Chapter 4 : Measuring The Success of Strategic Initiatives

MEASURING THE SUCCESS OF STRATEGIC INITIATIVES

• Key performances indicator - measure that are tied to business drivers.
• Metrics are detailed mesures that feed KPIs
• Performances metrics fall into the business intilligence that is neither technology, nor business centered , but requires input from both IT and business professionals.

EFFICIENCY AND EFFECTIVENESS

• Efficiency IT metric - measures the performances of the IT system itself including throughput, speed, and availability.
• Effectiveness IT metric - mesures the impact IT has on business processes and activities including customer satisfaction, conversion rates, and sell-through increase.

BENCHMARKING- BASE LINE METRICS

• Benchmarking - a process of continously measuring systems results, comparing those results to optimal systems performances, and identfying steps and procedures to improve system performance.

BENCHMARKING - BASELINING METRICS

• E-government bencmarking

EFFICIENCY IT METRICS

1. Efficiency IT metrics focus on technology and include

• 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 numbers 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 time

• 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 times it takes to response to user interactions such as a mouse click.

EFFECTIVENESS IT METRICS

1. 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. A popular usability metric on the internet is 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 to investment, cost-benefit analysis.

THE INTERRELATIONSHIP OF EFFICIENCY AND EFFECTIVENESS IT METRICS

METRICS FOR STRATEGICS INITIATIVES

1. Metrics for measuring and managing strategis initiative include :

• Web site metric  

              - website metric include:

                      *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 abandone 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.

                      *Conversion rate - percentage of potiential customers who visit a site and acctually buy

                                                     something.

                      *Cost-per-thousand (CPM) - sales dollars generated per dollar of advertising.This is

                                                                     commonly used to make the case for spending money to

                                                                     appear on a search engine.

                     *Page exposures - average number of page exposures to individual visitors.

                     *Total hits - number of visit to a website, many of which may be by the same visitor

                     *Unique visitors - number of unique visitors to a site in a given time.This is commonly

                                                   used by Nielsen/Net ratings to rank the most populat web sites.

• Supply chain management (SCM) metrics

                     *Back order - an unfilled customers order .A back order is demand 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 a gap between the purchase
                                                                                     order creation date and the requested delivery
                                                                                     date.
                     *Customer order actual cycle time - the average time it take 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 manufacturing cycle time plus
                                                                                   included to deploy the product to the appropriate
                                                                                   distribution center.
                     *Inventory turns ( inventory turnover) - the number of time that a company's inventory
                                                                                     cycle or turns over per year. It is one of the
                                                                                     commonly used supply chain metrics.

• Customer relationship management (CRM) metrics.

                      *Sales metrics

                      *Service metrics

                      *Marketing metrics

• Business process reengineering (BPR) mterics & Enterpraise Resources Planning

CHAPTER 3: STRATEGIC INITIATIVES FOR IMPLEMENTING COMPETITIVE ADVANTAGE

CHAPTER 3: STRATEGIC INITIATIVES FOR IMPLEMENTING COMPETITIVE ADVANTAGE

LEARNING OUTCOME 

•  List and describe the four basic components of supply chain management
•  Explain customer relationship management systems and how they can help organizations understand their customers
• Summarize the importance of enterprise resource planning systems
•  Identify how an organization can use business process reengineering to improve its business

Organizations can undertake high-profile strategic initiatives including:

1. 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]

Four basic components of supply chain management include:

1.Supply chain strategy – strategy for managing all resources to meet customer demand

2.Supply chain partner – partners throughout the supply chain that deliver finished products, raw materials, and services.

3.Supply chain operation – schedule for production activities

4.Supply chain logistics – product delivery process

WAL- MART AND PROCTER & GAMBLE [P&G] SCM

What is the effectiveness and efficientcy of SCM systems to an organization :

1.Decrease the power of its buyers

2.Increase its own supplier power

3.Increase switching costs to reduce the threat of substitute products or services

4.Create entry barriers thereby reducing the threat of new entrants

5.Increase efficiencies while seeking a competitive advantage through cost leadership

2. Customer relationship management (CRM)

•CRM is not just technology, but a strategy, process, and business goal that an organization must embrace on an enterprisewide level

•

•CRM can enable an organization to:

–Identify types of customers

–Design individual customer marketing campaigns

–Treat each customer as an individual

–Understand customer buying behaviors

CRM OVERVIEW

3. Business process reengineering (BPR)

•Business process – a standardized set of activities that accomplish a specific task, such as processing a customer’s order

•

•Business process reengineering (BPR) – the analysis and redesign of workflow within and between enterprises

–The purpose of BPR is to make all business processes best-in-class

4. Enterprise resource planning (ERP)

•Enterprise resource planning (ERP) – integrates all departments and functions throughout an organization into a single IT system so that employees can make decisions by viewingenterprisewide information on all business operations

• Keyword in ERP is "enterprise

ERP systems collect data from across an organization and correlates the data generating anenterprisewide view

END OF CHAPTER 3 

 Identifying Competitive Advantages

Competitive Advantages

¡What is competitive advantage?

§A product or service that an organization’s customers place a greater value on than similar offerings from a competitor.

§Unfortunately, CA is temporary because competitors keep duplicate the strategy.

§Then, the company should start the new competitive advantage.

• Five Forces Models

¡Michael Porter’s Five Forces Model is useful tool to aid organization in challenging decision whether to join a new industry or industry segment.

An organization within the supply chain

• 

• Porters 3 Gerneric Strategies

Generic Strategy Example

• Realationship between business process and value chain

Targeting Business Process

Supply Chain - a chain or series of processes that adds value to product & service for customer.

Add value to its products and services that support a profit margin for the firm.

Supply Chain Diagram

 NOTES OF CHAPTER 1 : BUSINESS DRIVEN TECHNOLOGY


Information Tecnology's Role In Business

• Information technology is everywhere in business

Information Technology Impact on Business Operations

Information

•Data - raw facts that describe the characteristic of an event

•

•Information - data converted into a meaningful and useful context

•

•Business intelligence – applications and technologies that are used to support decision-making efforts

Data, Information and BI

IT Resources

IT Culture

•

Organizational information cultures include:

•Information-Functional Culture - Employees use information as a means of exercising influence or power over others. For example, a manager in sales refuses to share information with marketing. This causes marketing to need the sales manager’s input each time a new sales strategy is developed.

••Information-Sharing Culture  - Employees across departments trust each other to use information (especially about problems and failures) to improve performance.

–Information-Inquiring Culture - Employees across departments search for information to better understand the future and align themselves with current trends and new directions.

•Information-Discovery Culture - Employees across departments are open to new insights about crisis and radical changes and seek ways to create competitive advantages.

END OF CHAPTER ONE