Management of Virtual Organizations faces new challenges that traditional approaches cannot address. This research proposes a performance measurement framework for service oriented virtual organizations including a structural and a procedural component. The structural framework aligns the activities of partners in a virtual organization at three different layers. The first layer is designed for partners’ strategic alignment through coordination of the value creation network. In the second layer, performance dimensions of partners’ collaboration are defined and mapped to the service choreography model. The third layer focuses on assessing effectiveness and efficiency of partners’ domain specific services, which is designed based on ITIL V3 service level management guidelines. In order to consolidate the structural framework, these three layers are integrated using a method for extracting service choreography model and SLA aggregation patterns from the value network. The procedural framework, on the other side, defines the processes required to design the KPI structure, implement the solution, communicate the results, and derive improvements. We propose an implementation architecture that enables inter-organizational performance management in collaborative environments. Then, the IBM products for business process and performance management (IBM BPM, Business Monitor, and Cognos BI) are employed to implement the proposed architecture. The conceptual framework along with the implementation architecture provides an integrated solution for decentralized performance measurement without the need for a central authority. We demonstrate that the proposed solution enhances flexibility, scalability, and interoperability, and supports transparency of partners’ performance information at an agreed-upon level as a basis for mutual trust.

Management of Virtual Organizations faces new challenges that traditional approaches cannot address. This research proposes a performance measurement framework for service oriented virtual organizations including a structural and a procedural component. The structural framework aligns the activities of partners in a virtual organization at three different layers. The first layer is designed for partners’ strategic alignment through coordination of the value creation network. In the second layer, performance dimensions of partners’ collaboration are defined and mapped to the service choreography model. The third layer focuses on assessing effectiveness and efficiency of partners’ domain specific services, which is designed based on ITIL V3 service level management guidelines. In order to consolidate the structural framework, these three layers are integrated using a method for extracting service choreography model and SLA aggregation patterns from the value network. The procedural framework, on the other side, defines the processes required to design the KPI structure, implement the solution, communicate the results, and derive improvements. We propose an implementation architecture that enables inter-organizational performance management in collaborative environments. Then, the IBM products for business process and performance management (IBM BPM, Business Monitor, and Cognos BI) are employed to implement the proposed architecture. The conceptual framework along with the implementation architecture provides an integrated solution for decentralized performance measurement without the need for a central authority. We demonstrate that the proposed solution enhances flexibility, scalability, and interoperability, and supports transparency of partners’ performance information at an agreed-upon level as a basis for mutual trust.