1794
E-CRM
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ENDNOTE
1
,QWKLVVWXG\HLQWHOOLJHQFHLVGH¿QHGDVWKH
adding of intelligence to electronic data. It
represents the creation of knowledge from
WKHLQIRUPDWLRQÀRZLQJLQWRWKH¿UPIURP
its Web-based and traditional systems. It
allows companies to customise and enhance
personalised relationships with customers
and suppliers and improve the effectiveness
DQGSUR¿WDELOLW\RIEXVLQHVVSURFHVVHVDQG
operations.
This work was previously published in International Journal of E-Business Research, Vol. 3, Issue 2, edited by I. Lee, pp. 41-56,
copyright 2007 by IGI Publishing (an imprint of IGI Global).
1797
Copyright © 2009, IGI Global, distributing in print or electronic forms without written permission of IGI Global is prohibited.
Chapter 6.6
EBBSC:
A Balanced Scorecard-Based

Framework for Strategic E-Business
Management
Fen Wang
University of Maryland, Baltimore County, USA
Guisseppi Forgionne
University of Maryland, Baltimore County, USA
ABSTRACT
E-business is far more about strategy than tech-
nology, and the strategy of e-business is very
important in today’s dynamic and competitive
environment. In this article, we describe a bal-
anced scorecard-based framework in detail
and discuss its potential e-business uses. This
framework enables e-business managers to plan
and allocate resources more effectively and align
strategic objectives with performance results. It
also provides a stable point of reference for e-busi-
nesses to understand and manage the fundamental
changes introduced by e-business initiatives.
INTRODUCTION
The Link of Objectives to Strategies
E-business has rapidly developed from being a
vision of the future world of business to being
³WKH´ZD\RIGRLQJEXVLQHVV:KHODQ0D[HORQ
2001). This business opened new channels for
communication and selling, a new source of data
on customers and competitors, and changed the
face of competition tremendously (Koutsoukis,
Dominguez-Ballesteros, Lucas, & Mitra, 2000;
Porter, 2001). Clearly, business processes of the

VWFHQWXU\PXVWEHPRUHHI¿FLHQWDQGG\QDPLF
1798
EBBSC
to build and sustain value across the organiza-
tion, though having a dot-com presence does not
necessarily point to success. As Raisinghani and
6FKNDGHSRLQWHGRXW³SHUKDSVRQHRIWKH
best ways to succeed in the world of e-business
is to start off with a dynamic and new e-business
strategy” (p. 601).
E-business is far more about strategy than
technology. An effective e-business strategy is
an elaborate and systematic plan of action that
incorporates different organizational levels, dif-
ferent parties, different elements, and growth
pattern features (Bakry & Bakry, 2001). Unlike
traditional business strategy, e-business strategy
considers a company’s business management ar-
chitecture and how it can be improved, integrated
and automated by instant and global Internet
communication. Indeed, the Internet has spawned
new e-business strategy and radically transformed
existing models (Basu & Muylle, 2002; Pant &
Ravichandran, 2001). These new models incorpo-
rate Internet technology, universal connectivity,
and Web browser capabilities to integrate business
processes within and beyond an enterprise. As a
result, old business models should be adapted to
the new conditions, and companies worldwide
should develop an effective e-business strategy to

¿WWKHQHZFRQGLWLRQV:KHODQHWDO
What distinguishes many of the dot-coms from
traditional organizations is not their new techni-
cal power, but their innovative and imaginative
new business models (Hamel, 2000). This study
proposes a balanced scorecard based e-business
framework for the development and assessment
of e-business strategy in this new age. Aided by
this innovative and comprehensive e-business
framework, managers can identify the major deci-
sion factors involved in their e-business strategies,
specify the direct and indirect relationships among
the factors, and generate strategies that would
improve overall business performance.
BACKGROUND REVIEW
The Evolution of E-Business Models
A commonly cited reason for e-business failure
has been the lack of a workable and concrete
strategic business model to guide e-business ef-
forts (Paper, Pedersen, & Mulbery, 2003). While a
comprehensive framework for strategic e-business
management seems desirable, there are few studies
that offer complete and integrated views of e-busi-
ness strategy (Dubosson-Torbay, Osterwalder, &
Pigneur, 2001). In the business model literature,
many academic studies have provided a theoretical
basis for, and some empirical testing of, the mod-
els (Horsti, Tuunainen, & Tolonen, 2005). These
VWXGLHVIDOOLQWRWZREURDGFDWHJRULHV7KH¿UVW
group develops subsystem models in support of

