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Business Performance Management: A Question of Scope

Published: September 12, 2005

Although most vendors and consultants praise the benefits of corporate-wide business performance management, most implementations do not begin that way.

The ideal vision of business performance management (BPM) is a complete solution set, enterprise-wide and ranging from the Office of the Chief Executive to the line operator on the production floor. The more common reality however, starts with a departmental system typically utilizing just one component of BPM. Let’s examine why this is the case and what, if anything, should be done about it. 

While most vendors and consultants will tout the benefits of full BPM corporate-wide, most implementations don’t start out that way. The primary reason is simple: BPM is hard. While many IT managers are focused on getting the technology right (which they quickly realize is only one part of the job) the real challenges are cultural, political, and management related. Specifically, does the organization know what the BPM system should measure (key performance indicators)?  Is it culturally ready to share more data or to use a dashboard regularly to measure performance? Will all business units adhere to a common chart of accounts and consolidation hierarchies? Are all functional groups giving BPM the same priority in their IT project stack? Due to these issues and other, those in the most pain usually tend to strike out on their own. 

The most common BPM first steps involve budgeting or dashboards. Finance-driven initiatives will usually start with budgeting and planning. While all departments will utilize the new budgeting solution, Finance is the primary beneficiary. Budgeting, particularly when done in just Excel, is very labor intensive for them. When a new budgeting solution is brought in the Finance staff’s role in building, distributing, collecting, and consolidating spreadsheets is greatly reduced. While their pain is reduced, the full benefits of BPM are not realized.

IT-led BPM initiatives often begin with dashboards. If the IT group can’t get other departments excited about the project, they’ll use the dashboard to measure IT performance. Useful, but again just a slice of BPM. 

Let’s look at some real world examples. The R&D department of a large pharmaceutical company was anxious to move forward with dashboards. The rest of the company was simply not ready. Their solution was to implement a dashboard specific to their department. However, the solution they selected was from a full suite BPM vendor so when and if the rest of the company wants to do dashboards or other elements of BPM they have the option of purchasing systems compatible and easily integrated with the R&D group’s dashboard.  This is a great example of how one can start within a single department, but take steps to realize a broader vision that could exist in the future.

The IT department of a major financial services firm had been given funding to develop a dashboard for their department. As they started researching BPM they learned that they would probably have to also upgrade their planning systems so they would have good base data to measure their performance against. Once they started looking at planning they realized they couldn’t really do that in a vacuum so they would need to get the rest of the company involved. In a large company such as theirs, that would take time. So they put their dashboard project on the back burner, and began a six month project to sell, educate, and gather requirements and support from the rest of the company. Which company made the better decision? Only time will tell. 

So, the question remains, what is the right answer? Should it be all or nothing, or is a subset of BPM a good start? As you would expect, it all depends. If you are in severe pain, for example you can’t get the data you need to make business decisions, or the budget process has become so cumbersome and slow that it is not usable, then the answer clearly is to move forward with the necessary components of BPM in the impacted areas. However, if you take a moment to map out the long term vision for BPM, you can see where this short-term projects fits in. Then if you proceed with an eye towards what’s to come down the road, you reduce the risk of this pain-reliever being disconnected from the future BPM systems yet to be implemented.