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Chapter 4
Measuring the Success of
Strategic Initiatives
Learning Outcomes
 Compare efficiency IT metrics and
effectiveness IT metrics
 List and describe five common types of
efficiency IT metrics
 List and describe four types of effectiveness
IT metrics
 Explain customer metrics and their
importance to an organization
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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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E-government efficiency metrics
includes:
• the number of computers
per 100 citizens
• the number of Internet hosts
per 10,000 citizens
• the percentage of the
citizen population online
E-government effectiveness metrics include
CRM practices, customer-service vision,
approaches to offering e-government services through
multiple-service delivery channels, and
initiatives for identifying services for individual citizen segments
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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Effectiveness IT metrics focus on an
organization’s goals, strategies, & objectives
 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 between
efficiency and effectiveness
The interrelationships between
efficiency and effectiveness
 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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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
 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
consumer’s 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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Visitor Web site metrics
Exposure, visit, and hit Web site metrics
How Levi’s Got Its Jeans into Wal-Mart
 Formulate a strategy for how Levi’s can use
efficiency metrics to improve its business
 Formulate a strategy for how Levi’s can use
effectiveness metrics to improve its business
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How 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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Case Questions
1. How could you use efficiency metrics to help
place a value on Friendster?
2. How could you use effectiveness metrics to help
place a value on Friendster?
3. Explain how a venture capital company can
value Friendster at $53 million when the
company has yet to generate any revenue
4. Explain why Google would be interested in
buying Friendster for $30 million when the
company has yet to generate any revenue
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