Chapter 4; Measuring The Success of Strategic Initiatives

Measuring Information Technology 's Success

- Key performance indicator – measures that are tied to business drivers.

- Metrics are detailed measures that feed KPIs.

- Performance metrics fall into the nebulous area of business intelligence that is neither

technology, nor business centered, but requires input from both IT and business

professionals.

Efficiency and Effectiveness

Efficiency IT metric – measures the performance of the IT system itself including

throughput, speed, and availability.

Effectiveness IT metric – measures the impact IT has on business processes and

activities including customer satisfaction, conversion rates, and sell-through increases.

Benchmarking- Base Lining Metrics

- Regardless of what is measured, how it is measured, and whether it is for the sake of 

efficiency or effectiveness, there must be 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.

Benchmarking-base lining metrics

-E- government benchmark

Efficiency IT metrics

Effectiveness of IT metrics

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

- 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)

Metric for strategic initiatives

Metrics for measuring and managing strategic initiatives include:

 >Web site metrics

 >Supply chain management (SCM) metrics

 >Customer relationship management (CRM) metrics

 >Business process reengineering (BPR) metrics

 >Enterprise resource planning (ERP) metrics

Websites metrics

Web site metrics include:

 >Abandoned registrations

 >Abandoned shopping cards

 >Click-through

 >Conversion rate

 >Cost-per-thousand

 >Page exposures

 >Total hits

 >Unique visitors

Customer relationship management metrics

Customer relationship management metrics measure user satisfaction and interaction and

include : 

 >Sales metrics

 >Service metrics 

 >Marketing metrics



BRP and ERP Metrics
- The balanced scorecard enables organisations to measure and manage strategic initiatives.

Chapter 5 – Organizational Structures that Support Strategic Initiatives

ORGANIZATIONAL STRUCTURES

• Organizational employees must work closely together to develop strategic initiatives that create competitive advantages.
• Ethics and security are two fundamental building blocks that organizations must base their businesses upon.

INFORMATION TECHNOLOGY ROLES AND RESPONSIBILITIES

• Information technology is a relatively new functional area, having only been around formally for around 40 years.
• Recent IT – related strategic positions:

             -   Chief Information Officer (CIO)

             -   Chief Technology Officer (CTO)

             -   Chief Security Officer (CSO)

             -   Chief Privacy Officer (CPO)

             -   Chief Knowledge Officer (CKO)

 Chief Information Officer (CIO) – oversees all uses of IT and ensures the strategic alignment of IT with business goals and objectives.

-  Broad CIO functions include;

•  Manager – ensuring the delivery of all IT projects, on time and within budget.
• Leader – ensuring the strategic vision of IT is in line with the strategic vision of the organization.
• Communicator – building and maintaining strong executive relationships.

  Average CIO compensation by industry

Industry	Average CIO Compensation
Wholesale/Retail/Distribution	$ 243,304
Finance	$ 210,547
Insurance	$ 197,697
Manufacturing	$ 190,250
Medical/Dental/Health Care	$ 171,032
Government	$ 118,359
Education	$   93,750

·         What concerns CIOs the most

Percentages %	CIOs Concerns
94	Enhancing customer satisfaction
92	Security
89	Technology evaluation
87	Budgeting
83	Staffing
66	ROI analysis
64	Building new applications
45	Outsourcing hosting

o     Chief Technology Officer (CTO) – responsible for ensuring the throughput , speed, accuracy, availability and reliability of IT

o    Chief Security Officer (CSO) – responsible for ensuring the security of IT systems

o   Chief Privacy Officer (CPO) – responsible for ensuring the ethical and legal use of information

o   Chief Knowledge Officer (CKO) – responsible for collecting, maintaining and distributing the organization’s knowledge

THE GAP BETWEEN BUSINESS PERSONNEL AND IT PRSONNEL

•  Business personnel possess expertise in functional areas such as marketing, accounting and sales
•  IT personnel have the technological expertise
• This typically causes a communications gap between the business personnel and IT personnel

IMPROVING COMMUNICATIONS

• Business personnel must seek to increase their understanding of IT
• IT personnel must seek to increase their understanding of the business
•  It is the responsibility of the CIO to ensure effective communication between business personnel and IT personnel

ORGANIZATIONAL FUNDAMENTALS – ETHICS AND SECURITY

•  Ethics and security are two fundamental building blocks that organizations must base their businesses on to be successful
• In recent years, such event as the 9/11 have shed new light on the meaning of ethics and security

ETHICS 

• Ethics – the principles and standards that guide our behavior toward other people
• Privacy is a major ethical issues;

• Privacy – the right to be left alone when you want to be to have control ever your own personnel possessions and not to be observed without your consent

• Issues affected by technology advances

Intelligent property	Intangible creative work that is embodied in physical form
Copyright	The legal protection afforded an expression of an idea, such as a song, video game and some types of proprietary documents
Fair use doctrine	In certain situations, it is legal to use copyrighted material
Pirated software	The unauthorized use, duplication, distribution or sale of copyrighted software
Counterfeit software	Software that is manufactured to lock like the real thing and sold as such

•  One of the main ingredients in trust is privacy
• Primary reasons privacy issues lost trust for e-business

1.	Loss of personnel privacy is a top concern for Americans in the 21st century
2.	Among Internet users, 37 percent would be “a lot” more inclined to purchase a product on a websites that had a privacy policy
3.	Privacy/security is the number one factors that would convert Internet researchers into Internet buyers

SECURITY – HOW MUCH WILL DOWNTIME COST YOUR BUSINESS??

