The Balanced Scorecard Approach

for Business to Business

Michael Ebert
Michael Haag

Beth Huston
Rod 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: B2B
Virtual Marketplace
Procurement/Resource
Management
Value Chain Integration
Customer Relationship
Management
Info Brokerage

E-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? Its No. 1, 2, 3 ,4.

Jack Welch, Chairman& CEO, General Electric

Virtual Marketplace
Application
Selling Goods and Services to other businesses
Objectives
Increase customer base
Decrease marketing and product promotion costs
Decrease inventory costs
Improve customer buying experience
Examples
CISCO Connection Online
Staples

Procurement/Resource Management
Application
Buying goods and services from other businesses
Objectives
Manage long-term relationship with suppliers
Lower requisitioning costs
Reduce supplier costs
Increase accountability and control
Optimize purchases
Shorter cycle times/reduced inventory
Examples
Boeing

Value Chain Integration

Application
Sharing enterprise information with suppliers and buyers to enable more
efficient real-time planning (supply, demand, and production) and logistics
Objectives
Improve cycle time
Reduce inventory
Lower operating expenses
Supplier integration (especially small to medium suppliers)
Examples
Car manufacturers - Order to Delivery Production Processes
FedEx - Logistics processes

Customer Relationship Management

Application
Improving Customer care - Pre-Sales, Post-Sales
Objectives
Improve care through individual treatment
Reduce costs through customer self-service
Increase repeat buying through long-term customer relationships
Examples
Hewlett Packard

Info Brokerage
Application
Capitalize on Internet related business opportunities
Objectives
Generate Market Growth
Generate Market Share (Near-Term)
Generate Net Income (Long-term)
Examples
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-andmortar.
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
CUSTOMER PERSPECTIVE
Goal

Measure

Unit

Continually improve
user friendliness.

Site logs

Tracks where customers go,

which pages are most popular,
how much time is spent and how
may users return

Increase services offered Such services How many new ones are
to small businesses and offered
established
vendors to enhance
customer experience
Build brand awareness
New of
Number of new customers
customer
acquisitions

Balanced Scorecard
FINANCIAL PERSPECTIVE
Goal

Measure

Unit

Strong financial
performance

Staples.com stock

Share price

Balanced Scorecard
INTERNAL BUSINESS PROCESSES
Goal

Measure

Expand Strategic
Alliances

Companies with whom

Number of new
strategic agreements are
agreements.
made
Growth of sales and revenue Dollars
compared to competition

Exploit advantages of
being established Brick
and Mortar
Expand Internationally

Sites in foreign countries

Unit

Number of new
countries reached

Build online brand

The proportional increase in Dollars
awareness through
revenue Staples Inc. that is
advertising in conjunction attributable to Staples.com
with Staples Inc.

Balanced Scorecard
LEARNING ORGANIZATION

Goal

Measure

Unit

Continue to
reevaluate the
customer wants and
needs

Completion of
effective surveys,
focus groups, and
in-house user
groups

Number of such
studies completed

Value Chain Integration

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

B2B Strategy
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

Balanced Scorecard
CUSTOMER PERSPECTIVE
Goal

Measure

Unit

Broaden Services

Services & Revenue

# Services & Dollars

On-Time Pick-up &

Delivery
Package Tracking
Accuracy
Web Page Simplicity

Lateness

# Times Late

System Down Time

Minutes

Order Time
Failed Attempts
Market Studies
Positive Publicity

Minutes/Seconds
# Failed Attempts
Customer Satisfaction Rating
# Awards
News Coverage Time

Market Studies

Customer Satisfaction Rating

Be Perceived as
Leader

Deliver Quality
Service Experience

Balanced Scorecard
FINANCIAL PERSPECTIVE
Goal

Measure

Unit

Increase Strategic
Partnerships
Return Customers

Partnerships &
Revenue
Return Customers

# Partnerships & Dollars

Increase Revenue

Revenue

Dollars

Increase Profit

Profit

Dollars

Lower Costs

Costs

Dollars

# Return Customers

Balanced Scorecard
INTERNAL BUSINESS PROCESS
Goal

Measure

Implement
Budget & Schedule
Technology
Improve Mgt & Distb Reduce Time & Cost
of Docs
Maximize the Internet Budget

Unit
Dollars & Weeks
Hours & Dollars
# Hits

LEARNING ORGANIZATION
Goal

Measure

Unit

Establish CuttingEdge 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

Financial Perspective
Procurement/Resource Mgmt
Value Chain Integration
Virtual Marketplace

Customer Perspective
Customer Relationship Mgmt
Info Brokerage

Vision &

Business Processes
Procurement/Resource Mgmt
Value Chain Integration

Strategy
Organization
Learning
Customer
Relationship Mgmt
Info Brokerage
Virtual marketplace

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