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.
The financial services firm owns many BPM software products (which is its own problem), but is not really doing BPM. These products are implemented across the company in specific departments or geographic regions to address one-off needs. In some cases they are used to enhance reporting, in others to replace spreadsheet budgeting.There is no company-wide system tied to strategic goals and management of performance against those goals. The good news is that they have a project to create just such a system. The bad news is that it is dead on arrival. The company is a political mine-field, a collection of fiefdoms. The person in charge of BPM is a smart guy, but with little authority. He needs to manage by influence. Good luck. The auto company we've spoken with has a slightly different challenge. We have been approached several times by a mid-level manager who fully understands the value of BPM and how badly his company needs it, but he can't get buy-in from upper management. As a matter of fact he can't even get their attention. The best he has been able to do is to get the ok to form a committee to do preliminary research on how BPM can be used to improve reporting. This bureaucratic organization has made little progress on this initiative in the course of the several years we have been following them. The only thing they have succeeding in doing apparently is running out of money. Which brings us back to, well, us. These companies and others like them have created an economic meltdown that we all must now deal with. How can we use BPM to get through these volatile times? For one thing, BPM can enable us to easily model the outcomes of various actions under consideration. If we are thinking about closing a plant for example what will the actual cost savings be and what will the impact be on revenues? In addition BPM can give us a more holistic view of this decision and show us how other parts of the company may be affected. As we look to better manage costs the BPM system can highlight areas for improvement where productivity or returns per employee are low. On the other hand it can also help us to optimize profitability. It can identify our most profitable products so we focus on those. It can also show us where our prices are out of line with our true costs of manufacturing, supporting, and delivering our products and services. Many BPM systems today also include risk management capabilities, quite useful for companies whose appetite for risk has gone way down. Perhaps most importantly, BPM enables management to make the frequent and fast decisions required by the daily market gyrations with confidence and relative ease. They have one consistent set of data that they trust in, an easy way to access that information, and tools that enable ad-hoc analysis with minimal technical support. Is BPM the answer to all of our problems? No of course not, but it makes it much easier to deal with those problems today and puts us on the path to addressing them tomorrow.
Posted December 12, 2008 7:14 AM
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