Difficulties in measuring and justi

Difficulties in measuring and justifying e-commerce
Justifying EC (and IT) projects can be complex, and therefore ,difficult to justify. Let us see why
The EC justification process
The EC justification process varies depending on the situation and the methods used . However, in its extreme, it can be very complex . As shown in Figure 14.3,five areas must be considered in the justification of IT projects. In this section , we discuss the intangible and tangible areas . In Cheaper 1, we discussed some strategic and tactical considerations
Difficulties in measuring productivity and performance gains
One of the major benefits of using EC is increased productivity. However , productivity increases may be difficult to measure for a number of reasons.
Data and analysis issues
Data, or the analysis of data ,may hide productivity gains . Why is this so? In manufacturing , it is easy to measure outputs and inputs. For example, toyota product motor vehicles a relatively well defined that shows gradual quality changes over time . It is not difficult to identify the resources used to produce these vehicles with reasonable accuracy. However , in service indystries, such as education, social services, or health care delivery, it is more difficult to define what the products are, how they differ in quality , and how they may be related to corresponding benefits and cost
Other generic factors are:
-EC productivity gains in one area my be offset by losses in other areas
-hidden costs and benefits
-incorrectly defining what is measured
Relating EC and its expenditures to organizational performance.
The reason is that the relationship between investment and performance may be indirect;factors such as shared EC and it assets and how they are used can impact organizational performance and make it difficult to assess the value of an investment.
Other difficulties
The long time lags between investment and profit realization may throw off productivity measurements
Intangible costs and benefits
In many cases EC projects generate intangible benefits, such as faster time to market, and increased employee and customer satisfaction. These are very desirable benefits , but it may be difficult to place an accurate monetary value on them. For example , it is generally known that e-mail improves communications, but it is difficult to measure the value of this improverment
Tangible costs and benefits
The costs involved in purchasing hardware , software, consulting ,and support services usually re tangible, as are the costs of telecommunication services, maintenance,and direct labor. These costs can be measured . similarly, tangible benefits , including increase profitability, improved productivity, and greater market share, can be measured with relative ease
Intangible costs and benefits
When it comes to intangible costs and benefits, organizations must develop innovative metrics to track these as accurately as possible. Intangible costs may range from the inclusion of some vague costs such as those resulting from the learning curve during of the incorporation of an Ec system, to better respond to customer inquiries. Another intangible cost may result from the need to change or adaption of certain business processes such as building and operating an inventory tracking system . An additional difficulty is separating Ec cost from the costs of routine maintenance of inventory and other relevant iT systems.
Managing intangible benefits
The first step in managing intangible benefits is to define them (see the opening case of telstra , and if possible , specify how they are going to be measured
A simple solution is to make rough estimates of the monetary values of all the intangible benefits and then conduct an ROI or this approach is appealing , but in many case , the simplification assumptions used in these estimates are questionable . I the estimates were too high , a wrong investment may have been made. An estimate that is too low may result in disregarding a good investment and potentially losing a competitive advantage. Intangible costs and benefits may be approached in a number of different ways. Several of the methods presented in Setion 14 also can be used o evaluate intangible benefits. For more on intangible costs and benefits, see Ritter and rottger(2008)
One way to deal with intangible benefits is to develop a balanced scorecard for the proposed investment. This approach requires listing both tangible and inttangible goals and their measures . For an example of how this works ,see Asefeso(2014)
These difficulties can cause many companies not to measure the value of IT and EC projects, which can be a risky approach . For those companies that conduct a formal justification , we present a number of methods in
The process of justifying EC and IT Project
Justifying large scale investment is not only about selecting a method ;it is aslo about executing it. The appropriate process is not simple . The major steps of this process , according to Baseline (2006) and the authors experience are:
1 establish an appropriate basis for analysis with your vendor, and then conduct your ROI
2 investigate what metrics to use (including internal and external metrics) and be sure about thei accuracy
3 justify the costs benefit under appropriate assumptions (see the references provided in the opening case)
4 verify all data used in the calculation
5 include strategic benefits, including long term ones. Find contributions to competitive advantage. Make sure not to underestimate costs and overestimate benefits(a tendency of many managers)
6. Make data as realistic as possible , and include costs avoidance and risk analysis.

7 Commit all business partners, as well as suppliers and major customers
The use of gartne's hype cycle
Before we introduce the specific methods used in justification, we present briefly the concept of the hype cicle . Organizations can use this tool to assess the maturity level of specific EC technologies so they can develop a strategy before they invest effort and money in conducting costs benefit and justification analysis.
