Chapter 13

PERFORMANCE
EVALUATION AND METRICS
Chapter 11

PERFORMANCE EVALUATION AND

METRICS

Introduction

When we talk about computers, speed and efficiency are key. But how do we measure
how fast or efficient a computer really is?

This is where performance evaluation and metrics come in.

Performance evaluation involves measuring how well a computer system performs
specific tasks, while metrics are the standards or criteria used for that measurement.

By understanding these, we can:

⚫ Compare computers or processors,

⚫ Improve system design
⚫ Ensure that a computer meets the needs of its users efficiently.

For example, when you compare two computers, you might notice that one starts
applications faster, while another handles multitasking better. These observations are
based on measurable performance factors such as execution time, throughput, and
CPU utilization.

Specific Objectives

1. Define performance evaluation and performance metrics in computer systems.

2. Explain the importance of evaluating computer performance.

3. Identify and describe key performance metrics

4. Apply formula to calculate system performance and speedup.

5. Analyze and interpret system performance using examples and activities.

Duration
Chapter 11: Buses and communication technique = ___ hours
What is Performance Evaluation?
Performance metrics are data and calculations that businesses use to track activities,
behaviors and capabilities within an organization. Some performance metrics, such as
operating cash flow ratio, measure financial performance. Others, including mean time to
repair, keep track of operational performance. Performance metrics can be implemented at the
individual, team or organizational level of a business.

Each function within a business is beholden to relevant performance metrics. Sales teams
are tracked against metrics like lead-to-sale conversion rates, while project management
teams must track metrics like cost performance index. Then there are those all-important
performance metrics, such as net income and net profit margin, that the entire organization
contributes to. After all, profitability is the ultimate goal that all other performance
management efforts are designed to support.

Perfomance Metrics?
Performance metrics offer a way for business stakeholders to continually assess the
financial health and productivity of various business areas. These metrics vary in format and
relevance depending on the stakeholder's role and the objectives being managed.

For example: an investor might focus on high-level metrics like earnings before interest,
taxes, depreciation, and amortization (EBITDA). In contrast, a CEO may track revenue
growth, profit margin, and customer satisfaction. Project management executives might
prioritize cost variance and cycle time, while human resources (HR) managers might focus on
employee satisfaction and engagement.

Some performance metrics, such as return on investment (ROI), are universally

applicable across industries. Others are industry-specific, like bed utilization rates in hospitals
or sales per square foot in retail. Regardless of the metric, effective tracking and measurement
can drive accountability and improvement, aligning with the adage, "If it can be measured, it
can be managed."

To extract value from performance metrics, businesses should:

⚫ Ensure metrics are accurately, consistently, and frequently collected to maintain

trustworthiness.

⚫ Measure aspects that genuinely matter to leadership objectives.

⚫ Make metrics easily accessible, fostering transparency and effective use.

⚫ Tie metrics to consequences, promoting accountability and favorable outcomes.

Performance metrics gain significance when compared to other key information, such as:

⚫ Changes over time, especially after business decisions or actions.

⚫ Comparisons with industry standards or competitors.

⚫ Evaluations of a business unit’s performance relative to the rest of the organization.

⚫ Correlations with profitability or productivity.

While often used interchangeably, performance metrics and key performance indicators
(KPIs) differ slightly. Performance metrics are general measures, where as KPIs are
strategically chosen to monitor and drive progress toward specific goals. For example, cost of
goods sold (COGS) is a general performance metric but can become a KPI if used to measure
cost management performance.

Quantitative vs Qualitative metrics

Performance metrics can typically be divided into two buckets: quantitative and
qualitative. Quantitative metrics are the straightforward measures that can be calculated easily
without any kind of human judgment or subjective ranking. Financial performance metrics are
some of the most significant measures that fall into this category. Qualitative metrics, on the
other hand, tend to track opinions or subjective traits, such as service levels, satisfaction and
loyalty. They’re usually a quantitative interpretation of judgments that are measured through
surveys or feedback.

Common examples of quantitative metrics tracked by companies are sales growth, gross
profit, customer retention rates and employee absenteeism rates. In contrast, common
examples of qualitative metrics include customer satisfaction, brand value, net promoter
scores and employee satisfaction.

Performance metrics are quantitative measures that describe how effectively a computer
or system performs.

Metrics Definition Example/Unit

Execution time (Response Time taken by the system to 5 seconds per task
time) complete a task or program.

Throughput Number of tasks completed 100 task per second

per unit time

Latecy Time delay between request Delay in loading a webpage

and response

CPU utilization Percentage of time CPU is 90% utilization

actively processing

Bandwidth Amount of transmitted per 50 Mbps internet speed

unit time

Efficiency Rtio of useful work to total Higher efficiency = less idle

work done time
7 types of performance metrics
1. Business Performance Metrics

Business performance metrics encompass measurements across finance, operations,

marketing, sales, and customer relations. They provide a comprehensive view of the business,
aiding strategic planning.

Examples:

◼ Gross Revenue: Sales and revenue generation.

◼ Return on Investment (ROI): Investment performance.

◼ Employee Turnover Rate: Employee retention effectiveness.

◼ Cost of Goods Sold (COGS): Direct costs of goods sold.

◼ Customer Satisfaction Rate: Customer satisfaction levels.

◼ Revenue vs. Forecast Variance: Revenue performance against forecasts.

2. Financial Performance Metrics

Financial performance metrics track a company's financial health and performance,

typically derived from accounting data.

Examples:

◼ Net Income: Profit after deducting costs.

◼ Net Profit Margin: Profit per dollar of revenue.

◼ Operating Cash Flow Ratio: Ability to pay short-term liabilities.

