Chapter 4

WHAT IS METRICS???

IT Operations involves the processes that are responsible for the day-to-day supervision and management of the conduct of IT. With the use of appropriate metrics, IT Operations can be monitored, its performance aligned with targets, and its trends observed. Correct metrics allow IT goals to be put in line with business goals, improving the conduct and success of the company’s business.

Generically, the term "metrics" refers to performance measures and operating statistics about any aspect of an organization. These measurements are usually contrasted against predefined targets or goals. Metrics can be implemented organization-wide as part of a comprehensive program or can be implemented at any level of the organization by individual units. The term "performance measurement" is synonymous with metrics.

Relationship between efficiency it and effectiveness it metrics :

Efficiency: doing things the right way

Effectiveness: doing the right things

Equality: doing things fairly

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.

•         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

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

•         Effectiveness IT metrics focus on an organization’s 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.

•         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)

•         The interrelationships between efficiency and effectiveness

•         E-governement benchmarks for IT efficiency and effectiveness

 

 

Metrics for strategic initiatives

•  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 then abandon)

·       Click-through (count the number of people who visit a site, click on ad, and then are taken to the site of the advertiser)

·       Conversion rate (Percentage of potential customers who visit a site and actaully buy something)

·       Cost-per-thousand (CPM) (sales dollars generated per dollar of advertisitng. This is commonly used ot make the case for spending money to appear on a search engine / how much does it cost the company to get 1,000 views?)

·       Total hints (number of visits to a website, many of which may be by the same visitors)

·       Unique Visitors (the number of unique visitors to you sites a a given time. Commonly used to rate the most popular websites)

• Supply chain management (SCM) metrics
  
  
  ·       Back Order (An unfilled customer order for a product that is out of stock)
  ·       Customer order promised cycle time (the anticipated or agreed upon cycle time of a purchase order. it is the gap between the purchase order creation date and the requested delivery date)
  ·       Customer order actual cycle time (the average time it takes to actually fill a customer's purchase order. This measure can be viewed on an order or an order line level)
  ·       Inventory replenishment cycle time (measure of the manufactoing cycle time plus the time included to deploy the product to the appropriate distribution center)
  ·       Inventory turns (Number of times inventory turns during a one year period. One of the most commonly used SCM metrics.)
  
  
   Customer relationship management (CRM) metrics
  
  
  Business process reengineering (BPR) metrics
  
  
  Enterprise resource planning (ERP) metrics