DVSHFL¿FDVSHFWRIHEXVLQHVVDSSOLFDWLRQVZKLOH
the second group involves generic frameworks to
UHÀHFWHEXVLQHVVUHDOLW\
Table 1 provides a brief overview of the
existing subsystem model studies. As this table
demonstrates, although each of the subsystem
models involves operationalized views of a par-
ticular aspect of e-business, none offer a complete
and integrated view of e-business strategy as a
whole.
Among the generic e-business strategy mod-
HOV:KHODQHWDOSURSRVHGD¿YHHOHPHQW
HEXVLQHVV DUFKLWHFWXUH 7KH ¿YH HOHPHQWV DUH
product, channel, customer management, resource
management, and information. Afuah and Tucci
(2001) presented a more detailed list of model
components including scope, customer value, rev-
enue sources, connected activities. Like Whelan
et al. (2001), these researchers did not specify
the interrelationships and causality between
these components. Hamel (2000) offered a more
complete model than the others. This researcher
used a four part framework that describes links
1799
EBBSC
E H W Z H HQ P R G HOF R P S RQH Q W V HJ ³ &R Q ¿J X U DW LRQ´ 
WRFRQQHFWWKH³&RUHVWUDWHJ\´DQG³6WUDWHJLF
resources”). Similarly, Dubosson-Torbay et al.
(2001) used a framework to analyze e-business
with four principal components: product in-

novation, customer relationship, infrastructure
PDQDJHPHQWDQG¿QDQFLDODVSHFWV'DPDQSRXU
 DOVR LGHQWL¿HG IRXU HOHPHQWV RI HEXVL-
QHVVIURPDV\VWHPDWLFSHUVSHFWLYHEXVLQHVV¿-
nancial models, relationships, commerce, and
responsiveness. Still another e-business model is
composed of a value cluster, marketing offering,
UHVRXUFHV\VWHPDQG¿QDQFLDOPRGHO5D\SRUW
& Jaworski, 2001). Going beyond the segment
frameworks, De, Mathew, and Abraham (2001)
developed a pragmatic framework that offers a
series of different perspectives for the analysis
of e-business: transaction costs, switching costs,
infrastructure investment, revenue models, and
other elements.
Table 2 summarizes the scope and model com-
ponents of the generic e-business frameworks. As
this table illustrates, no operational generic models
have been offered, or implemented, by the propo-
7DEOH7KH¿UVWJURXSVXEV\VWHPHEXVLQHVVPRGHOVWXGLHV
Model Focus/Purpose
Model Components/
Factors involved
Sample Studies
A generalized pricing
model
Order Unit; Territory;
Customer; Price Type;
Interval; Contract; Currency
Kelkar, Leukel &

Schmitz Price, 2002
A demand model for
variety
Utility structure: good
variety; price
Kim, Allenby &
Rossi, 2002
A model to support
supply chain activities
A cooperative virtual
network structure; A supply
chain infranstructure;
Change management;
Organizational adaptation
Cheng, Li, Love &
Irani, 2001
A statistical model e-
business capacity
Utilization of capacity;
Cost of capacity; Revenue
EHQH¿WV6HUYLFHTXDOLW\
Operations risk
Goldszmit, Palma &
Sabata, 2001
A mental cognitive
model for e-customer
SUR¿OH
e-customer behavior; Web
site semantics; e-services;
internet marketing

Kwan, 2002
$¿YHVWDJHPRGHO
for explaining and
predictin Net-based
customer service
(NCSS)
NCSS Interaction Value;
NCSS usefulness;
Experience Quality; Cost of
NCSS Use
Piccoli, Brohman,
Watson &
Parasuraman, 2004
A model decribing the
values exchanged in an
e-business process
Base actor (organization &
customer), order of value
transfer (business order),
order of communicative acts
(process order)
Jayaweera,
Johannesson &
Wohed, 2001
A shared process
model for e-business
transactions
Process speed/credibility,
task independence, task
synchronization, e-business

