Evaluation Of Business Performance.pdf

Evaluation of Business Performance (CIS412) Lecture Notes How to Measure Business Performance with Information Technology by Tara Duggan Using information technology to measure business performance involves IT systems gathering data and analyzing it. Business performance management systems allow managers to examine details about organizational activities. Once you identify the metrics you want to track, compare values over time to evaluate how your business functions. Obtaining metrics like sales, average time to resolve support incidents and operational costs typically involves linking multiple IT systems. Use IT functions to identify measures as lagging (reports past performance) and leading (predicting future performance) such as customer satisfaction or website traffic, in order to make strategic business decisions. 1. Identify your organizational mission, goals and objectives for each company department. Aligning your business performance measurement strategy with your corporate plans allows you to produce reports that provide comprehensive coverage of company functions. Typically, measuring business activities involves extracting, transforming and loading large amounts of data--usually on a nightly basis--into other systems for validation and analysis. Identifying the right data is essential to measuring business performance accurately. 2. Develop a balanced scorecard (a structured report of financial and nonfinancial information) as a business performance measurement system by gathering reporting data from each functional database. Evaluate the metrics inputs, calculations and outputs requirements. Identify the rules governing how the data collection occurs and how often updates occur. Use applications such as Oracle's Hyperion, SAP's BusinessObjects or HostAnalytics performance management software to set targets and allocate the resources to achieve your goals. Additionally, use business intelligence software such as IBM's Cognos or SAS Business Intelligence to examine operational data. 3. Set up business activity monitoring. Using IT solutions, for example, Mentisys' ProcessOne system or Categoric's products, allows you to manage to business operations workflow processes, including scheduling tasks and resources. These applications produce real-time data about processes and transactions. Analyzing results helps you improve efficiency and productivity in your business operations. 4. Establish event alerting and management. With computer programming, trigger alarms when predefined conditions occur. For example, banks often transfer money automatically. Failure to receive confirmation of transfer transactions causes email alerts to support personnel, who intervene and investigate any delays. Event alerting and management IT solutions provide measurement details preventing costly problems. Other business analytical tools such as Adeptra services or Omniture's SiteCatalyst improve your understanding of customer contact issues. For example, measure website activity such as page views and keyword search terms.

Evaluation of Business Performance Compiled by: Stefan A. D. Flores, MBA Ref. no. 2018-2019 ver. 01

Programming code include on each web page sends customer usage information to a data warehouse that you can view, filter and analyze. Using this kind of data when making business decisions helps your company respond to customer needs more effectively and improve business performance. References • • • • •

Kellen: Business Performance Measurement Oracle: Hyperion SAP: SAP BusinessObjects Portfolio IBM: Cognos Business Intelligence and Financial Performance Management HostAnalytics: Business Planning Software

Resources • • • • •

Omniture: Web Analytics Mentisys Process One SAS: Business Intelligence Categoric: Products Overview Adeptra: Welcome to Adeptra

The Three Fundamental Roles of Information Systems in Business by Julie Davoren Organizations strive to be market leaders in their given industry. In climates where factors such as recession, inflationary pressures and increased competition can hinder the achievement of this goal, companies look for strategies that lead to competitive advantages. One such strategy is the adoption of information systems within the company. Information systems help a company make adequate use of its data, reduce workload and assist with compliance with various mandatory regulations. Information Storage and Analysis At the date of publication, many companies no longer manage their data and information manually with registers and hard-copy formats. Through the adoption of information systems, companies can make use of sophisticated and comprehensive databases that can contain all imaginable pieces of data about the company. Information systems store, update and even analyze the information, which the company can then use to pinpoint solutions to current or future problems. Furthermore, these systems can integrate data from various sources, inside and outside the company, keeping the company up to date with internal performance and external opportunities and threats. Assist with Making Decisions The long-term success of a company depends upon the adequacy of its strategic plans. An organization’s management team uses information systems to formulate strategic plans and make decisions for the organization's longevity and prosperity. The business uses information systems to evaluate information from all sources, including information from external references such as Reuters or Bloomberg, which provide information on the general economy. This analysis of and comparison to market trends helps organizations analyze the adequacy and quality of their strategic decisions.

Evaluation of Business Performance Compiled by: Stefan A. D. Flores, MBA Ref. no. 2018-2019 ver. 01

Assist with Business Processes Information systems aid businesses in developing a larger number of value added-systems in the company. For example, a company can integrate information systems with the manufacturing cycle to ensure that the output it produces complies with the requirements of the various quality management standards. Adoption of information systems simplifies business processes and removes unnecessary activities. Information systems add controls to employee processes, ensuring that only users with the applicable rights can perform certain tasks. Further, information systems eliminate repetitive tasks and increase accuracy, allowing employees to concentrate on more high-level functions. Information systems can also lead to better project planning and implementation through effective monitoring and comparison against established criteria. Considerations when Implementing Information Systems Implementing information systems within an organization can prove to be costly. Implementation costs include not only installation of the systems but also employee training sessions. In addition, employees may see the adoption of information systems as an unwarranted change and, thus, may resist this change. Resistance to change can hinder business operations and can cause employee turnover. Companies should have leadership in place to assess the adequacy of the decision to have an information system and to guide the company through the transition phase and weigh information systems cost against the potential benefits. References • •

