THE SUCCESS OF STRATEGIC INITIATIVES

Assalamualaikum. 

On this chapter, I have learned on how we can measure the success of strategic initiatives. Everyone knows that the IT has become important part of the strategies to make the organization more successful. How can we measure the success of strategic initiatives is by understanding about the IT. 

Key Performance Indicators (KPIs)  : the measure that is tied to business drivers.  Performance metrics fall into a nebulous area of business intelligence that is neither technology nor business-centered, but this area requires input from form both IT and business professionals to find success.

EFFICIENCY AND EFFECTIVENESS.

In order to have a success in measuring the strategic initiatives, the organization should have the efficiency and effectiveness. Efficiency and effectiveness metrics are two primary types of IT metrics.

Efficiency IT metrics measure the performance of IT system itself including throughput, speed, and availability. Efficiency is a productivity metrics meaning how fast one can do something by using its resources in an optimal way. For example, testing efficiency metric can be "Number of test cases executed per hour or per person day". This explains how efficient (i.e. fast) the person is at testing

Effectiveness IT metrics measure the impact IT has on business processes and activities including customer satisfaction, conversion rates, and sell-through increases. It also explain how well an organization is setting the right goals and objectives and ensuring they are achieved.

Thus, the two efficiency and effectiveness are definitely interrelated.

BENCHMARKING.

There must be benchmarks when want to measure the success based on effectiveness or efficiency. Benchmarking is a process of continuously measuring system results, comparing those results to optimal system performance and identifying steps and procedures to improve system performance.

THE INTERRELATIONSHIP OF EFFECIENCY AND EFFECTIVENESS IT METRICS

Figure 1: interrelationship between efficiency and effectiveness

MATRIX FOR STRATEGIC INITIATIVES.

Ø  A metric is nothing more than a standard measure to assess performance in a particular area. Metrics are at the heart of a good, customer-focused management system and any program directed at continuous improvement which want to meet the customers’ needs and business objectives. Moreover, business leader want to monitor key metrics in real time to actively track the health of their business which they familiar with financial metrics. Different financial ratios are used to evaluate a company’s performance.

Here a few of the more common financial ratios include:

·         Most managers are familiar with financial metrics but unfamiliar with information system metrics. The following metrics will help managers measure and manage their strategic initiatives:

1.       WEBSITE METRICS

2.      SUPPLY CHAIN MANAGEMENT (SCM) METRICS

3.       CUSTOMER RELATIONSHIP MANAGEMENT (CRM) METRICS

4.      BUSINESS PROCESS REENGINEERING (BPR) METRICS

5.      ENTERPRISE RESOURCE PLANNING  (ERP) METRICS

•    Website Metrics

Most companies measure the traffic on a website as the primary determinant of the website's success. A company can use web traffic analysis or web analytic to determine the revenue generated, the number of new customers acquired, and so on.

• SUPPLY CHAIN MANAGEMENT (SCM) METRICS

Can help an organization understand how it's operating over a given time period. SCM can cover many areas including procurement, production, distribution, inventory, transportation

• Customer Relationship Management (CRM) Metrics

Wondering what CRM metrics to track and monitor using reporting and real-time performance dashboards?

• Business Process Reengineering (BPR) and Enterprise Resource Planning (ERP) Metrics.

Addressing some of the weaknesses and vagueness of previous measurement techniques, the balanced scorecard approach provides a clear prescription as to what companies should measure in order to balance the financial perspective. 

The balanced scorecard is a management system that enables organizations to clarify their vision and strategy and translate them into action. It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results

      How to measure BPR and ERP by using balanced scorecard???

The balanced scorecard views the organization from four perspective and users should develop metrics, collect data and analyze their business relative to each of these perspectives:

                    i.            The learning and growth perspective

                  ii.            The internal business process perspective

                iii.            The customer perspective

                 iv.            The financial perspective

take a break! see u later....tq... :D