eBusiness measurement as it exists today is broken. According to a new Report from Forrester Research, Inc. (Nasdaq: FORR), firms will not achieve growth and success in the emerging eBusiness marketplace using traditional statistics like ROI as eBusiness measurements. Instead, firms need to fund and measure eBusiness based on three classes of externally oriented objectives: end-customer success, hyperpartnering efficiency, and multicompany financial performance across a company.
“Just as businesses develop specialized organizational characteristics when they move online, they must also employ nontraditional methods to fund and track eBusiness projects,” said Bobby Cameron, principal analyst at Forrester Research. “Firms that lack the flexibility or foresight to implement an eBusiness plan risk both financial and qualitative losses.”
Forrester recommends that firms implement an eBusiness platform based on end-customer success, hyperpartnering efficiency, and multicompany financial performance. First, because instant diffusion of information over the Internet puts customers in the driver’s seat, end-customer success is crucial to business survival and must be central to all of a firm’s eBusiness projects. To ensure end-customer success, internal factors like efficiency and responsiveness — in combination with external factors like customer satisfaction and profitability — should be gauged based on their impact on end customers.
Second, firms must practice hyperpartnering efficiency: the ability to form, reconfigure, and disband partnerships quickly and efficiently. As interdependence explodes among firms online, Forrester predicts that firms must increasingly focus on partner satisfaction and success, as well as cost, responsiveness, and quality.
Finally, to reflect their increasing interdependence, firms must look at multicompany financial performance, objectives that address only inward-looking metrics don’t capture the full impact of eBusiness investments. Instead of focusing on a single firm’s profitability, a multicompany approach takes into account the relevant costs, revenues, and ROI from internal business units as well as external entities.
“Firms will suffer from lost customers, limited partnerships, and missed eBusiness opportunities if they make eBusiness decisions based on measurements that ignore the impact on external constituents like end customers and trading partners,” said Cameron. “The firms that we see succeeding in eBusiness take conscious and deliberate steps to break away from traditional metrics and create measurements that address the unique interdependencies of the new business landscape.”
For the Report “Measuring eBusiness Success,” Forrester interviewed eBusiness leaders from 50 Global 2,500 companies. Of those interviewed, 43% complained that a lack of objective data and eBusiness hype forces them to make investment decisions based on soft, qualitative information.