A
business metric is any type of measurement used to gauge some quantifiable
component of a company's performance. Business metrics are part of the broad
area of business intelligence, which comprises a wide variety of applications
and technologies for gathering, storing, analyzing, and providing access to
data to help enterprise users make better business decisions. Metrics are about
neither technology nor business strategy. 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. 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 way. However,
operating in the upper left-hand corner (minimal effectiveness with increased
efficiency) or the lower right-hand corner (significant effectiveness with
minimal efficiency) may be in line with an organization’s particular
strategies. In general, operating in the lower left-hand corner (minimal
efficiency and minimal effectiveness) is not ideal for the operation of an
organization.
·
Explain why a business would use
metrics to measure the success of strategic initiatives.
Metrics
are the heart of a good, customer-focused management system and any program
directed at continuous improvements. A focus on customers and performance
standards shoes up in the form of metrics that assess the ability to meet
customers’ needs and business objectives. The following metrics will help
managers measure and manage their strategic initiatives:
Business
Process Reengineering (BPR) and Enterprise Resource Planning (ERP) Metrics
1.
Business Process Reengineering (BPR) and
Enterprise Resource Planning (ERP) Metrics are large organization
initiatives. Measuring these type of strategic initiatives is extremely
difficult. One of the best methods is the balance scorecard.
2.
Balance Scorecard: is the
management system, in addition to a measurement system, that enables
organizations to clarify their vision and strategy and translate them into
action. It provides feedback around both the internal business processes and
external outcome in order to continuously improve strategic performance and
results.
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