Page 173 - DMGT302_FUNDAMENTALS_OF_PROJECT_MANAGEMENT

Fundamentals of Project Management

Notes 10.4 Measures for Business Contribution

E-business strategic plan achievements:
Completion of steps of the E-business project plan

Business value of E-business projects
Profitability of the web site
Return on Investment (ROI) or Information Economics
Direct online contribution to revenue

Operational cost reductions
Cost reductions of acquiring a new customer
Cost reductions of customer relationship management
Cost reductions of promotional material

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Caution The Business Contribution perspective captures the business value created from
the E-business investments.

10.5 Compliance with Budget

The ultimate goal of E-business projects, as any other IT project, is to satisfy the Board of
Directors and consequently the shareholders. Surprisingly, the Adams’ survey revealed that
only 56 percent of the dot.com companies tracked shareholder satisfaction which is low if one
takes into consideration their reliance on the stock exchange and investors (for the bricks-and-
mortar and the clicks-and-mortar firms percentages were even lower with respectively 36 % and
44 %). We suppose that this is caused by the fact that many E-business projects are technically
driven and that not always the business evaluation is taken too seriously. Therefore, in a balanced
scorecard, the business contribution perspective is as important – not to say the most
important – as the other three perspectives. Motivated, trained and experienced IT employees
(future orientation) should improve the delivery of excellent E-business processes and
applications (operational excellence), that in turn should enhance customer satisfaction (customer
orientation), and finally should by all means result in financial profits (business contribution).
E-business projects often are deployed on the basis of a step-by-step approach. A well-known
Gartner-model describes four levels of E-business: (1) the publishing level focusing on showing
information of the company on a web site, (2) the prospecting level with customer oriented
information, (3) the business integration level which is transaction centric and can be defined as
E-commerce, and (4) the business transformation level which is the mature level of E-business
that includes supplier and customer integration. Completion of steps of the E-business project plan
will represents this evaluation item.

The business value of E-business projects shows how the E-business projects are affecting the
performance of the whole business. It gives an idea of the contribution of the project measured
through the standard financial measures that are used to determine the health of the business.
Typical measures are the profitability of the web site that can be defined as the direct revenue of the
web site minus the operational costs of the site and a combination of Return on Investment and
Information Economics to capture the tangible and intangible benefits. The direct online contribution

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