A Balanced Scorecard Approach to Monitoring and Evaluating E-Partnerships

The ongoing success of e-partnership requires the constant monitoring and measuring of its progress and outcomes. Many companies rushed into e-partnerships in order to exploit complementary resources that they lacked but knew little about how to make their partnerships work and how to effectively monitor and measure its performance. Even today, many partnerships are left to drift without a system in place to assess the quality of partnerships. So, how can the productivity and health of a partnership be monitored and measured? The biggest challenge relating to performance measurement for e-partnerships is that e-partners are often independent business firms and legal entities with different stakeholders and different business objectives and goals. In the supplychain, for example, one firm can rarely control the entire supply chain’s performance. However, performance measures that can be extended across firm boundaries and processes are needed to measure inter-organizational e-partnerships. The uncertainty and intangibility of e-business and information technology add more complexity and challenges to the measurement of e-partnership performance. Looking at the current literature, it is not hard to find that the development and implementation of performance measurement systems for inter-firm collaboration is still in its infancy. Overall, traditional performance measures do not focus on key inter-firm activities to monitor extended enterprise performance. This chapter reviews and discusses various concepts, models and issues of performance measurement. On the basis of that, the chapter proposes, by taking a balanced scorecard approach, a new set of performance metrics for managers to assess the process and outcome of e-partnerships in a comprehensive manner. The chapter will also help e-partners to benchmark against best practices and determine future direction and priorities in their e-business partnerships.

Successes and Failures in E-Partnering

The previous chapters have included a comprehensive discussion of general issues concerning e-partnership management from both technology and people perspectives, and, continuing this theme, this chapter presents extended and systematic multiple case studies which allow a more profound exploration of the way in which companies have partnered in e-business. It also contains an in-depth examination of specific issues and problems raised in e-partnerships. The cases selected for the case studies represent a broad range of interests, from big brand dotcoms like Yahoo! and Google to a small manufacturer that has embraced e-business and e-partnership technologies and practices. The case studies are followed by a cross-case analysis of the key issues in relation to the development of e-partnerships. Key successful factors are identified from the successful cases, along with the hard lessons learned from failure.

E-Business Supply Chains and E-Partnerships

In today’s business world, most companies operate within an integrated system, or a network of organizations of upstream suppliers and downstream customers that produce and distribute products and services. It is estimated that about 60% to 70% of today’s transactions in any company are completed in the supply chain (Bovel & Martha, 2000). E-partnership in the supply chain is, therefore, the focus of this chapter. This author argues that e-partnership provides a powerful and transformative means for supply chain management to achieve its objectives through extended relationships and enhanced information technologies. The rationale for the argument is that an e-partnering supply chain can lead to greater business opportunities, better integration of suppliers and vendors, better management information, lower operational costs, better market understanding and expanded geographical coverage. Therefore, a partnership approach to the supply chain provides significant opportunities to maximize bottom line results. Helping to better understand the broader operational context of e-partnerships, this chapter explores the recent development of the supply chain, specifically, electronic and e-business supply chain and its interfaces with e-partnerships. The chapter presents a broader comprehensive view of the landscape in which e-partnership prevails and the role it plays in the e-business arena.

