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Why less is more for eBusiness performance metrics

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The field of Performance Metrics is a strange one.  Who knew it could be so hard to extract information from data?   If ever there were an area where “less is more” needs to apply, this is it.

For example, one of my clients had a monthly performance report that was 20 pages long.  Even though its production was largely automated, it still took a significant amount of time and effort to produce each month.  Even worse, once the management team had it, nobody knew what to do with it.  There was too much information to sift through and no consensus on which metrics were most important or even what they meant.  The monthly performance report was ineffective at helping management evaluate organizational performance and determine the actions which would result in performance improvement.

I am a big fan of the Balanced Scorecard (BCS) approach.  Originated by Norton and Kaplan almost 20 years ago, it is estimated to be used by almost 50% of Fortune 1000 companies.  In my client’s case, we used this approach to reduce their 20 page report down to a one page scorecard.  The scorecard was composed of 20 key indicators, each tied to a specific goal of the organization.  Interestingly, almost none of the final key indicators came from the original monthly performance report (although they may have been derived from the same data).  

The use of the BSC approach for measuring eBusiness performance is fairly new, but I think it is quite promising.  I see three important benefits:

  1. A huge amount of data is boiled down to a small number of key indicators
  2. The Indicators are tied to business goals
  3. They are defined such that they are actionable

Bottom line, scorecards help executives both measure and manage performance.  Although the BSC approach was developed with the enterprise perspective in mind, our work with eScorecards is showing that it is also effective at measuring and managing eBusiness performance.

In future blogs I will explore some specific eBusiness performance indicators.  If you have some that you have found effective, I’d love to hear from you.

That’s all for now –  John