Sources of Unplanned Downtime
Bomb threat	Hacker	Snowstorm
Burst pipe	Hail	Sprinkler malfunction
Chemical spill	Hurricane	Static electricity
Construction	Ice storm	Strike
Corrupted data	Insects	Terrorism
Earthquake	Lightning	Theft
Electrical short	Network failure	Tornado
Epidemic	Plane crash	Train derailment
Equipment failure	Frozen pipe	Smoke damage
Evacuation	Power outage	Vandalism
Explosion	Power surge	Vehicle crash
Fire	Rodents	Virus
Flood	Sabotage	Water damage (various)
Fraud	Shredded data	Wind

·         How much will downtime cost your business??

PROTECTING INTELLECTUAL ASSETS

·         Organizational information is intellectual capital – it must be protected

·         Information security – the protection of information from accidental or intentional misuse by persons inside or outside an organization

·         E-business automatically crates tremendous information security risks for organization

Percentage of IT Budget Spent on Information Security

Average Reported Computer Security 

Expenditure/Investment per Employee 

Chapter 3: Strategic Initiatives for Implementing Competitive Advantages Supply Chain Management

Supply chain management (SCM) involves the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability. The four basic components of supply chain management are:

1. Supply chain strategy - the strategy for managing all the resources required to meet customer demand for all products and services.
2. Supply chain partners -the partners chosen to deliver finished products, raw materials, and services including pricing, delivery, and payment processes along with partner relationship monitoring metrics.
3. Supply chain operation - the schedule for production activities including testing,packaging and preparation for delivery. Measurements for this component include productivity and quality.
4. Supply chain logistics - the product delivery processes and elements including orders,warehouse, carriers, defective product returns, and invoicing.  

Effective and Efficient Supply Chain Management's Effect on Porter's Five Forces

  Effective and efficient supply chain management systems can enable an organization to:

• Decrease the power of its buyers.
• Increase its own supplier power.
• Increase switching costs to reduce the threat of substitute products or services.
• Create entry barriers thereby reducing the threat of new entrants.
• Increase efficiency while seeking a competitive advantage through cost leadership.

Customer Relationship Management

  Customer relationship management (CRM) involves managing all aspects of a customer's relationship with an organization to increase customer loyalty and retention and an organization's profitability.

CRM overview

Based on the figure,its provides an overview of a typical CRM system. Customers contact an organization through various means including call centers, web access, email, faxes, and direct sales. A single customer may access an organization multiple times through many different channels. The CRM system tracks every communication between the customer and the organization and provides access to CRM information within different systems from accounting to order fulfillment. Understanding all customer communications allows the organizations to communicate effectively with each customer.

CRM Strategy

  

  It is important to realize that CRM is not just technology, but also a strategy that an organization must embrace on an enterprise level.Although there are many technological components of CRM, it is actually a process and business goal simply enhanced by technology. Implementing a CRM system can help an organization identify customers and design specific marketing campaigns tailored to each customer, thereby increasing customer spending. A CRM system also allows an organization to treat customers as individuals, gaining important insights into their buying preferences and behaviors and leading to increased sales, greater profitability,and higher rate of customer loyalty.

Business Process Re-engineering

  A business process is a standardized set of activities that accomplish a specific task, such as processing a customer's order. Business process re-engineering (BPR) is the analysis and redesigns of workflow within and between enterprises. The concept of BPR traces its origins to management theories developed as early as the 19th century. The purpose of BPR is to make all business process the best-in-class.

Seven Principles of Business Process Re-engineering

Finding Opportunity Using BPR

  Companies frequently strive to improve their business processes by performing tasks faster, cheaper, and better.

Better, Faster, Cheaper of BPR

  Based on the figure that displays different ways to travel the same road. A company could improve the way that it travels the road by moving from foot to horse and then from horse to car. However, true BPR would look at taking different path. A company could forget about traveling on the same old road and use an airplane to get to its final destination. Companies often follow the same indirect path for doing business, not realizing there might be a different, faster and more direct way of doing business.

Pitfalls of BPR 

  One hazard of BPR is that the company becomes so wrapped up in fighting its own demons that it fails to keep up with its competitors in offering new products or services. While American Express tackled a comprehensive re-engineering of its credit card business, MasterCard and Visa introduced a new product- the corporate procurement card. American Express lagged a full year behind before offering its customers the same service.

Enterprise Resource Planning

  Today's business leaders need significant amounts of information to be readily accessible with real-time views into their businesses so that decisions can be made when they need to be, without the added time of tracking data and generating reports.Enterprise resource planning (ERP) integrates all departments and functions throughout an organization into a single IT system so that employees can make decisions by viewing enterprise-wide  information on all business operations.

Auto Insurance Claims Processes