What is gartners hype cycle ?
A hype cycle is a graphic representation
Of the life cycle of specific IT and EC technologies (cloud computing ,3D printing, e-payment). They term was coined by Gartner. The hype cycle provides a snapshot of technologies , IT methodologies, and management related disciplines overtime. the hype cycle highlights the over-hyped technologies versus those that are matured and already have high usage in industry. The hype cycle also provides estimates of how long technologies and trends will take to reach maturity. The methodology and details are presented at gartner.com/technology/research/methodol-ogies/hype-cycle.jsp. Hype cycle can be customized (by Gartner Inc ,for a free) to fit certain industries and companies. Gartner revises the hype cycles once a year
Each hype cycle has five stages that reflect the basic adoption path any technology follows, starting with a trigger point, through over enthusiasm hype,and then enduring disillusionment, befor finally becoming accepted. (note that Gartner developmed the hype cycle to replace the product life cycle, which includes four stages.)
The five stages of the hype cycle re:
1Technology trigger. The generation of media interest and industry exposure in new IT or EC technology, which includes publicity events (such as product launch parties, public demonstrations,or press releases), that result in considerable atention to the technology.
2 peak of inflated expectations. His is the phase of exuberance and overenthusiam, and too much publicity and over-estimation of the technology’s potential. In 2003, augmented reality and the internet of Things were in this stage. The technology performance may not be able to kee up with the promises made by technology leaders, consultants, and financial analysts
Trough of disillusionment. A point where the media no longer care about the technology because its result were disappointing
4 slope of rnlightenment . The usefulness,risks,and benefits of the technology are understood because of the combuned god results and best efforts and practies of many organizations
5. Plateau of producrivity . Thetechnology has shown to have actual benefits . Now on their second or third generation , the methodologies and tools are more stable and consistent. The location of the plateu of the echnology depends on whether the technology is specifically for a niche market or is universal
Application of the hype cycle
Gartner ,Inc, provides an annual report that covers about 102 different hype cycles evaluating over 2,000 different technologies across 75 industries. For information, including a video,see gartner.com/technology/reseach /hype cycle. Gartner Inc, charges fees for providing is repors, which include technology trends. The 2011 and 2014 reports cover many EC technologies such as mobile commerce and devices, microblogging ,augmented reality, green I in data centers,social analytics,cloud computng,context-aware coputing,internet of Thing ,virtual worlds, location-based applications,security,RFID ,video telpresence, and collective intelligence.
An example of how EC technologies were placed on the hpe cycle in the past isavailable t gartner.com/newsroom/id/2575515. The press release provides interesting informaton about several emerging EC technologies. Examination of the hpe cycle can be useful to any organization that seriously considers the emerging tools of e-comerce,m-commerce, and social commerce
Section14.3 review questions
How do organizations measure performance and productivity ? What are the difficulties in measuring performance and productivity?
