Effectiveness and Efficiency Metrics for IS and IT - Essay Example

Download file to see previous pages Efficiency metrics for IS would comprise areas such as antivirus infection rates, firewall bypass rates, denial of service (DoS) attacks stoppage, etc. Areas for IT efficiency metrics would include areas such as bit rate, bandwidth usage statistics, etc. (Khosrow-Pour, 2006). Therefore, effectiveness metrics tend to quantify the overall success of the system while efficiency metrics tend to quantify the competence of the system from an internal perspective.

Economic Value of IT
The economic value of IT to a company tends to depend on the particular business needs of the company under focus. Broadly speaking, IT tends to contribute to four major areas in nearly all businesses. These areas include (but are not limited to) the corporate market position and revenue generation; customer support for business operations; direct and indirect fiscal benefits such as cost savings; and investments in IT that enhance the business operations through value addition. Depending on the nature of the business in focus, it would be pertinent to measure the value of IT contribution accordingly (Sward, 2006).

It has been suggested that IT’s contribution to economic value can be measured most effectively considering the absence of relevant IT services to a business (Sliger & Broderick, 2008). The economic value of IT to a business can be measured best when considering what would happen if IT services and goods were removed. Although this may seem an extreme method of quantification, it provides the most realistic scenario. Similarly, businesses should focus on areas that matter most - such as the delivery of goods to customers after booking. This allows businesses to see how IT adds to the baseline operations and lets the business realize in what way the IT system would augment revenues best.

IS Value Assessment Models
The implementation of IS in a business operation is to ensure that security breaches are not able to affect the entire business operation negatively. Quantifying the returns provided by IS to a business operations environment may not be simple at all. On the one hand, some businesses are transacting secure information such as credit card numbers using IT; on the other hand, some businesses are doing little more than providing customer support online. Using similar methods to measure IS value addition for various businesses is highly unrealistic so various models are in place that depends in large part on the nature of the business in question.

It is recommended that businesses define in detail what areas are to be valued most in terms of security. The reasons behind such value addition classification should also be expounded based on value addition to business operations. Once such value-addition areas have been specified, the next step should be to classify IS value addition (Tsiakis & Pekoe, 2008).

Applicability of Traditional Financial Ratios and Measurements
Traditional financial ratios and measurements cannot be applied to IT and are directly, instead, they require some manipulation before they can be applied. It is pertinent to note that financial ratios and measurements are not fully applicable to several different IT and IS areas such as the provision of bandwidth, virus detection rates, etc. However, this does not indicate that financial ratios and measurements such as return on investment (ROI) cannot be applied to IT and IS systems at all. Instead, it must be noticed that IT and IS systems have their peculiarities that must be accounted for before fiscal ratios and measurements can be used for any relevant quantification.

It is not uncommon to apply fiscal ratios and measurements such as ROI to assess the value addition of IT and IS systems, but the traditional areas of value addition are modified to reflect actual system realities (Tsiakis & Pekoe, 2008). As long as traditional fiscal ratios and measurements are manipulated to account for IT and peculiarities, the hybrid derivatives can be used just as effectively as traditional fiscal ratios and measurements are used in fiscal transaction areas. ...Download file to see next pages Read More