CHAPTER 4: MEASURING THE SUCCESS OF STRATEGIC INITIATIVES

MGT 300 (INFORMATION TECHNOLOGY IN BUSINESS)

CHAPTER 4 - Measuring the success of strategic initiatives

1.      Define metrics and describe the relationship between efficiency IT metrics and effectiveness IT metrics.

Metrics are the detailed measures that feed those key performance indicators (KPI). Efficiency and effectiveness metrics are two primary types of IT metrics. Efficiency IT metrics measure the performance of the IT system itself including throughput, speed and availability. Effectiveness IT metrics measure the impact IT has on business processes and activities including customer satisfaction, conversion rates, and sell-through increases. Peter Drucker offers a helpful distinction between efficiency and effectiveness. Drucker states that managers “Do things right” and / or “Do the right things”. Doing things right addresses efficiency (getting the most from each resources) while doing the right things addresses effectiveness (setting the right goals and objectives and ensuring they are accomplished). Effectiveness focuses on how well an organization is achieving its goals and objectives while efficiency focuses on the extent to which an organization is using its resources in an optimal ways.

2.      Explain why a business would use metrics to measure and success of strategic initiatives.

A business uses metrics to measure and success of strategic initiatives because business leaders want to monitor key metrics in real time to actively track the health of their business. Different financial ratios are used to evaluate a company’s performance. Companies can gain additional insight into their performance by comparing financial ratios against other companies in their industry. A few of the common financial ratios include internal rate of return, return on investment, payback method and break-even analysis.  

MGT 300

CHAPTER 3: STRATEGIC INITIATIVES FOR IMPLEMENTING COMPETITIVE ADVANTAGES

SUPPLY CHAIN MANAGEMENT (SCM) – management of information flows between among stages in a supply chain to maximize total supply chain effectiveness & profitability.

 FOUR BASIC COMPONENT OF SCM:                                                                                                                                                                                            

v  SUPPLY CHAIN STRATEGY- manages all resources required to meet customer demand.

v  SUPPLY CHAIN PARTNERS- the partners chosen to deliver finished products, raw materials & services including pricing, delivery & payment process along with partner relationship monitoring metrics.

v  SUPPLY CHAIN OPERATION- schedule for production activities like testing, packaging & preparation for delivery. Measurement for this component includes quality & quantity.

v  SUPPLY CHAIN LOGISTICS- the product delivery process & elements such as orders, warehouse, carriers, defective product returns & invoicing.

~ Example of SCM system is Wal-Mart (Mydin), Procter & Gamble (P&G).

~ ADVANTAGES: saves time, reduce inventory & decrease order-processing costs.

EFFECTIVE & EFFICIENT SCM ENABLE:

CUSTOMER RELATION MANAGEMENT (CRM) – Manage all aspects of a customer’s relationship with an organization to increase customer loyalty & retention & organization’s profitability. Many organizations, such as Charles Schwab & Kaiser Permanente, have obtained great success through CRM systems. CRM is not technology but a strategy, process & business goal.

~ Example of CRM: rebate (Tesco) & flyers Courts Mammoth.

BUSINESS PROCESS REENGINEERING (BPR) – activities that accomplish a specific task, analysis & redesign of workflow within & between enterprises.

~ Example of BPR: Maybank2u

~ Principles:

1. §  Organize around outcomes, not tasks
2. §  Identify all the organization’s process & prioritize them in order of redesign urgency
3. §  Integrate information process work into real work
4. §  Treat geographically dispersed resources as tough they were centralized
5. §  Link parallel activities in the workflow instead of just integrating their results
6. §  Put the decision point where the work is performed & build control into the process
7. §  Capture information once & at the source

ENTERPRISE RESOURCE PLANNING (ERP) – integrates all departments & functions throughout an organization into a single IT system so employees can make decision by viewing enterprises wide information on all business operations.

~ Example of ERP: student portal