Value decomposition of e‐commerce performance

Abstract

Purpose The need to measure organisational effectiveness has become increasingly accepted. Performance measurements can readily be developed but need to be further defined as performance metrics. The paper's aim is to show how the use of the decomposition technique enables the development of electronic commerce (e‐commerce) metrics. Design/methodology/approach In the approach to value decomposition, value constructs are identified at the highest level, decomposed into the next levels, referred to as value variables, which are further broken down into value metrics. During decomposition, proper splicing has to occur. This implies that values (constructs, variables and metrics) should be carefully specified and that their interconnections should be controlled. Furthermore, functional integrity is required so that a succinct statement can be made for each metric. Findings The paper identified value constructs and value variables for six e‐commerce applications. They are aggregated into corporate performance management measures so that the various lower level value metrics can be made to work seamlessly together. Practical implications Although there is large agreement on the key values obtained from e‐commerce, it is difficult to achieve the degree of integrity required by the decomposition technique. Further research is required. Originality/value Performance measures provide a factual representation of important business activities and enable greater preciseness in their execution. The paper provides insight into values and associated measures in important activities of e‐commerce, namely VRM, B2C, B2B, CRM, EP, and ERP.

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