autonomy
Park, 2002
Macro-level matching
algorithms to compose
a Web-based business
process
Service capabilities and
properties, activities in a
process request, business
requirments and objectives
Lee & Park, 2003
1800
EBBSC
Table 1. continued
Hayes and
Wheelwright four-stage
model of
Operation negative impact,
best-practice operation,
stategy-support operation
competitive-advantage
operation
Banes,
Hinton &
Mieczkowska,
2004
A methodology for
design, implementation
and continuous
improvement of e-

business processes
Process vision, process
VSHFL¿FDWLRQSURFHVV
realization, process
improvement
Kirdmer, 2004
e-knowledge networks
for collaborative e-
business
Supply chain management
networks, Adserver networks,
Content syndication
networks, B2B exchange
networks
Warkentin,
Sugumaran &
Bapna, 2001
Knowledge
management in e-
business and CRM
Customer relationships,
knowledge on customers,
customer needs
Plessis & Boon,
2004
A virtual community
activity framework
from an e-business
perspective
Community knowledge

sharing activity, virtual
community outcomes, loyalty
to the service provide
Koh & Kim,
2004
nents. The generic frameworks, instead, provide
theoretical guidance on components that could
be included in a comprehensive and integrated
e-business strategy model.
One exception is the high level e-business
framework, with preliminary empirical evidence,
proposed by Hasan and Tibbits (2000). These
researchers developed a BSC-based case study
for e-business management in an Australian state-
government utility. The researchers, however, did
not identify and formulate the goals, measures, and
targets in each scorecard perspective.
As Tables 1 and 2 indicate, the literature has
not offered a comprehensive and concrete model
of e-business strategy. The electronic business
balanced scorecard (EBBSC) model proposed
in this study attempts to close that research gap
by linking business strategies to a broad range
of measures, examining important business is-
sues facing e-business managers, and providing
a complete and integrated view of e-business
management.
EBBSC FRAMEWORK
SPECIFICATION
7KHSURSRVHG(%%6&IUDPHZRUNLGHQWL¿HVIRXU

essential perspectives. These perspectives include
WKH¿QDQFLDOFXVWRPHULQWHUQDOSURFHVVHVDQG
learning and growth views. First introduced in
the early 1990s as the balanced scorecard (BSC),
these views provide a balanced picture of current
operating performance as well as the drivers of
future performance in traditional businesses
(Kaplan & Norton, 1992, 1996). The underlying
motivation for this vision and strategy has been
explored repeatedly (Dutta & Manzoni, 1999; Lee
& Ko, 2000; Lohman, Fortuin, & Wouters, 2004;
Marr & Schiuma, 2003; Soliman & Youssef, 2001;
Sandstrom & Toivanen, 2002) and is therefore
not repeated here.
Because the methodology of the BSC explicitly
focuses on links among business decisions and
outcomes, it is intended to guide strategy devel-
opment, implementation, and communication,
1801
EBBSC
and to provide reliable feedback for management
control and performance evaluation (Malina &
Selto, 2001). Although most implementations em-
phasize BSC success as a commercial product, the
rationale behind the BSC does appeal to managers
who face new challenges in the modern business
environment (Hasan et al., 2000).
As indicated by Hasan et al. (2000), the real
challenge is to determine how the BSC can be
successfully applied in the context of e-business.

E-business functions in a constantly changing
environment of interdependencies, which has
been perceived as highly uncertain, stemming
from increased information visibility and dynamic
market structures (Golicic, Davis, McCarthy, &
Mentzer, 2002; Wang, 2001). In this environment,
traditional success measures may be incomplete,
and possibly misleading, and the original BSC
IUDPHZRUNPD\UHTXLUHUDGLFDOPRGL¿FDWLRQ
8VLQJOLWHUDWXUH¿QGLQJVDQGXQGHUO\LQJWKHRULHV
we adapted the original BSC into the comprehensive
e-business management framework (EBBSC) shown
LQ)LJXUH$VWKLV¿JXUHLQGLFDWHVWKH(%%6&
consists of four perspectives, including the busi-
ness core, analytic e-CRM, process structure, and
e-knowledge network.
Tables 3 and 4 compare this EBBSC concept
with the subsystem and generic model studies. As
Afuah & Tucci
(2001)
Damanpour
(2001)
De et al.
(2001)
Dubosson et al.
(2001)
Hamel (2000)
Hasan &
Tibbits (2000)
Rayport &