The Future of E-Business and E-Partnerships

As demonstrated in this book, e-partnerships have significantly improved the efficiency of e-businesses and the supply chain. The collaboration between e-partners has reduced operating costs, shortened lead time of the supply chain, enhanced customer service levels and helped eliminate transaction errors in the entire supply chain, thus adding significant value to the supply chain and other businesses. Kafka et al. (2000) predicted that in spite of the misfortunes of e-marketplaces over the past few years, from an international perspective, the demand for e-marketplaces worldwide will grow steadily from US$2.5 billion in 1999 to US$15 billion in 2004. The overall improvement of economic conditions worldwide in 2003 and 2004 and the recovery of investors’ confidence in high-tech and e-business industries have refueled the growth of e-businesses, including e-marketplaces. Indeed, the public interest in Google’s IPO launched in August 2004 is an indicator of the recovery. After two days trading, Google’s share price jumped 27%, and the company’s value (around US$29 billion) now equals that of the Ford Motor Company. According to the projection made by Forrester Research, online sales will grow at a year-over-year pace of 19% to US$225.9 billion in 2008 in the United States. Further, the number of online shoppers will also increase significantly, and nearly 5 million new United States households will shop online every year (TechWeb News, 2003). The mega-economic environment entails a positive and promising future for e-business, although there are many challenges and hurdles that need to be surmounted. So, what will be the landscape of tomorrow’s e-business and e-partnership? This chapter attempts to answer this question. This chapter is bifurcated, speculating the future trends of e-business and e-partnership extrapolated from current development and formulating overall conclusions based upon the research of the book.

Technological Challenges and Issues Facing E-Partnerships

As discussed in the previous chapters, e-partnerships have a number of advantages and benefits that can help organizations sustain and achieve their organizational goals in today’s e-business world. “The rewards of a happy union can be both substantial and satisfying. But, just like marriage, the failure rate is alarmingly high” (Seligman, 2001, p. 34). Partnering companies often face the challenges of sharing customer information; integrating business, IT processes and systems; and aligning business models. As e-partnership has gained momentum, the difficult question posed to managers is not why e-partnerships are necessary, but how to make them work. Like e-business and e-commerce, e-partnership faces a range of issues relating to the use of Internet and IT technologies as well as the reliance on inter-organizational interfaces. The rapid development and advance of information and Internet technologies have triggered a whole range of possibilities for integration and alignment of systems among e-partners and supply chain members. For example, the partnership between Exostar (an e-marketplace) and Federation (a software provider) provides trading partners of the e-marketplace with opportunities to securely exchange information in the key design and manufacturing process. Coordination of product data information including product engineering data both internally and across the supply chain is made possible in the Exostar e-marketplace. With Federation’s software, Exostar’s customers are able to securely and inexpensively interconnect and share engineering product data from their Product Data/Lifecycle Management (PDM/PLM) system with their partners and suppliers (Withrow & Brock, 2004).

Overview of E-Partnerships

In the past decade, many significant changes have affected the business environment, including globalization of economies, the fast growth of electronic business, dramatically increased competition in most industries and sectors and rapidly evolving technology innovations. As globalization increasingly permeates the world markets, competition is no longer limited to that between individual businesses, but now exists between the entire supply chain. Equally, the convergence of IT and communication and the advent of the Internet have impacted dramatically on almost every aspect of our lives. Indeed, the Internet and WWW have been seen as the catalyst for radical change in businessactivities and business processes. The digital world offers a borderless and virtual village where companies are interconnected and interdependent through a network of partnerships and relationships. Companies have responded differently to the opportunity this represents; some use Web sites as a show window (a public relations tool) or build e-business portals which complement an existing brick-and-mortar business, while other Web sites serve as the only physical appearance of an e-business.

How to Make E-Partnerships Work

Today, partnerships and alliances have proliferated and become a key corporate strategy to gain competitive advantage. However, studies show that most business alliances fail halfway through their expected lifetimes (Segil, 2004). The previous chapters have demonstrated that dealing with the challenges and risks of e-partnership is a difficult and complicated task for e-business management. The success of e-partnership will not be achieved by simply adding electronic technologies to the infrastructure of traditional partnerships. Firms need to incorporate an e-partnership concept into their overall corporate strategy. The alignment and integration of information systems and processes and the effective use of various inter-organizational information systems and Web technologies among e-partners are only part of the challenge of making e-partnerships work. The components of alignment and integration between e-partners should also include corporate strategy, organizational and business structures, job specifications, organizational culture, values and beliefs. While sufficient support of IT infrastructure and resources are undeniably crucial for successful e-partnerships, effectively dealing with human and cultural factors and reducing potential financial, commercial and legal risks associated in e-partnering exceed the complexities of information and communication technologies in building and supporting e-partnerships. Thus, managing e-partnerships requires more than the navigation of technological hurdles and complexity. Human, organizational and cultural factors become more crucial as e-business moves toward maturity. In this regard, the biggest challenges to management include conflict in different organizational and country cultures, taxation, financial and commercial risks, and legal risks concerning online intellectual property, national and international online trade and law. This chapter focuses on people management in e-partnership and network management. Key human and culture issues will be discussed, including quality of e-partnerships, ecosystems, commitment, communication and termination of partnership. In particular, this chapter investigates the issue of trust and information and knowledge management in the context of e-partnership.

