Originally published February 13, 2006
Over the last 12 months, the major business performance management (BPM) vendors have been busy adding functionality to complete their product suites. While they develop or acquire any missing core components, these vendors are pushing the business performance management envelope in new directions to further differentiate themselves. With larger companies such as Cognos, Hyperion and Business Objects going down this path, how does a smaller player get noticed? For several vendors that are new to business performance management, the answer is in focusing on a particular business or performance process that can benefit from improved process efficiency.
One vendor doing this is Varicent, which concentrates on the under-served area of sales performance management. Their product enables you to examine the performance of your sales force (or any revenue-generating group) through a dashboard, ranking reports and other performance charts, graphs and analytics. In addition, it goes a step further by calculating performance-based compensation due each individual. This last piece, tying compensation to performance, is a key element of business performance management that many BPM adopters struggle to accomplish. In addition, it provides tangible ROI early by improving accuracy and reducing overpayments, which are common with the spreadsheet-based sales compensation models it replaces.
Another area getting focused attention is cash management. While most BPM systems incorporate the ability to report on cash, both from a plan and actual perspective, they do not provide the tools necessary to truly “manage” cash. Emagia is a software vendor that has focused on receivables, payables and credit risk management for years. They recently introduced a Cash Flow Performance Management suite. This suite allows for detailed short-term cash forecasting, a cash-flow scorecard and dashboard, as well as predictive analytics. This is an example of a specialized vendor applying the principles and technologies of performance management to a key business process. In this case, it is the optimization of working capital.
Some vendors are improving processes already inherent in business performance management. A company called XLerant delivers a product that improves and simplifies budget creation itself. Budgeting and planning is an area that many vendors have already addressed with robust functionality. The primary focus of existing budgeting products includes budget collection, consolidation and reporting processes. Budget creation is usually left to someone in accounting to address by creating a series of input templates. This new vendor provides a wizard-driven front end to the typical budgeting product (or even Excel for that matter), focused on salary planning. It embeds rules supplied by finance and HR (such as target raise percents and salary ranges by title/level) and combines them with a step-by-step walkthrough that prompts for all the required inputs. A product like this can make it easier for the average cost center manager to quickly and accurately complete his budget. This, in turn, facilitates bringing more employees into the BPM process, which is key to realizing the full potential of business performance management.
Another business process getting special attention is performance analytics. Most analytics provided by the mainstream BPM vendors can help you identify how different parts of the company are performing and allow drill-down into levels of detail. However, to fully understand how individual business processes are contributing to or hurting overall performance requires somewhat complex statistical analysis. The products that can do this usually are not geared to the business end user. ISIS Solutions, a vendor with a product grounded in deep mathematical analysis, has recently introduced a BPM Business Analytics Suite. It enables end users to perform the complex analysis required through the use of simple English language business queries. In addition, it can provide a prioritized action list for management based on its performance analysis. This kind of capability further enhances the ability of BPM end users to better understand and manage their business performance.
What will ultimately become of these BPM niche players? Will the big vendors duplicate their functionality and put them out of business? Clearly, they are addressing an unmet need and the core BPM vendors will take notice. Most likely, the planning/consolidation /reporting /dashboard/analytics vendors will continue to invest in keeping their core capabilities competitive. For specialized process functionality, they will probably look to partner with or, in some cases, acquire the appropriate products and/or vendors. This is all good news for end users because it expands the available functionality to help deliver the holistic enterprise-wide view of performance promised by business performance management.
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