◼ Debt-to-Equity Ratio: Company leverage.

◼ Accounts Receivable Turnover: Effectiveness in collecting money.

◼ Days Sales Outstanding (DSO): Speed of customer payments.

3. Operational Performance Metrics

Operational performance metrics measure how well a company executes its processes,
focusing on productivity, efficiency, quality, and safety.

Examples:

◼ Production Downtime: Time when systems are non-operational.

◼ Production Downtime Costs: Lost revenue due to downtime.

◼ Throughput: Volume of products made.

◼ On-Time Delivery: Timeliness of product delivery.

 ◼ Rate-of-Return Merchandise Authorizations (RMAs): Customer return rates.

◼ Mean Time to Repair (MTTR): Time to fix equipment.

◼ First-Time Fix Rate: Effectiveness of resolving problems initially.

◼ Service Level Agreement (SLA) Compliance Rate: Meeting contractual SLAs.

4. Sales Performance Metrics

Sales performance metrics provide visibility into sales volumes, team productivity, and
marketing effectiveness.

Examples:

◼ Quote-to-Close Ratio: Effectiveness in closing sales.

◼ Month-over-Month Growth: Sales capability in generating new business.

◼ Lead-to-Sale Conversion Rate: Success in converting leads.

◼ Customer Lifetime Value (CLV): Value of continued service and sales.

◼ Customer Acquisition Cost (CAC): Efficiency of sales and marketing spend.

5. Project Management Performance Metrics

Project management performance metrics monitor the advancement and financial

outcomes of projects.

Examples:

◼ Planned Value: Approved value of work.

◼ Earned Value: Actual value earned.

◼ Resource Capacity: Availability of resources.

◼ Cost Performance Index (CPI): Project cost effectiveness.

◼ Schedule Variance (SV): Schedule adherence in dollar value.

6. Marketing Performance Metrics

Marketing performance metrics measure the effectiveness and cost efficiency of

marketing efforts.

Examples:

◼ Cost Per Lead: Cost of generating new leads.

◼ Click-Through Rate (CTR): Likelihood of prospects clicking for more

information.
 ◼ Lead-Conversion Rate: Effectiveness in converting visitors to leads.

◼ Customer Acquisition Cost Payback Period: Time to recoup marketing

investments.

7. Employee Performance Metrics

Employee performance metrics assess productivity, engagement, and efficiency.

Examples:

◼ Payroll-to-Revenue Ratio: Workforce productivity in generating revenue.

◼ Employee Productivity Rate: Individual productivity.

◼ Error Rate: Frequency of errors.

◼ Employee Satisfaction Rate: Employee satisfaction levels.

◼ Employee Turnover: Likelihood of employee departure.

Key Performance Equations

1. Basic relationship

1
𝑃𝑒𝑟𝑓𝑜𝑟𝑚𝑎𝑛𝑐𝑒 =
𝐸𝑥𝑒𝑐𝑢𝑡𝑖𝑜𝑛 𝑡𝑖𝑚𝑒

The lower the execution time, the higher the performance.

2. CPU time formula

CPU Time=(Instruction Count)×(CPI)×(Clock Cycle Time)

Or

𝐼𝑛𝑠𝑡𝑟𝑢𝑐𝑡𝑖𝑜𝑛 𝐶𝑜𝑢𝑛𝑡 𝑥 𝐶𝑃𝐼

𝐶𝑃𝑈 𝑡𝑖𝑚𝑒 =
𝐶𝑙𝑜𝑐𝑘 𝑅𝑎𝑡𝑒

Where:

⚫ Instruction Count (IC): Number of machine instructions executed.

⚫ CPI (Cycles Per Instruction): Average number of cycles per instruction.
⚫ Clock Cycle Time: Time per clock cycle (inverse of clock rate)

3. Speedup Formula

𝐸𝑥𝑒𝑐𝑢𝑡𝑖𝑜𝑛 𝑇𝑖𝑚𝑒 (𝑜𝑙𝑑)

𝑆𝑝𝑒𝑒𝑑𝑢𝑝 =
𝐸𝑥𝑒𝑐𝑢𝑡𝑖𝑜𝑛 𝑇𝑖𝑚𝑒 (𝑁𝑒𝑤)
Used to compare how much faster one system or improvement is compared to another.

Example Problem
Example 1:
A CPU has a clock rate of 2 GHz, executes 4 × 10⁹ instructions, and has an average CPI of 2.
Find the CPU Execution Time.

Solution:

4 𝑥 109 𝑥 2
𝐶𝑃𝑈 𝑇𝑖𝑚𝑒 = 4 𝑆𝑒𝑐𝑜𝑛𝑑𝑠
2 𝑥 109

The CPU takes 4 seconds to complete the program.

Example 2:
System A takes 10 seconds to execute a task, while System B takes 5 seconds.
Find the Speedup of System B.

10
𝑆𝑝𝑒𝑒𝑑𝑢𝑝 = 2
5

System B is twice as fast as System A.

Analogy for understanding

Imagine a restaurant kitchen:

⚫ Execution Time → How long it takes to cook one dish.

⚫ Throughput → How many dishes are served in an hour.
⚫ Latency → The waiting time before the cooking starts.
⚫ CPU Utilization → How busy the chef is.
⚫ Efficiency → How well the chef uses ingredients and tools.

A high-performance kitchen, like a good computer, is fast, consistent, and efficient.

 Activity 1
Direction: Answer the following questions given. 10 points equivalent on each question.

1. Define “Performance Evaluation”

2. Explain why performance evaluation is important in computer system design.

3. Write the formula for CPU Time and define all variables.