Choosing a business performance management (BPM) system and vendor is a decision involving an investment that can range from $50,000 to more than $2 million, depending on the project scope. The long-term impact is considerably larger than that budget, however. Much of our work at BPM Partners, Inc. is focused on this significant decision, and we have seen enough good (and bad) choices made to convince us that there is a right (and a wrong) way to do it.

The process starts with you – or someone in your company – deciding who to involve. Internally, you must identify the key stakeholders and the executive champions. Getting the endorsement and proactive commitment of senior management turns out to be a crucial part of this first step. Err on the side of inclusiveness. This could mean you’ll recruit representatives of several operational areas, along with key IT and finance people.

Externally, consider engaging expert help. Some companies have policies against hiring consultants, which means the BPM project manager may be forced to go it alone. However, this project manager must be able to quickly identify expert, objective information in order to enhance his or her own expertise. Several of the BPM consulting firms sell research reports, detailed product reviews and best practice guides. Purchasing the right research can help get you started by avoiding costly errors.

Examine the Business Requirements First
Requirements definition must start with what the enterprise needs to accomplish with business performance management, not how it will be done. You’ll have best results with the following sequence: your company sets the business requirements, finds a vendor (or vendors) that can satisfy those requirements and then conducts a technology review to ensure compatibility. If your enterprise has certain inflexible technical requirements, they should be part of the initial vendor screening process.

Business performance management aims to tie business execution to the organization’s strategy. Defining the requirements for BPM projects should begin with that strategy in mind. This helps balance the multitude of agendas that will show themselves once the project is underway.

If the technical priorities are weighted too heavily, the business requirements may get short shrift. Involve a range of participants in a structured discussion, and don’t rush it. It is a big help if you can keep politics out as you address the “want lists” of different areas of the company.

Some of the technical issues to consider include application interfaces, whether or not the system must be entirely Web-based (including administration) or a service-oriented architecture. Data integration issues, the choice of relational databases and multidimensional databases all need to be early discussion points.

Selection Committee
At some point, your project group needs to be reduced to a set of people committed to seeing the entire process through in detail. If the stakeholder departments of your company are represented adequately, that is your selection committee. Again, you want senior management present and committed.

What Kind of Vendor?
Before looking at individual vendors in any detail, consider the broader categories of software vendors to define whether you have a preference. These range from ERP vendors (preferably your own) to those who focus on tools for development, best-in-class applications or both. On the issue of vendor type, finance and IT will frequently collide. IT often votes for your existing ERP or data warehouse tools vendor because your BPM implementation should align with your current data architecture, their people know the systems involved and it just seems like a logical choice. Business users don’t care about the underlying architecture; they want ease of use, specific BPM functionality and self-sufficiency. The resulting debate is one where IT should ultimately defer to the business users, provided the selected vendor meets IT’s key technology and security requirements.

We have seen many such arguments; and while data and systems integration needs to be addressed, the requests of the business users must come first or the system won’t get the acceptance it requires. If IT gets what IT wants, the system may never be fully embraced by the end users. One way to resolve a stalemate here between IT and finance is to bring in a referee, either a senior rule-maker or an outside neutral party.

Create a Vendor List
When you build your vendor list, look beyond the best-known software players to include those who may have quality products but weaker marketing. Tap into unbiased information sources. The goal is to build a broad list of vendors that – at least on the surface – appear to meet your basic requirements. A request for proposal (RFP) or a third-party expert can help you reduce this initial list to two or three key vendors.

Requirements Scoring Grid
Once your requirements have been defined and you have created a list of the vendors of interest, a logical methodology will be necessary to walk through the selection process. Before you start evaluations, members on the selection committee need to agree on the weighting of each of the business requirements. This will make it tougher for debates to start as to which requirement is a higher priority while you are conducting detailed vendor evaluations.

The Customized Demo
It’s up to you to insist and enforce that the vendors’ demos be focused on your particular needs. A common mistake is to invite vendors and permit them to run their own demo rather than requiring them to deliver your demo. Rest assured, if you don’t dictate what data to use, and what functionality to show in real time, the vendors will focus on their selling differentiators. Your group may get excited about capabilities and functions that you don’t need, instead of knowing if the system can really meet your requirements. Be inflexible. Control the demos.

Adequate Due Diligence is Key
In summary, you need to assemble a cross-functional team, focus on the business requirements while keeping technical needs in mind, find vendors that match your requirements, score them using a prioritized and weighted version of your key requirements, demand customized demos, and select the product that comes out on top. This process typically takes two to three months. Unfortunately, many companies think they can take shortcuts, and they don’t seem to realize how much those shortcuts increase their risk. Some companies will simply decide to use an existing solution already in-house for other purposes. Other companies will select a vendor based on marketing messages and slick demos. As stated in the beginning of this article, this is a costly investment in a mission-critical system. Making the wrong decision is not an option.

Recent articles by Craig Schiff

• Overspending on Business Performance Management
• A Turning Point for Business Performance Management?
• Why Performance Management? Part 2
• Your Performance Management or Business Intelligence Platform – Is it Frozen in Time?