2why is it difficult to relate EC(IT) investments to organizational performance? List the major reason
. define intangible costs and benefits
Define intangible costs and benefits and explain why they must be considered when justifying an Ec investmen

Results (Vietnamese) 1:

Khó khăn trong đo và chứng minh thương mại điện tửChứng minh EC (và nó) các dự án có thể phức tạp, và do đó, khó khăn để biện minh cho. Chúng ta hãy xem lý do tại saoQuá trình biện minh EC Quá trình biện minh EC khác nhau tùy thuộc vào tình hình và các phương pháp được sử dụng. Tuy nhiên, trong cùng cực của nó, nó có thể rất phức tạp. Như minh hoạ trong hình 14.3, năm lĩnh vực phải được xem xét trong biện minh của dự án CNTT. Trong phần này, chúng tôi thảo luận về các khu vực vô hình và hữu hình. Trong 1 rẻ hơn, chúng tôi đã thảo luận một số cân nhắc chiến lược và chiến thuậtNhững khó khăn trong đo năng suất và hiệu suất lợi nhuậnMột trong những lợi ích lớn của việc sử dụng EC là tăng năng suất. Tuy nhiên, làm tăng năng suất có thể được khó khăn để đo lường đối với một số lý do.Dữ liệu và phân tích các vấn đềDữ liệu, hoặc phân tích dữ liệu, có thể ẩn năng suất lợi nhuận. Tại sao như vậy? Trong sản xuất, nó rất dễ dàng để đo lường kết quả đầu ra và đầu vào. Ví dụ, xe có động cơ toyota sản phẩm tương đối cũng định nghĩa đó cho thấy chất lượng dần dần thay đổi theo thời gian. Nó không phải là khó khăn để xác định các nguồn lực được sử dụng để sản xuất những chiếc xe với độ chính xác hợp lý. Tuy nhiên, trong indystries dịch vụ, chẳng hạn như giáo dục, Dịch vụ xã hội, hoặc cung cấp chăm sóc y tế, nó là khó khăn hơn để xác định các sản phẩm là gì, làm thế nào chúng khác nhau ở chất lượng, và làm thế nào họ có thể được liên quan đến lợi ích tương ứng và chi phí Các yếu tố chung khác là:-EC năng suất lợi nhuận trong một khu vực của tôi được bù đắp bởi các thiệt hại trong các khu vực khác-hidden costs and benefits -incorrectly defining what is measuredRelating EC and its expenditures to organizational performance.The reason is that the relationship between investment and performance may be indirect;factors such as shared EC and it assets and how they are used can impact organizational performance and make it difficult to assess the value of an investment.Other difficultiesThe long time lags between investment and profit realization may throw off productivity measurementsIntangible costs and benefitsIn many cases EC projects generate intangible benefits, such as faster time to market, and increased employee and customer satisfaction. These are very desirable benefits , but it may be difficult to place an accurate monetary value on them. For example , it is generally known that e-mail improves communications, but it is difficult to measure the value of this improvermentTangible costs and benefits The costs involved in purchasing hardware , software, consulting ,and support services usually re tangible, as are the costs of telecommunication services, maintenance,and direct labor. These costs can be measured . similarly, tangible benefits , including increase profitability, improved productivity, and greater market share, can be measured with relative easeIntangible costs and benefits When it comes to intangible costs and benefits, organizations must develop innovative metrics to track these as accurately as possible. Intangible costs may range from the inclusion of some vague costs such as those resulting from the learning curve during of the incorporation of an Ec system, to better respond to customer inquiries. Another intangible cost may result from the need to change or adaption of certain business processes such as building and operating an inventory tracking system . An additional difficulty is separating Ec cost from the costs of routine maintenance of inventory and other relevant iT systems.Managing intangible benefitsThe first step in managing intangible benefits is to define them (see the opening case of telstra , and if possible , specify how they are going to be measured A simple solution is to make rough estimates of the monetary values of all the intangible benefits and then conduct an ROI or this approach is appealing , but in many case , the simplification assumptions used in these estimates are questionable . I the estimates were too high , a wrong investment may have been made. An estimate that is too low may result in disregarding a good investment and potentially losing a competitive advantage. Intangible costs and benefits may be approached in a number of different ways. Several of the methods presented in Setion 14 also can be used o evaluate intangible benefits. For more on intangible costs and benefits, see Ritter and rottger(2008)One way to deal with intangible benefits is to develop a balanced scorecard for the proposed investment. This approach requires listing both tangible and inttangible goals and their measures . For an example of how this works ,see Asefeso(2014)These difficulties can cause many companies not to measure the value of IT and EC projects, which can be a risky approach . For those companies that conduct a formal justification , we present a number of methods in The process of