"Database Systems: Design, Implementation, and Management, 9th edition"; Carlos Coronel, et al.; 2011 "Introduction to Business Information Systems"; Rolf T. Wigand, et al.; 2003

What Are the Advantages of Information Technology in Business? by Tim Zimmer With the advent of the internet and management information systems (think computers, phones, and software), businesses have been able to transform from local mom and pop shops to international household names. In order to keep up with competition as a result of internet commercialization, companies are increasingly turning to information technology (IT) -- or hardware, software, and telecommunications networks -- to streamline services and boost performance. As such, IT has become an essential feature in the business landscape that has helped companies cut costs, improve communication, build recognition, and release more innovative and attractive products. IT Streamlines Communication Efficient communication is critical to company success. In an increasingly connected and dispersed business landscape, recruiting, retaining, and leveraging employees requires ongoing communication and collaboration. A key advantage of information technology lies in its ability to streamline communication both internally and externally. For example, online meeting and video conferencing platforms such as Skype, GoToMeeting, and WebEx provide businesses the opportunity to collaborate virtually in real-time, significantly reducing costs associated with bringing clients on-site or communicating with staff who work Evaluation of Business Performance Compiled by: Stefan A. D. Flores, MBA Ref. no. 2018-2019 ver. 01

remotely. In addition, IT allows organizations to connect almost effortlessly with international suppliers and consumers. IT Facilitates Strategic Thinking One of the fundamental advantages of IT is its ability to enhance a company's competitive advantage in the marketplace, by facilitating strategic thinking and knowledge transfer. Accessing and leveraging social networks and subscription databases, for instance, has enabled companies the ability to assemble, interpret and transfer information like never before. This has given businesses unparalleled access to customers and consumers, enabling organizations to deliver new and enhanced products. Therefore, when used as a strategic investment rather than as a means to an end, IT provides organizations with the tools they need to properly evaluate the market and to implement strategies needed for a competitive edge. IT Stores and Safeguards Valuable Information The storage, preservation, and maintenance of information -- known as information management -- is another domain in which IT shines. Information management is essential to any business that must store and safeguard sensitive information (such as financial data) for long periods of time. IT affords companies the ability to store, share, and backup files for later use, as well as protecting information from unauthorized individuals. As a result, IT gives businesses the peace of mind that the information they collect and analyze can be properly stored and safeguarded for future use. IT Cuts Costs and Eliminates Waste Although IT may seem expensive when first implemented, in the long run, however, it becomes incredibly cost-effective by streamlining a company's operational and managerial processes. The implementation of online training programs is a classic example of IT improving an organization's internal processes by reducing costs and employee time spent outside of work. In effect, IT enables companies to do more with less, without sacrificing quality or value. References • • • • • •

The Role of Information Technology in the Business Sector Impact of Information Technology and Internet in Businesses The Business Advantages of Information Technology Information Technology The Changing Role of IT in The Future of Business The Evolving Role of Information Systems and Technology in Organizations: A Strategic Perspective

How to Measure the Business Value of IT by Eileen Rojas Information technology departments that invest the time and effort to measure the business value of their services can show how IT contributes to the strategic success of their companies. When IT's value is measured through management and shareholder benefits, return on investment, net present value and employee productivity gains, the department is able to demonstrate its vital role in ensuring the

Evaluation of Business Performance Compiled by: Stefan A. D. Flores, MBA Ref. no. 2018-2019 ver. 01

company's success. The use of quantitative or financial information helps to demonstrate IT's impact on the company’s bottom line. Management and Shareholder Benefits IT investments should support company objectives and focus all of their efforts on the end users' requirements. When determining business value, it is important to note and measure the benefits provided to the business, such as increased revenue, faster access to information and better customer service. For example, IT services can enhance the customer's experience by providing a positive interaction through a well-designed website that provides excellent customer service. Comparing the cost of maintaining the website to the revenue it provides can directly show the service IT contributes to the company. Determining ROI Calculating an IT project's ROI can show management what they can expect to gain when they support new or ongoing IT investments. When costs are easily identified, ROI can be calculated by taking the investment's estimated revenue and subtracting the investment's cost. The result is divided by the investment's cost and multiplied by 100. The end result is a percentage that shows the rate of return on the IT project. Determining NPV To eliminate some of the uncertainty of investing in a long-term IT project, use NPV to arrive at a current cost figure. To calculate the NPV, you must use reasonable cost, revenue and discount rate estimates. A time period for the investment must also be determined. Use a time value of money table or the NPV formula available in most spreadsheet programs to calculate an IT project's NPV. The end result is the cost in today's dollars of future net cash inflows or outflows related to the IT project. Employee Productivity Measuring employee productivity presents a challenge to an IT department trying to quantify this benefit to an organization. For example, computer chip maker Intel identifies improvements in employee productivity by measuring time-based efficiencies gained by employees who are able to produce more. The company's formula takes into account the number of employees affected, the amount of employee time gained and average indirect employee costs. Finance and other participating business departments can provide the IT depar tment with the information and assistance to measure productivity correctly. References Intel: Measuring IT Success at the Bottom Line GSA: Measuring the Value of IT Investments, One Business Case at a Time Intel Press: Measuring the Business Value of Information Technology Baseline: How to Measure IT's Business Value

Evaluation of Business Performance Compiled by: Stefan A. D. Flores, MBA Ref. no. 2018-2019 ver. 01