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Unit 10: Managing E-business Projects

2. Expansion of the market reach that goes beyond any boarder; Notes

3. Strengthening of relationships with customers and suppliers;
4. Cost reductions through the deployment of electronic internal and external business
processes;

5. Lower telecommunications costs as a result of the inexpensive internet infrastructure.
Because of the intangible nature of some of these benefits, it is difficult to measure the contribution
of E-business initiatives to business performance and to manage these projects to ensure that
real profits are realized. In practice, E-business projects are often managed too technically and
little attention is paid to the business case.

Example: The Belgian online grocery store Ready be that used its web storefront to take
customers’ orders. It relied heavily on manual processes to fulfill the orders. In less than two
years Ready be set up a centralized warehouse and fifty points of distribution where customers
could pick up their purchases they made through internet. Beside this, Ready be renewed its web
site three times and even started a WAP (Wireless Application Protocol) project that would
allow customers to mail their shopping list via their mobile phone.
In the year 2000 the losses of Ready be amounted to 12 million Euro and the online grocery had
to stop its business. This mini case shows clearly that E-business projects are to be monitored
and that each E-business initiative needs a well-defined business case (what are the benefits and
what are the costs?). In the grocery case, the use of a monitoring instrument could easily have
shown that too many costs were made that could be avoided by just using the existing warehouses
and shops of their traditional grocery chain and by not starting yet the WAP project (this
pervasive computing project was clearly technically driven). Therefore, a recent developed
monitoring instrument, the balanced scorecard, will be presented and applied to E-business
projects.
The need for measuring E-business performance is confirmed by a study conducted by the
consulting firm Accenture (formerly Andersen Consulting) and the Cranfield School
of Management (Adams et al.). Senior managers from more than 70 bricks-and-mortar,
clicks-and-mortar and dot.com firms were surveyed regarding their performance management
systems. One of the major findings is that dot.coms appear to measure more than the two
other types of businesses but that this optimism may be misguided because numerous
publications reveal that E-businesses are failing to deliver the expected service and go even
bankrupt. We agree with one of the study’s conclusions that “even if they do have the data,
they would appear to be failing to act on it”. Another observation is that too many dot.coms
are “obsessed with measurement rather than management”. The deployment of an E-business
balanced scorecard may overcome these problems if it is implemented as a measurement and
management system.

Notes Because of the intangible nature of some of these benefits, it is difficult to measure
the contribution of E-business initiatives to business performance and to manage these
projects to ensure that real profits are realized.

10.2 Balance Scorecard

In the 1990s, Kaplan and Norton developed the balanced scorecard. Their idea is that the evaluation
of a company should not be restricted to the traditional financial performance measures but

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