How to evaluate system performance

System performance is typically evaluated from two perspectives, efficiency and effectiveness. The book gives you approaches for understanding both terms. Let me give you another, simple way of distinguishing between the two terms. I like to think of efficiency as “doing things right.” I think of effectiveness as “doing the right things.” The ideal is to be efficient and effective. However, sometimes one gets sacrificed for the other. That sacrifice should be a management decision.

Efficiency improvement could include conversion from paper-based records management to electronic record management. For example, the University changed its staff vacation and sick day paper system to an electronic attendance system. This eliminates handling of paper and speeds the review and approval process of vacation and sick day reporting.
Improvements in efficiency often results in a reduction of staff, reduction in waste, meeting customer orders on time, billing customers more quickly, paying suppliers more quickly, and cost reductions.

Improvements in effectiveness are demonstrated by better supplier relationships, better customer relations, increased profitability, and growth. The use of a customer relationship management system (CRM) could be used to track customer purchases and collect other customer information. This information could then be used to identify new product offerings or product enhancements designed for specific customer needs.