EUROPEMEDIA-(C)2002 Van Dusseldorp & Partners - http://www.vandusseldorp.com/

While companies should seek a return on investment (ROI) from their e-business, there are limitations in focusing on ROI as the only measure of success.

The dotcom doom has caused many companies to crack down and require concrete proof of a project?s ROI. But there is danger in jumping on the current ROI bandwagon and limiting the potential benefits of the internet.

The internet cannot be confined to one process or department - it will always affect a number of business areas, bringing unexpected returns, which makes any discrete measurements of the impact of e-business unrepresentative. The success of e-business projects lies in making the entire business system better, while ROI models are designed to measure results in isolation.

Traditional business measurements tend to focus on internal operations, while e-business delivers the greatest rewards when used between a company and its external trading partners. Internet investments affect a supplier?s overall business - not some secluded online niche.

Companies that focus exclusively on ROI performance will miss e-business opportunities, because such internally-focused metrics don?t do justice to possibilities outside the company whose payback could be increased customer loyalty. As business-to-business (B2B) adoption gathers pace, projects insisting on immediate ROI at the expense of aggressive integration with customer systems will cause more harm than good.

Developing detailed ROI models may slow down e-business projects. Faced with internal cultural resistance and a loss of the sense of urgency in the wake of the dotcom crash, such slowness may kill a project before it can prove its worth. With customers rationalizing their supplier bases, time is limited for suppliers to web-enable their catalogues. First-mover advantage may be overrated but tenth-mover advantage doesn?t exist.

The success of an e-business project does not necessarily lie in increased revenues - non-financial key performance indicators are also important because relying on financial goals could damage relationships with customers expecting higher levels of service.

Intangible benefits can be looked at in monetary terms. For example, increasing customer satisfaction levels by 10 per cent could be valued at E100,000 and an increase of 30 per cent be valued at E1m. Such monetary values make it easier to compare alternative benefits -although they can be misleading. It?s difficult to compare reducing inventory by 10 days and increasing customer satisfaction by 30 per cent.

Ultimately, the customer must be the measure - suppliers have to test e-business initiatives against customer-facing criteria that are regularly assessed and updated as the status and goals of the project change. ((Distributed via M2 Communications Ltd - http://www.m2.com))