E-Partnership Strategy and Structure

Now that the Internet bubble has seemingly burst, the days are gone when anyone with Internet and IT knowledge can run a successful e-business. Like other businesses, e-business also needs strategic management skills and traditional business sense. This author argues that the success of e-business requires a well-defined and well-formulated e-partnering strategy. A good e-partnering strategy can make a significant impact on business operations, customer relations and competitive market position of an organization, if it is implemented and executed successfully. E-managers must be able to think forward and strategically. Business partnership, in whatever form, has gone from being a peripheral tool of management to a centerpiece of corporate strategy and competitive advantage over the past decade (Bamford, Gomes-Casseres, & Robinson, 2003). This chapter studies e-partnership from a strategic management perspective because e-partnership has become an important component of the strategy of many successful companies. From a strategic management perspective, e-partnerships should be strategic e-business alliances. Strategic management focuses on the process whereby managers develop and implement strategies for achieving strategic goals within existing conditions, in turn, helping organizations identify and achieve a competitive advantage. By resorting to a strategic management approach, this chapter helps in understanding the complex nature of e-partnering strategy formulation and implementation, which involves changes to existing business models and procedures. The chapter focuses on the strategy of e-partnering and its matching structures and delineates various worked examples of e-partnerships in today’s e-business world, thereby providing a practical guide to e-partnering strategy formation and implementation.

Entrepreneurship and Innovation Through E-Partnering

The dotcom crash and the following 3-year economic downturn saw hundreds of Internet startups closed down or sold. However, many of the innovations and technologies created by them “live on and play important roles in the future either via acquisitions, in new startups, or through copycatting by the industry’s giants” (Hamm, 2003, p. 52). Blogger.com was a troubled startup that hosted 200,000 Web logs, personal Web sites where people could share insights and Web links with all comers. It was bought by Google in 2003 and has since become part of Google’s information storehouse. Another example was Liquid Audio, a digital music pioneer subsequently acquired by Anderson Merchandisers, a major distributor of music CDs, to help create profitable online music distribution. Despite the many failures caused by the dotcom crash, it presented new challenges as well as new opportunities to entrepreneurs of e-business. This author argues that a combination of entrepreneurship and innovation will be a crucial factor to the long-term sustainability of e-commerce and e-businesses. In this frenetically changing competitive landscape, e-entrepreneurship and e-innovation enable organizations to gain competitive advantage and hold the key to their e-business success. For the purposes of this book, e-entrepreneurship and e-innovation refer broadly to entrepreneurship and innovation in the context of e-business activities and operations. The fast growth and business success of companies such as eBay, Amazon.com, travel.com and priceline.com, along with the bankruptcy of numerous dotcom firms worldwide in 2000, hold potent management implications for IT innovation and entrepreneurial organizations worldwide. As such, e-entrepreneurship and e-innovation have become emerging disciplines for proactively responding to changes in the e-business world. As an integral part of e-commerce and e-business, e-partnership directly derives benefit from e-entrepreneurship and e-innovation, yet equally, is often the means to achieve the outcomes of the two. This chapter seeks to explore the thrust of entrepreneurship and innovation and their implications for e-business and e-partnership success from an integrative perspective of entrepreneurship and innovation. The chapter focuses on the role of e-partnerships in maximizing the value of entrepreneurship and innovation.