[8] 2002 e-business-strategies-for-virtual-organizations
[8] 2002 e-business-strategies-for-virtual-organizations
[8] 2002 e-business-strategies-for-virtual-organizations
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e-Business Strategies <strong>for</strong> Virtual Organizations<br />
178<br />
� Search <strong>for</strong> leading indicators: emphasize lead rather than lag<br />
indicators.<br />
� Search <strong>for</strong> cause and effect links: altering one part of the<br />
process may have hidden effects on another process.<br />
� Link key per<strong>for</strong>mance measures to compensation: reengineer<br />
your reward systems to link in with KPI achievement.<br />
� Use the scorecard as an everyday management tool: make this<br />
part of corporate policy such that all employees are familiar<br />
with the measures.<br />
� Continuously improve your system; today’s improvement<br />
becomes tomorrow’s norm – it is important to maintain a<br />
living evolving system.<br />
In essence, the scorecard becomes a cybernetic or feedback<br />
system of if-then statements linking financial, customer, <strong>business</strong><br />
process and learning objectives. This will only be an<br />
effective mechanism if it also incorporates a new system of<br />
measurements.<br />
8.5.3 Measures of success<br />
The Balanced Scorecard establishes a framework <strong>for</strong> per<strong>for</strong>mance<br />
evaluation but the actual measurements applied remain at<br />
the discretion of the particular organization. There are four<br />
specific areas in the Balanced Scorecard where dynamic and<br />
strategic measurements need to be applied:<br />
� Measuring corporate contribution.<br />
� Measuring user orientation.<br />
� Measuring operational excellence.<br />
� Measuring future orientation.<br />
Short-term financial evaluations such as control of IT expenses<br />
and third party sales need to be considered as part of the<br />
corporate contribution along with longer-term <strong>business</strong> value of<br />
new IT projects and the <strong>business</strong> value of the whole IT function.<br />
The type of financial measures that can be applied to ascertain<br />
these figures are exemplified by the in<strong>for</strong>mation economics<br />
approach, using a scoring technique <strong>for</strong> value and risk.<br />
Similar measures need to be developed <strong>for</strong> user orientation,<br />
operational excellence and future orientation and per<strong>for</strong>mance<br />
drivers related to outcome measures. Examples of other approaches<br />
include the incorporation of activity-based costing (ABC)<br />
into the BSC, economic value added (EVA) and market value<br />
added (MVA) and inclusive valuation methodology as a<br />
knowledge asset evaluation approach. None of this is easy.