Matakuliah
Tahun
: A0784 - Strategi Investasi IT
: 2009
Measuring IT Performance
Pertemuan 5-6
Introduction
•Before evaluating the investment, it must be
measured in some way for comparison.
•There are issues of measuring business
effectiveness and efficiency
Bina Nusantara University
3
Economics of Information
• Systematic series of concepts and theories that explain
the role which information and IT play to assist an
organization with product and service design,
development, manufacture, and delivery
• Presents rules to asses the expected and actual impact
of investing in a particular IT
Bina Nusantara University
4
Why measure IT performance?
• Allow decision makers to asses the business value and
the efficiency of an IT
• Evaluate effects of IT to justify initial investment and
impact after implementation
• Provide facts to allocate resources in optimal way
• Allow to monitor cost and prioritize different IT projects
Bina Nusantara University
5
Financial performance measures
Profitability measures :
• Return on equity
• Return on assets
• Return on investment
• Return on sales
• Earnings per share
• Revenue growth
Efficiency measures :
• Sales by total assets
• Sales by employee
• Inventory turnover
Bina Nusantara University
6
Business performance measures
From customer perspective :
• Cost effectiveness
• Delivery speed
• Support availability
• On-time delivery
• Defective products/services
• Training support
• Responsive support
Bina Nusantara University
7
Business performance measures
From internal perspective :
• Efficient development
• Quality development
• Low levels of rework
• Competent employees
• Highly skilled employees
Bina Nusantara University
8
Business performance measures
From innovation and learning perspective :
• Highly skilled employees
• Protect knowledge based on employees
• Increased market offerings
• Encourage innovative research
• Improve innovative thinking
• Foster innovative research
Bina Nusantara University
9
Business performance measures
From financial perspective :
• Profitable business
• Profitable use of IT
• Profitable IT development
• Efficient maintenance
• Reliable planners
Bina Nusantara University
10
IT cost categorizations
Cost by activity :
• Development costs
• Maintenance costs
• Operating costs
• User support costs
• Administration and other costs
Costs by resources :
• Technology costs
• Personnel costs
• Outside services costs
• Other costs
Bina Nusantara University
11
Measures of IT effectiveness
1. IT supports business process.
Criteria :
• Coverage of management business process
• Coverage of operational business process
Steps :
a. Identify business process
b. Identify types of IT
c. Create matrix of business process and current IT
application
d. Calculate ratio of actual to potential application
Bina Nusantara University
12
Measures of IT effectiveness
2. IT supports employees.
Criteria :
• Reliability of IT applications and information
• Accessibility and security of information
• Flexibility of IT
• Ease of use
Steps :
a. Identify IT capabilities
b. Define effectiveness criteria
c. Develop measures
Bina Nusantara University
13
Measures of IT effectiveness
3. IT sourcing function.
Criteria :
• Ease operation of IT, maintenance and expansion
• Ease to repair, test, transfer and link
• Extent to be reused and meet security necessities
Objective:
• Handle cost successfully
• Optimize asset utilization & staff levels
• Be an efficient developer & supplier
Bina Nusantara University
14