BPM: Beyond Business Intelligence

"It is an immutable law in business that words are words, explanations are explanations, promises are promises -- but only performance is reality," Harold S. Geneen, former chief executive of International Telephone and Telegraph (ITT), said.

In the face of brutal competition, fast access to the right information is said to be a key ingredient in a manager's ability to make decisions quickly. But is simply having the right information enough?

Vendors are pushing the boundaries of business intelligence tools, redesigning these to be more user friendly. The days when you need power users to print a sales report are fast ending. But running a business isn't simply about knowing the competition and the market.

Imagine a 100-meter race where every combatant finishes at exactly the same time. Would you still call it a race? Competition is defined as the act of striving against another force to achieve dominance or attain a reward or goal. A key element in any competition is the ability to measure the performance of participants either against themselves, a preset metric, or the competition (often the leader in that industry).

Enter Business Performance Management (BPM), a set of processes that help organizations optimize their business performance. It is a framework for organizing, automating and analyzing business methodologies, metrics, processes and systems that drive business performance.

"BPM is not about IT, it's not about reporting, it's not about forecasting, it's not about planning, and yet it is all of these things and more. BPM is a management tool that can be used to measure how well the business is doing and help align the activities of people and processes to achieve desired goals," explains Sheikh Manzoor Ghani, Director of Performance Management at SAS Malaysia.

When you are able to measure your performance against a set benchmark, you are able to gauge areas for improvement. BPM uses key performance indicators (KPIs) to help companies monitor efficiency of projects and employees against operational targets. Because BPM is all about tracking how processes are performing it creates a mechanism for continuous improvement.

Agents of change

Can you go for it alone? Because BPM is not a point solution -- not a product -- its implementation requires a fair bit of understanding of industry best practices, methodologies and technologies. Going for it alone creates the potential for failure.

While most companies know their operations better than anyone else, most successful introduction of BPM systems required an external agent to introduce the possibilities and help identify areas that can benefit from the solution.

"Enterprises should use external resources but always use these resources synergistically with internal processes and programs. External resources will bring in perspectives from other industries and experiences, and provide benchmarks that will be useful for setting up KPIs internally," says Deena Lawrence, Global Partner at Meritus.

"By turning to en external source, a company is able to draw upon the expertise and experience that these consultants have to set the right goals and measure the right metrics to help ensure successful use of the BPM solution in the most effective and efficient manner for their organization," says Ghani.

Common mistakes

The unknown invites mistakes. The good news is that if we learn from the mistakes of others, we have the opportunity to avoid these when it's our turn.

Ghani points to lack of understanding of internal processes as a very common mistake. "It is essential for an organization to identify its own business requirements, and to ensure that a vendor can meet those requirements," adds Ghani.

He also points out that organizations need to consider data integration and their own data analysis methods, in order to alleviate additional challenges when implementing a new system.

Lawrence warns that "blind adherence to past practices creates a false sense of 'safety' and 'correctness'. Other common mistakes include having loosely defined KPIs that may not measure key business costs (an example being marketing), lack of measure to capture organizational training (knowledge is often lost when people quit the company), and an IT infrastructure that focuses on storage, tools and reports, rather than on insight from captured data."

BPM provides visuals to allow organizations to manage and analyze KPIs, and to set benchmarks for proactive corporate planning. "The main BPM aspects to consider are KPIs, data mining, scorecards, dashboards, and of course the benefits and challenges associated with implementing a BPM solution," advises Ghani.

The right tool for the right job

You can have the best BI tools money can buy and be happy with how it helps you make business decisions. It will certainly help you make forecasts and do "what if scenarios". But it won't help you understand why you are behind the leader in the market. It will not help you track your performance to help you become better than yourself or the industry or the competition. That is the job of BPM.

Gartner warns that supporting performance management can be a daunting endeavor, given the strategic impact it can have on your organization. To succeed, it is important to understand and identify your organization's business objectives, metrics, constituents and communication approach.

Most vendors will only be able to support specific parts of a user's holistic performance management requirements. Consequently, users must define their real scope for performance management and plan to buy and build accordingly.

Sheikh Manzoor Ghani, Director of Performance Management at SAS Malaysia, points to research work done by the Hackett Group and materials from the book "The Strategy Gap" that present several best practices and plans of high-performance organizations, which are in relation to their BPM strategy.

1. Good plans answer key directional questions. High-performing organizations do not assume that Plan A will always work. Instead, they prepare alternatives in case they are needed.

2. Good plans typically address three activities -- how the organization will maintain current operations, how it will improve the efficiency of current operations, and which new ventures or initiatives the organization will implement. In this way, any change in performance can be assessed in terms of the type of activity.

3. Good plans -- and organizations -- are focused. High-performing organizations do not plan in detail. More detail does not equal more accuracy. More detail does, however, negatively affect the time available for analysis.

4. Good plans include all aspects of the business. In addition to detailing how goals will be achieved, good plans also describe how the organization can continue to be effective and generate programs into the future. Employee knowledge, customer relationships, and the culture of innovation may create the bulk of value for any organization. This is perhaps the biggest reason a general ledger cannot be used to collect and hold a performance management budget for an organization.

5. Good plans link strategies to activities. Activities in a high-performing organization are linked into a cause and effect hierarchy because the achievement of an objective is the result of doing the right things well. This way, organizations can begin to understand and can build on the true drivers of success.

6. Good plans are measurable. Objectives and strategies have measures of success, while activities have measures of implementation. In this way, the completeness of an activity can be correlated with the success of an objective.

7. Good plans include assignments for accountability. In high-performing organizations, specific people are made responsible for individual activities. They are empowered, rewarded, and have control of the resources to ensure the delivery of the activity.

8. Good plans include the recording and monitoring of assumptions. If the organization discovers that their business assumptions are incorrect, they reconsider the associated plan targets and adapt accordingly.

9. Good plans includes a Strategy Driven Approach Strategy scorecards along with their graphical representations on strategy maps provide a logical and comprehensive way to describe strategy.

10. Good plans include a Business Metrics Driven Approach KPI scorecards are most helpful for departments and teams when a strategic program already exists at a higher level as that "things that get measured get managed."