Jaworski
(2001)
Whelan &
Maxelon
(2001)
price, revenue
sources,
sustainibility
ZKDWLVGLI¿FXOW
to initiate of the
business model)
business
¿QDQFLDO
models
(business
model and
opportunities)
Revenue
models
(Advertising,
retail,
banking &
information
harvesting)
Product
innovation
(market
segment, value
proposition),
Financial

Aspects (cost
& revenue
structures)
Core Strategy
(business
mission, product/
market scope,
differentiation
basis), Pricing
structure
Finance/
Business value
Financial
model
Product
Customer value
(distinctive
offering or low
cost), Scope
(customer &
products/services)
Relationships
(relationships
& collaboration
management)
Transaction
and
Switching
costs, User
Experience,

Models,
Versioned
products/
niche
marketing
Customer
Relationship,
Infastructure
Management
I (partner
network)
Customer
Interface
(support. info &
insight, re la ti os
hip dynamics);
Customer
EHQH¿WV
Customer User
perspectives
Marketing
offering
Customer
management
connected
activities
(interdependency
between different
activities)
Responsiveness

HI¿FLHQF\
& timing of
transactions)
Commerce
(e-buying
& selling
mechanism)
Network
externalities,
Infastructure
investment
Infastructure
Management
II (activities &
processes)
Strategic
resources (core
processes);
&RQ¿JXUDWLRQ
Value network,
company
boundaries
Internal
business/
Process
Value cluster Channel
Implementation
(resources
needed);
Capabilities (skills

needed)

Infastructure
Management
III (resources/
assets)
Strategic
resources (core
competencies,
strategic assets)
Innovation/
Learning
future
readiness
Resource
system
Resource
management;
Information
Table 2. 2
nd
group generic e-business framework studies
1802
EBBSC
this comparison indicates, the EBBSC framework
is based on the e-business model literature but rep-
resents a more complete, explicit, and integrated
view of e-business strategy. Such a framework
can be utilized to translate e-business strategies
into conceptual blueprints for strategic manage-

ment control and performance evaluation. The
EBBSC framework also provides a stable point
of reference for e-businesses to understand and
explore e-business initiatives effectively.
Business Core Perspective
Although e-business models differ somewhat from
traditional brick and mortar models, the funda-
mental needs of consumers and businesses remain
the same. Consumers want desirable products and
services at competitive prices, while businesses
ZDQWSUR¿WDEOHPDUNHWLQJDQGSURGXFWLRQ7KH
focus should be on long-term and short-term de-
cision making in the dynamic, competitive, and
compressed business cycles of the global e-era.
Figure 2 depicts the business core perspective in
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primary objective is S U R ¿WPD [ L P L ] D W L R Q  
Within the e-business value cycle, many in-
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Some factors involve Internet considerations,
such as network performance (e.g., network
security and e-capacity). Risk and uncertainty
will be created by intangible organizational and
environmental factors (Palmer & Wiseman, 1999).
Representative decision factors in the business
core perspective as a result of the Internet effect
are highlighted in Figure 2.
Revenues increase from product and service

expansions, new customers and markets, and
higher value re-pricing. Price, capacity, supply
FKDLQPDQDJHPHQWHI¿FDF\DQGVWDIISUR¿FLHQF\
are the major determinants of the quantity sup-
plied. Capacity is limited by the equipment
and/or available personnel, but also by the limit
associated with network technology (Goldszmidt
et al., 2001). A stronger emphasis on supplier
relationship management reduces uncertainty
(Craighead et al., 2003; Golicic et al., 2002). Sup-
SO\FKDLQPDQDJHPHQWHI¿FDF\FDQEHXVHGDVDQ
indicator of the bargaining power of suppliers
(Porter, 2001).
On the demand side, there are traditional
determinants, including customer retention and
the marketing mix, and new e-business factors.
Customer retention measures the company’s
customer loyalty (Smith, 2002) or stickiness
(Ingsriswang et al., 2001). Since customers can
now compare prices and services with a-click, it is
more challenging to attract and retain customers
in the virtual business world.
Figure 1. Adapted four perspectives for strategic e-business management (Adapted from Wang & For-
gionne, 2005)
Process Structure
Process intelligence &
integration in e-business
Analytic e-CRM
Effective e-customer
relations management

