The Benefits of an E-Business Performance Measurement System

The Benefits of an E-Business Performance Measurement System

David Barnes (University of Westminster, UK) and Matthew Hinton (Open University Business School, UK)
DOI: 10.4018/978-1-60566-346-3.ch011
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Abstract

This chapter investigates how organizations have been adapting their performance measurement practices in response to their adoption of e-business in their business operations. It aims to identify the features and benefits of an effective e-business performance measurement system. Twelve organizations known to have had some success in developing performance measurement systems suitable for the online environment were studied. The researchers found that these organizations adopted an incremental rather than a radical approach to changing their performance measurement system for e-business, thereby avoiding the costs and disruption associated with the introduction of more complex performance metrics. Secondly, they eschewed the use of best practice recipes (such as the balanced scorecard). The study concludes that although these results may be at odds with the prescriptive generic performance measurement literature, they may be appropriate for the current state of development of e-business.
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Background

E-business is defined as the use of Internet-based information and communication technologies (ICTs) to conduct business (including sharing information, maintaining relationships and conducting transactions) within and between organizations (Poon & Swatman, 1999). Its introduction can be seen as the catalyst for disruptive change in business organizations (Lyytinen & Rose, 2003). It has heralded some fundamental changes in the way that existing businesses operate (Hammer & Champy, 2001; Gates & Hemingway, 2000). In some industries entirely new business models have emerged (Laudon & Traver, 2008). E-business offers significant scope for reshaping supply chains (Sen & King, 2003; Shunk et al., 2007), transforming established value chains and information flows (Evans & Wurster, 2000) and facilitating co-production and innovation (Tapscott & Williams, 2008). Over the last decade, organizations of all kinds have rushed to join the online business community. By 2005 firms employing nearly 98% of British workers had some kind of online presence and e-business accounted for 14% of business turnover (E-business watch, 2005) with 40.4 million users in the UK population (Internet World Stats, 2008). It is believed that 90% of UK firms have incorporated e-business into their internal business processes, whilst 65% are using e-business to integrate their supply chains, make purchases from suppliers and sell to their customers (E-business watch, 2007).

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