justifying EC and IT Project Justifying large scale investment is not only about selecting a method ;it is aslo about executing it. The appropriate process is not simple . The major steps of this process , according to Baseline (2006) and the authors experience are:1 establish an appropriate basis for analysis with your vendor, and then conduct your ROI2 investigate what metrics to use (including internal and external metrics) and be sure about thei accuracy3 justify the costs benefit under appropriate assumptions (see the references provided in the opening case)4 verify all data used in the calculation 5 include strategic benefits, including long term ones. Find contributions to competitive advantage. Make sure not to underestimate costs and overestimate benefits(a tendency of many managers) 6. Make data as realistic as possible , and include costs avoidance and risk analysis.7 Commit all business partners, as well as suppliers and major customersThe use of gartne's hype cycleBefore we introduce the specific methods used in justification, we present briefly the concept of the hype cicle . Organizations can use this tool to assess the maturity level of specific EC technologies so they can develop a strategy before they invest effort and money in conducting costs benefit and justification analysis.What is gartners hype cycle ?A hype cycle is a graphic representationOf the life cycle of specific IT and EC technologies (cloud computing ,3D printing, e-payment). They term was coined by Gartner. The hype cycle provides a snapshot of technologies , IT methodologies, and management related disciplines overtime. the hype cycle highlights the over-hyped technologies versus those that are matured and already have high usage in industry. The hype cycle also provides estimates of how long technologies and trends will take to reach maturity. The methodology and details are presented at gartner.com/technology/research/methodol-ogies/hype-cycle.jsp. Hype cycle can be customized (by Gartner Inc ,for a free) to fit certain industries and companies. Gartner revises the hype cycles once a yearEach hype cycle has five stages that reflect the basic adoption path any technology follows, starting with a trigger point, through over enthusiasm hype,and then enduring disillusionment, befor finally becoming accepted. (note that Gartner developmed the hype cycle to replace the product life cycle, which includes four stages.)The five stages of the hype cycle re:
1Technology trigger. The generation of media interest and industry exposure in new IT or EC technology, which includes publicity events (such as product launch parties, public demonstrations,or press releases), that result in considerable atention to the technology.
2 peak of inflated expectations. His is the phase of exuberance and overenthusiam, and too much publicity and over-estimation of the technology’s potential. In 2003, augmented reality and the internet of Things were in this stage. The technology performance may not be able to kee up with the promises made by technology leaders, consultants, and financial analysts
Trough of disillusionment. A point where the media no longer care about the technology because its result were disappointing
4 slope of rnlightenment . The usefulness,risks,and benefits of the technology are understood because of the combuned god results and best efforts and practies of many organizations
5. Plateau of producrivity . Thetechnology has shown to have actual benefits . Now on their second or third generation , the methodologies and tools are more stable and consistent. The location of the plateu of the echnology depends on whether the technology is specifically for a niche market or is universal
Application of the hype cycle
Gartner ,Inc, provides an annual report that covers about 102 different hype cycles evaluating over 2,000 different technologies across 75 industries. For information, including a video,see gartner.com/technology/reseach /hype cycle. Gartner Inc, charges fees for providing is repors, which include technology trends. The 2011 and 2014 reports cover many EC technologies such as mobile commerce and devices, microblogging ,augmented reality, green I in data centers,social analytics,cloud computng,context-aware coputing,internet of Thing ,virtual worlds, location-based applications,security,RFID ,video telpresence, and collective intelligence.
An example of how EC technologies were placed on the hpe cycle in the past isavailable t gartner.com/newsroom/id/2575515. The press release provides interesting informaton about several emerging EC technologies. Examination of the hpe cycle can be useful to any organization that seriously considers the emerging tools of e-comerce,m-commerce, and social commerce
Section14.3 review questions
How do organizations measure performance and productivity ? What are the difficulties in measuring performance and productivity?
2why is it difficult to relate EC(IT) investments to organizational performance? List the major reason
. define intangible costs and benefits
Define intangible costs and benefits and explain why they must be considered when justifying an Ec investmen