Chapter 4

Measuring Information Technology's Success

Key Performance Indicator (KPI)

Measures that are tied to business drivers

• Metrics are detailed measures that feed KPIs
• Performance metrics fall into the nebulous ares 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 throughout, 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 - Baseline 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.

Comparing efficiency IT and effectiveness IT metrics for egovernment initiatives

The Interrelationships Of Efficiency and Effectiveness IT Metric

Common types of efficiency IT metrics

Effectiveness IT metrics focus on an organization's goals, strategies and objectives include:

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)

Metrics For Strategic Initiatives

Metrics for measuring and managing strategic initiatives include:

• Website metrics
• Supply chain management (SCM) metrics
• Customer relationship management (CRM) metrics
• Business process reenginerring (BPR)
• Enterprise resource planning (ERP) metrics

Website Metrics

Supply Chain Management Metrics

Customer Relationship Management Metrics

BPR and ERP Metrics

The balanced scoreboard enables organizations to measure and manage strategic initiatives;

 

CASE STUDY - AIR ASIA "NOW EVERYONE CAN FLY"

QUESTION 1
Identify five (5) of competitive advantages used by AirAsia.

1. Launching new routes from its hub in Kuala Lumpur International Airport at breakneck speed.
2. Undercutting former monopoly operator Malaysia Airlines with promotional fares as low as RM1 (US $0.27).
3. AirAsia operates scheduled domestic and international flights and is Asia's largest low fare.
4. AirAsia pioneered low cost travelling in Asia.
5. The first airline in the region to implement fully ticketless travel and unassigned seats.

QUESTION 2
Which of the Porter's generic strategies were applied by AirAsia in the case study and
explain with examples.

- From my opinion AirAsia applied cost leadership from the porter's generic strategies. For example from the article, AirAsia operates scheduled domestic and international flights and is Asia's largest low fare,no frills airline. AirAsia pioneered low cost travelling in Asia which is then followed by Tiger Airways, Jetstar Asia, Nok Air, Lion Air and Cebu Pacific.Becoming a low-cost producer in the industry allows the company to lower prices to customers.Competitors with higher costs cannot afford to compete with the low-cost leader on price.

QUESTION 3
Based on Porter's Five Force Model, analyze AirAsia's buyer power and supplier power.

-  Based on POrter's Five Model, AirAsai's buyer power is the customers.it will HIGH when buyers have many choices of whom to buy while it will LOW when their choices are few. To reduce the buyer power (and create competitive advantage), an organization must make it more attractive to buy from the company not from the competitors. From the AirAsia they have AirAsia operates with the world's lowest unit cost of US$0.023/ASK(available seat per kilometer) and a passenger break-even load factor of 52%.AirAsia is currently the main customer of the Airbus A320. The company has placed an order of 175 units of the same plane to service its routes.For the supplier power, Air Asia assessed by the suppliers' ability to directly impact the price they are charging for suppliers. For example Air Asia is currently the main customer of the Airbus A320. The company has place an order of 175 units of the same plane to service its route network by connecting all the existing cities in the region and expending further. Usually airline industry has high supplier power has an there are limited plane and engine manufactures to choose from.