Business performance management (BPM) has had a long and successful run. Is that about to change? Business performance management may become a victim of its own success if purchasers are not more
thorough in the planning of their initiative.
It Starts with Prospective Purchasers
Due to the general success of business performance management so far, some prospective users of BPM are treating it as just another commodity. Business performance management deals intimately
with the way a business is run and the decisions that are made. What product is used, how it’s implemented and what it measures are unique to every business. Treating it like the office copier
(just go buy the leading brand, or find the cheapest one) is very shortsighted. Some companies are doing research, but in name only. In many cases, ill-informed junior analysts are assigned to do the
research. They don’t know what they don’t know and end up buying into marketing hype. They are also impressed with all the information they can get at no cost, downloading every free
document they can find. We all know what you get for free – sales pieces or high-level overviews, not the appropriate depth you need to make the informed business decision that is required for
business performance management. In some instances, these very same people spend money on vendor conferences that are either too sales-oriented or too generic to really tell them what they need to
In addition, there are important steps being skipped. Many companies do not have a road map in place for performance management. Hard to believe, but true. They know the problem they are trying to
address today, but there is no vision for tomorrow. The result – buying a solution that they outgrow very quickly and/or a BPM initiative that never moves beyond the basics. What about
requirements? Some organizations think a single page high-level list is all they need. With the aggressive marketing going on today in business performance management and dozens of vendors to choose
from, that list will fall far short of enabling anyone to tell the vendors apart. For example, almost all BPM products work with Excel; how they actually utilize spreadsheets will vary by vendor.
Just having “must work with Excel” as a requirement will not be of much help. Lastly, since performance management is the focus, key performance indicators (KPIs) are critical. More
specifically, what is the system in fact going to measure? What is strategically important to our business today? Most companies simply automate existing reports and ratios. That is not going to give
them the real benefits of business performance management.
We have seen many instances where the CFO will either not fund the project as they focus on more pressing priorities, or just dictate the solution to be selected based on prior relationships or
familiarity from a prior (perhaps very different) job. It’s amazing that anyone ends up with the right solution.
The Vendors Play a Role
The vendor situation is adding to the confusion. There are a handful of very large vendors in this category. There are multiple impacts resulting from this situation. It lends itself to the
offhanded “let’s just consider vendor A, B, or C – they’re the biggest” comment. Also, while being functionally rich, these large-scale solutions can be costly and
complex, causing all but the largest enterprises to believe business performance management is not for them.
Smaller vendors have significant challenges and resulting financial performance pressures. This tends to stifle innovation and sometimes price competition. The big guys can do and charge what they
want. They have significant leverage and can set direction and tone. There is also a herd mentality. “We haven’t really evaluated this solution, but everyone else is going with
them.” Let’s not forget what happened with ERP
(enterprise resource planning) initiatives. Projects took much longer and were much more expensive than expected. Companies modified their
business to fit the product instead of the other way around. There are the beginnings of some of those same potential issues coming up in BPM implementations today.
Expert consultants should be able to help companies do BPM right and avoid some of the mistakes previously outlined. However, they have their own challenges. As this is one of the few
growing software categories, everyone is looking to get on the BPM bandwagon. BI
technology experts and data warehouse designers are starting to pass themselves off as performance management experts.
BPM is as much about business as it is about technology, and some of these consultants do not have the appropriate background or skills. Of course, there are also the hundreds of BPM implementation
consulting firms that partner with one or more vendors. Although many are expert and do a good job implementing the software they know best, some are pretending to be independent and unbiased BPM
experts that can help companies with their entire project from start to finish. Their underlying goal is to see that their partners’ products are purchased and they get the big dollar
Coming back to the prospective BPM purchaser – many don’t think they need expert guidance. “BPM is proven and successful, and the vendors will help me through my implementation.
What more do I need?” Of course, if they want to leverage the learning that made those that have gone before so successful, new purchasers need to employ best practices and the shared knowledge
of hundreds of similar companies that consultants can bring to the table.
With these trends I see a higher risk for BPM projects – and a higher percentage of failed implementations or, even worse, implementations that only meet 50-70% of their goals. In the
latter case, organizations will often stick with the sub-optimal system for 5-7 years, operating less efficiently than their competitors. I fear that once the full failures start to increase, it will
have a snowball effect. Business performance management will be viewed negatively and projects will be cancelled.
The good news is that those who are falling victim to the above issues are still in the minority (although growing). It is important to step back, develop a vision and a prioritized road
map of where you want to go, create a detailed requirements list that supports your existing business processes, consider a full range of vendors that can meet your requirements, and have a short
list of vendors do at least a small proof of concept during the evaluation process. Next, assure that the implementation firm you select is truly expert at the technologies selected by not selecting
them until after you have gone through your full evaluation of alternative technologies. Finally, confirm that you have the right expertise on your team – either in-house staff or
leverage external experts. Working with someone with the experience of multiple prior BPM engagements can definitely create huge value in the process.
SOURCE: A Turning Point for Business Performance Management?
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