[8] 2002 e-business-strategies-for-virtual-organizations

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Evaluating strategies for e-business change In practice, a company looking to build a scorecard would first secure the understanding and support of business and IT management who must be committed to the integration of business and IT strategies to lead to success. Following this, data would be gathered on measures and metrics in place which can be used – much performance measurement and assessment of drivers will probably already be in place. Third, the companyspecific scorecard is to be developed. The emphasis of the BSC is to capture real meaning by including both quantitative and qualitative information on a mix of outcomes (lag indicators) and performance drivers (lead indicators). The portfolio of measures thus created offers an alternative approach to the use of incentive compensation payments tied to traditional simplistic formulae of past performance. A wellconstructed scorecard will contain a good mix of measurable outcomes and performance drivers. Outcomes such as productivity measures alone, without linked performance drivers, will not show how these outcomes are to be achieved. Similarly performance drivers put in place with no links to outcomes may indeed result in short-term improvements, but will not show any correlation between resources put into these and financial outcomes. This latter is imperative for the success of this method: ‘A failure to convert improved operational performance into improved financial performance should send executives back to the drawing board to rethink the company’s strategy or its implementation plans’ (Kaplan and Norton 1996). 8.5.2 Implementing the BSC Ten steps are suggested for successful implementation of a Balanced Scorecard approach: � Focus on the strategic direction: all business units should be aware of the overall strategy and organizational mission. � Use a grassroots approach: the smallest viable strategic business unit (SBU) should be the locus of implementation. � Use a less-is-more philosophy: choose between six and eight key performance indicators (KPI) for each SBU rather than 30. � Link performance measures to key success factors: ensure that you have identified reasonable and achievable measures for success. � Treat the Balanced Scorecard implementation as a strategic initiative: this is not a control system. 177
e-Business Strategies for Virtual Organizations 178 � Search for leading indicators: emphasize lead rather than lag indicators. � Search for cause and effect links: altering one part of the process may have hidden effects on another process. � Link key performance measures to compensation: reengineer your reward systems to link in with KPI achievement. � Use the scorecard as an everyday management tool: make this part of corporate policy such that all employees are familiar with the measures. � Continuously improve your system; today’s improvement becomes tomorrow’s norm – it is important to maintain a living evolving system. In essence, the scorecard becomes a cybernetic or feedback system of if-then statements linking financial, customer, business process and learning objectives. This will only be an effective mechanism if it also incorporates a new system of measurements. 8.5.3 Measures of success The Balanced Scorecard establishes a framework for performance evaluation but the actual measurements applied remain at the discretion of the particular organization. There are four specific areas in the Balanced Scorecard where dynamic and strategic measurements need to be applied: � Measuring corporate contribution. � Measuring user orientation. � Measuring operational excellence. � Measuring future orientation. Short-term financial evaluations such as control of IT expenses and third party sales need to be considered as part of the corporate contribution along with longer-term business value of new IT projects and the business value of the whole IT function. The type of financial measures that can be applied to ascertain these figures are exemplified by the information economics approach, using a scoring technique for value and risk. Similar measures need to be developed for user orientation, operational excellence and future orientation and performance drivers related to outcome measures. Examples of other approaches include the incorporation of activity-based costing (ABC) into the BSC, economic value added (EVA) and market value added (MVA) and inclusive valuation methodology as a knowledge asset evaluation approach. None of this is easy.
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e-Business Strategies for Virtual O
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e-Business Strategies for Virtual O
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Contents Computer Weekly Profession
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Contents 6 Globalization and e-busi
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Contents 11.6 The increasing power
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Computer Weekly Professional Series
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Authors’ Preface There are dozens
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Authors’ Preface model will there
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Authors’ Preface alliances, bette
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1 e-business and the virtual organi
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e-business and the virtual organiza
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Figure 1.2 e-business and the virtu
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1.5 e-business e-business and the v
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Figure 1.3 e-business and the virtu
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Figure 1.4 Virtual objects, Scholz
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Characteristics of the virtual orga
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Figure 2.1 Formation of business al
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� empowerment of staff; Character
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e-business models for virtual organ
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3.4 Models of efficient response e-
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Figure 3.4 Star alliance model e-bu
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Figure 3.6 Market alliance model Fi
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Figure 3.10 Virtual alliance framew
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Figure 3.11 Virtual organizational
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References e-business models for vi
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IS planning strategies for emerging
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Figure 4.1 The evolution of IS/IT p
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Figure 4.3 A framework for SISP (Wa
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Figure 4.4 Planning adopts a busine
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Figure 4.5 Interconnected ecologies
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Figure 4.6 The interrelationships b
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4.8 Conclusion IS planning strategi
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References IS planning strategies f
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Moving from e-business to i-busines
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Globalization and e-business strate
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Adoption and deployment of online i
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Table 6.1 Online business models On
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Figure 6.2 VIM strategy Globalizati
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Page 218 and 219: Figure 9.2 Outsourcing, partnering
Page 220 and 221: 9.9 Summary Outsourcing, partnering
Page 222 and 223: References Outsourcing, partnering
Page 224 and 225: e-business strategies in the virtua
Page 242 and 243: 10.10 Summary e-business strategies
Page 244 and 245: 11 Creating virtual cultures for gl
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Creating virtual cultures for globa
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Four stages of market evolution Mar
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Figure 11.4 The four paths of evolu
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References Creating virtual culture
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Advanced knowledge, see Knowledge A
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[8] 2002 e-business-strategies-for-virtual-organizations

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