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? It’s 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-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 CUSTOMER PERSPECTIVE

Balanced Scorecard FINANCIAL PERSPECTIVE

Balanced Scorecard INTERNAL BUSINESS PROCESSES

Balanced Scorecard LEARNING ORGANIZATION

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

Balanced Scorecard FINANCIAL PERSPECTIVE

Balanced Scorecard INTERNAL BUSINESS PROCESS LEARNING ORGANIZATION

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 Processes Procurement/Resource Mgmt Value Chain Integration Organization Learning Customer Relationship Mgmt Info Brokerage Virtual marketplace Customer Perspective Financial Perspective Virtual Marketplace Vision & Strategy 11-41