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Chapter 5 E-business strategy 295

3 Financial measures. Traditional measures such as turnover, costs, profitability and return on
capital employed. For publicly quoted companies this measure is key to shareholder value.
Example measures from Halifax Bank: gross receipts (£), mortgage offers (£), loans (£).
4 Learning and growth: innovation and staff development. Innovation can be measured by
change in value through time (employee value, shareholder value, percentage and value of
sales from new products). Examples: management performance, training performance,
new product development.

For each of these four areas management teams will define objectives, specific measures, tar-
gets and initiatives to achieve these targets. For some companies, such as Skandia Life, the
balanced scorecard becomes much more than a performance measurement system and pro-
vides a framework for the entire business strategy process. Olve et al. (1999) make the point
that a further benefit of the scorecard is that it does not solely focus on outcomes, but also
considers measures that are performance drivers that should positively affect the outcomes.
For example, investment in technology and in employee training are performance drivers.
More recently, as the scorecard has been widely used, it has been suggested that it provides
a useful tool for aligning business and IS strategy, see for example der Zee and de Jong (1999).
Table 5.8 outlines how the balanced scorecard could be deployed in a B2B organization to
support its e-business strategy. A more detailed example of how the balanced scorecard can
be used for specific e-business processes such as Internet marketing is given in Chapter 8.

Table 5.8 An example of an e-business balanced scorecard for a B2B company

Scorecard component Objective metric

Customer perspective Customer acquisition rate (leads generated online)
Customer retention rate (% using online services)
Customer satisfaction index
Process Average time for new product development (months)
Procurement lead times
Sales cycle lead time
Financial Revenue contribution from online channel
Margin from online channel
Cost savings from partners using different e-services
Training hours attended per employee: target 30
Innovation and employee development Number of new product releases per year
hours/year

Strategy definition

Strategy definition The definition of strategy is driven by the objectives and vision referred to in the previous
Formulation, review and sections. As strategy is formulated based on vision and objectives, so it is necessary to fre-
selection of strategies to
achieve strategic quently revisit and revise them.
objectives. In this section the key strategic decisions faced by a management team developing e-business
strategy are reviewed. For each of the areas of strategy definition that we cover, managers will
want to generate different options, review them and select them as shown in Figure 5.16. We
start by considering the sell-side-related aspects of e-business and then review the buy-side-
related aspects.