We have just finished analyzing and have started to release the results of the 2009 BPM Pulse survey. This year's survey, 'Performance Management Goes Mainstream', added questions about the impact the economy was having on the survey respondent's BPM plans. In addition it included questions about project status and overall satisfaction with BPM. The good news for vendors, consultants, and most importantly, end users of performance management is that satisfaction is high and the rough economy is driving more people to invest in BPM, not less. You can view this graphically here. In addition, a summary whitepaper with information on business needs driving adoption, feature/functionality priorities, areas of focus for operational analysis, spending plans, etc. is available here.

The holy grail of business performance management (BPM) is to compensate people based on their achievement of corporate, departmental, and individual goals and objectives. While BPM is good at measuring progress against objectives, it is of little value if it doesn't change people's behavior, which in turn should help improve the bottom line. Incentive compensation based on what is being measured by the BPM system is a way to do that. Until now there have been two main roadblocks to implementation of this approach: culture and technology.

Whether they want to admit it or not, Microsoft has effectively killed their shot at being a player in business performance management (BPM) with the shooting of PerformancePoint. Many people have written very eloquent blogs about its' demise, perhaps this one being the most impassioned. For a fact-based description of what happened you can read Nigel Pendse's commentary. The fact of the matter is that it showed great promise, with thousands of beta testers and a strong team, but the reality was that I believe in the end there were just several dozen companies that actually went live with it. Nigel, can explain the 'why', I'll focus on the 'what's next'. Well, first of all those companies that bought it now have what we like to call a zombie product (dead, but ten years of support!). They need to seriously think about moving on before they invest any more time and resources in a product with no future. In this economy BPM is more critical than ever. So where should these guys look for a replacement?

Well, it's happened. Performance management has hit the big time. President-elect Obama has named a Chief Performance Officer to oversee budget and spending reform. I wonder what technology she'll use to accomplish this Herculean task? More importantly I wonder if this is actually good for performance management as a whole. Some companies will certainly see this as confirmation that performance management is real, it's important, and it's time for them to move into the 21st century as well. What if she's seen as not being very effective? After all government bureaucracy, unchecked spending, and tremendous debt are daunting challenges for anyone to overcome. Will a negative outcome for this new position tarnish the image of performance management everywhere?

As I've been following the financial services and auto industry bailout efforts it occurred to me that BPM (or lack thereof) may have played a role in the problems these companies are now facing. In addition, BPM can help the rest of us deal with the fallout from these business failures. We have had many BPM conversations over the years with one of the financial services firms recently receiving aid, and one of the automakers seeking aid. Both of these companies have failed miserably with business performance management. For starters, they didn't actually engage us to help (always a mistake). Seriously though, despite good intentions they were unable to pull off a successful BPM project. This is both symptomatic of their management problems, and one of many obstacles to good decision making.

Just in time for Halloween, the BPM vendors are creating their own band of zombies. More specifically, their dead products are being brought back to 'life'. Killing a product in the first place is often a difficult decision for a vendor. The internal staff that helped create and market the product may be reluctant to let it go. Some customers may not want to see the product they purchased disappear, even if its replacement has better features and performance.The reality though, is that it is the right decision. If you are releasing a major new replacement product you need to re-allocate resources and start consolidating customers on the new platform. The significant merger and acquisition activity of last year left several vendors with overlapping and redundant product sets. The best of the vendors officially killed off the weakest links and worked on enhancing and moving forward with the strongest in each category. The worst of the vendors also have dead products, they just didn't announce it for fear of a customer revolt. Which brings us back to the walking dead.

Life can be tough for consulting companies. Some potential customers have ben burned by unscrupulous consulting firms in the past and can now be somewhat hesitant to give the consulting industry another chance. Most consultants of course are fair, ethical, and deliver good value but end up paying the price for the few bad apples. I have recently had the unfortunate opportunity to observe a number of situations in the performance management consulting industry where the customer was being misled and will probably be left with a bad taste of consulting. In some cases the performance management software vendors are adding to the problem.

While meeting recently with a Fortune 100 company planning out their Business Performance Management initiative, something came up that I felt could derail the whole thing. Unfortunately, they didn't see it that way. These are very senior, smart people and they did a brilliant job of analyzing their data needs and developing a standardized data structure to handle everything. Where their brilliance failed them was on the people side of the equation. They did share that they were getting a little pushback from some of the divisions about moving to a new, standardized performance system. This was attributed to stubbornness and ignorance. It was their belief that they could overcome this by re-assignment of problematic individuals and hiring new people who wouldn't have been exposed to anything other than the new way of doing things. It was also suggested that people would come around if they thought about how this new system could help improve the company's stock price. From my perspective there was a much simpler, less heavy-handed approach they could take that would have a greater chance of success.

It's no secret that in many companies the relationship between Finance and IT can be somewhat strained. Business performance management (BPM) initiatives tend to bring those underlying tensions to the surface. For BPM to succeed Finance and IT need to work closely together as a team. In some companies there is such strong disagreement around BPM approaches, priorities, and technologies that they fail to reach consensus and the project simply stalls out. Of course if there was a good senior executive sponsor in place they could break through the logjam, but many companies fail to fill that role with the right person. A company we have been working with recently has absolutely no Finance/IT issues to deal with. The reason is that they took a proactive approach to head off problems of that type. They simply have the CIO reporting to the CFO.

In the performance management space there are currently at least 6 vendors that could be classified as 'big'. While they all have a broad and deep range of offerings, for some end users these solutions can be overkill - too complex, too expensive, too much of a good thing. For some vendors, their sheer size has also had a negative impact on their behavior in the field and therefore their ability to win business. We have recently observed the actions of one of these vendors at several prospects where their 'big company behavior' cost them the business. In at least one case it was a multi-million dollar deal that ended up gong to a much smaller competitor.