e-Knowledge Network
Knowledge innovation for future readiness
E-business
Strategy
Business Core
Successful financial planning and budgeting
1803
EBBSC
The marketing mix, coined by Borden (1965),
consists of traditional price, product, promotion,
and place (Borden, 1965; Brooksbank, 1999; Kot-
ler & Armstrong, 1997; Smith & Saker, 1992), as
well as enhancements unique to e-business. For
H[DPSOHSULFLQJPXVWEHDGMXVWHGWRWKHVSHFL¿F
requirements of e-procurement (Kelkar et al.,
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into e-marketing presentation and distribution
effort. Similar to the store design of a physical
shopping mall, the Web presentation style and
structure can attract online customers and build
customer loyalty in e-business (Chittaro & Ra-
non, 2002). Distribution involves traditional and
Internet (as called e-channel or virtual e-chain)
management and innovation (Manthou et al.,
2004; Mascarenhas et al., 2002).
$QRWKHUZD\WRPD[LPL]HSUR¿WEHVLGHVLQ-
FUHDVLQJUHYHQXHLVWRUHGXFH¿[HGDQGYDULDEOH
cost (Lee & Brandyberry, 2003). Traditionally,
¿[HGFRVWUHIHUVWRLQYDULDEOHVHOOLQJDQGDGPLQ-
istrative expenses. In the context of e-business,

¿[HGFRVWFDQLQFOXGHHEXVLQHVVV\VWHPGHYHO-
opment and maintenance expenses, as well as
other utility and management overhead. Variable
cost measures the materials, money, and labor
expenses involved in producing/importing and
selling the product. In the context of e-business,
labor expenses should include the effort spent
on knowledge management (transmission, shar-
ing, and innovation), building relationships, and
education in e-era technology (Ash & Burn, 2001;
Cash et al., 2004).
One indirect, but potentially effective, method
to reduce cost is to shorten the sales cycle. In
addition to product quality, price, and the e-mar-
NHWLQJPL[WKHFXVWRPHUSUR¿OHLVDQLPSRUWDQW
determinant of the e-business sales cycle. This
7DEOH7KH¿UVWJURXSVXEV\VWHPHEXVLQHVVPRGHOOLWHUDWXUHFRPSDULVRQ
EBBSC Framework
Perspectives
Comparative Model Components in
Literature
Sample Representative Studies
Business Core Successful
¿QDQFLDOSODQQLQJDQG
budgeting
3UR¿WPD[LPL]DWLRQ3ULFLQJ
mechanisms, Price structures, Revenue
sources, Demand uncertainties, Budget
mode, Financial performance, Market
optimization, Internet marketing

Kelkar, Leuke; & SchmitzPrice, 2002:
Kim, Allenby & Rossi, 2002; Valadares
Tavares, Pereira & Coelho, 2002;
Motiwalla & Riaz Khan, 2003; Liu,
Wynter & Xia, 2003; Chen, Liu & Song,
2004
Analytic e-CRM Effective
e-customer relations
management
Customer value, Customer knowledge,
(FXVWRPHUSUR¿OH&XVWRPHU
HI¿FLHQF\&RQVXPHUSRZHU&XVWRPHU
needs, e-CRM essence, Customer
perception, Mass customization model
Bielski, 2000; Rowley, 2002; Mei &
Harker, 2002; Wan, 2002; Fletcher, 2003;
Olsson & Karlson, 2003; Wang & Tang,
2003; Vrechopoulos, 2004; Piccoli,
Brohman, Watson & Parasuraman, 2004
Process Structure Process
intelligence & integration in
e-business
Process patterns, E-logistics platform,
Process (semi)-automation, Process
independence & sychronization,
Operation management, Value (e) -
chain, Process networks
Jayaweera, Johannesson & Wohed,
2001; Par, 2002; Lee & Park, 2003; Oh,
Hwang, & Lee, 2003, Barnes, Hinton &

Mieczkowska, 2004; Kirchmer, 2004
E-Knowledge Network
Knowledge innovation for
future readiness
Knowledge Management, E-knowledge
networks, E-knowledge decision
model, Knowledge exchange, Customer
knowledge, Knowledge chain model,
Knowledge sharing
Malhotra, 2000; Warkentin, Sugumaran
& Bapna, 2001; Raisinghani & Mead,
2002; Malhotra, 2002; Rowley, 2002;
Allard & Holsapple, 2002; Plessis &
Boon, 2004, Koh & Kim, 2004