Performance measurement systems in the service sector: the potential of IT is not yet utilised

Abstract

The aim of this study is to enhance understanding of how performance measurement is practised in service firms. The multi-case study puts special emphasis on IT-related aspects of performance measurement and analyses the whole life cycle of a performance measurement system (PMS), starting with defining performance indicators and ending with using the PMS for performance improvement activities. The study shows that the majority of performance indicators which companies have in place are financial ones. Nonfinancial aspects are partially measured but often they are not an integral part of the monthly or annual reporting. Although innovation seems to be vital for service companies, very little emphasis is put on its measurement. The analysis shows further that the concept of leading and lagging indicators is not applied and that business processes are not measured systematically. One of the problems companies deal with is that the operational IT systems are not fully integrated; therefore collection of performance data often needs some manual intervention. Finally, in most companies performance-relevant data is stored in various databases and documents so that company-wide access to performance results is not given. © 2002 Inderscience Enterprises Ltd.