The Balanced Scorecard Approach The Balanced Scorecard Approach for Business to Business for Business to Business

Michael Ebert

Michael Haag

Beth HustonRod Kerezsi

Agenda

• B2B Overview Mike Haag

• Mini-Case Studies

Company Overview, B2B Strategy, Balance Scorecard

unique elements

– Info Brokerage (Yahoo!) Beth Huston

– Virtual Marketplace (Staples) Mike Ebert

– Value Chain Integration (FED EX) Rod Kerezsi

• Conclusions Mike Haag

E-Enterprise Applications

E-Business: B2BE-Business: B2B• Virtual Marketplace

• Procurement/Resource Management

• Value Chain Integration

• Customer Relationship Management

• Info Brokerage

E-Commerce:B2CE-Commerce:B2C• E-Tailing/Customer Portals

– Amazon.com, CDNOW

• Bidding and Auctioning

– Priceline,eBay

• Consumer Care/Customer Management

– Merrill Lynch

• Electronic Bill Payment

– AT&T, MCI Worldcom

Importance of B2B

• B2B projections– 630,000 companies with B2B services by 2002– 90% of e-commerce by 2003– 30% of the world economy by 2010

“Where does the Internet rank in Priority? It’s No. 1, 2, 3 ,4.”Jack Welch, Chairman& CEO, General Electric

Virtual Marketplace

ApplicationApplication

• Selling Goods and Services to other businesses

ObjectivesObjectives

• Increase customer base

• Decrease marketing and product promotion costs

• Decrease inventory costs

• Improve customer buying experience

ExamplesExamples

• CISCO Connection Online

• Staples

Procurement/Resource Management

ApplicationApplication• Buying goods and services from other businesses

ObjectivesObjectives• Manage long-term relationship with suppliers• Lower requisitioning costs• Reduce supplier costs• Increase accountability and control• Optimize purchases• Shorter cycle times/reduced inventory

ExamplesExamples• Boeing

Value Chain Integration

ApplicationApplication• Sharing enterprise information with suppliers and buyers to enable more

efficient real-time planning (supply, demand, and production) and logistics

ObjectivesObjectives• Improve cycle time• Reduce inventory• Lower operating expenses• Supplier integration (especially small to medium suppliers)

ExamplesExamples• Car manufacturers - “Order to Delivery” Production Processes• FedEx - Logistics processes

Customer Relationship Management

ApplicationApplication

• Improving Customer care - Pre-Sales, Post-Sales

ObjectivesObjectives

• Improve care through individual treatment

• Reduce costs through customer self-service

• Increase repeat buying through long-term customer relationships

ExamplesExamples

• Hewlett Packard

Info Brokerage

ApplicationApplication

• Capitalize on Internet related business opportunities

ObjectivesObjectives

• Generate Market Growth

• Generate Market Share (Near-Term)

• Generate Net Income (Long-term)

ExamplesExamples

• Internet advertising : Yahoo!, Excite, Lycos

Virtual Marketplace

• This is the web marketing of a company or shop; an electronic version of the traditional way of selling.

• Staples.com is the online arm of Staples Inc. • Called a single cross-over or a “click-and-

mortar.”• Serves the needs of its customers in the office

products market.

B2B Strategy

• To grab a substantial market share in the small business and SOHO (small office/home office) market.

• To provide a single online destination where businesses can procure a wide array of office products and business services, access and exchange electronic commerce transactions with each other.

Balanced Scorecard

Goal Measure Unit

Continually improveuser friendliness.

Site logs Tracks where customers go,which pages are most popular,how much time is spent and howmay users return

Increase services offeredto small businesses andvendors to enhancecustomer experience

Such servicesoffered

How many new ones areestablished

Build brand awareness New ofcustomeracquisitions

Number of new customers

CUSTOMER PERSPECTIVE

Balanced Scorecard

Goal Measure Unit

Strong financialperformance

Staples.com stock Share price

FINANCIAL PERSPECTIVE

Balanced Scorecard

Goal Measure Unit

Expand StrategicAlliances

Companies with whomstrategic agreements aremade

Number of newagreements.

Exploit advantages ofbeing established Brickand Mortar

Growth of sales and revenuecompared to competition

Dollars

Expand Internationally Sites in foreign countries Number of newcountries reached

Build online brandawareness throughadvertising in conjunctionwith Staples Inc.

The proportional increase inrevenue Staples Inc. that isattributable to Staples.com

Dollars

INTERNAL BUSINESS PROCESSES

Balanced Scorecard

Goal Measure Unit

Continue toreevaluate thecustomer wants andneeds

Completion ofeffective surveys,focus groups, andin-house usergroups

Number of suchstudies completed

LEARNING ORGANIZATION

• a $19-billion global enterprise

• the world's largest express transportation company

• NA's 2nd-largest provider of ground small-package delivery

• a global logistics and transportation management company

• the world's largest surface expedited carrier

• a high-tech customs broker and trade facilitator

Value Chain IntegrationValue Chain Integration

• Attract new business from small & medium-sized customers

• Create new revenue streams

• Expand the high-margin international business

• Capitalize on e-commerce

• Provide meaningful supply chain solutions

B2B StrategyB2B Strategy

Balanced ScorecardBalanced Scorecard

Goal Measure Unit

Broaden Services Services & Revenue # Services & Dollars

On-Time Pick-up &Delivery

Lateness # Times Late

Package TrackingAccuracy

System Down Time Minutes

Web Page Simplicity Order TimeFailed Attempts

Minutes/Seconds# Failed Attempts

Be Perceived asLeader

Market Studies

Positive Publicity

Customer Satisfaction Rating# AwardsNews Coverage Time

Deliver QualityService Experience

Market Studies Customer Satisfaction Rating

CUSTOMER PERSPECTIVE

Balanced ScorecardBalanced Scorecard

Goal Measure Unit

Increase StrategicPartnerships

Partnerships &Revenue

# Partnerships & Dollars

Return Customers Return Customers # Return Customers

Increase Revenue Revenue Dollars

Increase Profit Profit Dollars

Lower Costs Costs Dollars

FINANCIAL PERSPECTIVE

Balanced ScorecardBalanced Scorecard

Goal Measure Unit

ImplementTechnology

Budget & Schedule Dollars & Weeks

Improve Mgt & Distbof Docs

Reduce Time & Cost Hours & Dollars

Maximize the Internet Budget # Hits

INTERNAL BUSINESS PROCESS

LEARNING ORGANIZATION

Goal Measure Unit

Establish Cutting-Edge Technology

New Technology # New Applications

Conclusions

• The internet revolution has presented businesses with unique opportunities and threats

• B2B applications are becoming an increasing reality and need to be effectively managed

• For most enterprises, B2B applications are just one facet of the business strategy (Brick and mortar, B2C, B2G are others)

• A B2B measures should compliment other measures in a balanced scorecard. Focus will depend on particular B2B application

• B2B measures will change over time

Balanced Scorecard in B2B Environment

Business ProcessesProcurement/Resource Mgmt

Value Chain Integration

Organization LearningCustomer Relationship Mgmt

Info BrokerageVirtual marketplace

Customer PerspectiveCustomer Relationship Mgmt

Info Brokerage

Financial PerspectiveProcurement/Resource Mgmt

Value Chain IntegrationVirtual Marketplace

Vision & Strategy

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