The main problem with business performance management (BPM) vendor selection is that most business professionals think they already know how to do it. If you, however, have come face to face with the reality that it’s not easy – if you have spent more than two months selecting a BPM vendor or have purchased a product that doesn’t quite do what you expected – then you can benefit from learning the right way to go about selecting a business performance management solution. It’s never too late to go back and do it right. Those who are just starting down the BPM path have an advantage; they can use this guide to get it right the first time.

A Road Map is Key
Business performance management has many components, from budgeting, strategic planning, consolidation, and reporting to dashboards and operational analytics. Without a well thought-out road map, you may address your current pain – usually budgeting – without an eye toward what follows next. Then, when you are ready to move on to the next phase, you may discover your vendor is great in the area you attacked first, but weak in the functionality you want to add next. Prior to making that first purchase, the senior team really needs to lay out their long-term vision for BPM and then identify and prioritize the various phases. In addition, an audit should be performed of software currently owned by the company. You may find that you already own products that can address some of your BPM requirements. A gap analysis based on where you are compared to where you want to go will help identify the missing pieces that need to be purchased.

Business Requirements First
BPM is a strategic business initiative. It is not a back-office operational system. Therefore, the business requirements need to be front and center. Which technology is best is really a secondary discussion. Before you look at OLAP vs. ROLAP vs. hybrid OLAP or the like, you need to determine more fundamental matters, such as whether or not a piece of software handle the complex allocations required by finance for the annual budget process. Some companies actually skip this step thinking they’ll know a good budgeting or reporting system when they see it. That skip is a big mistake. Avoid it. Interview the key stakeholders, gather their detailed requirements for the new system, and then consolidate and prioritize the results. You may also want to find out what they like and dislike about other systems they have used in the past to accomplish similar tasks. At this point, have someone experienced with business performance management give your requirements a sanity check. Unrealistic blue sky items on the list could cause you to filter out otherwise very capable vendors. Your list probably will be focused on current pains and challenges and overlook some potential BPM benefits that you didn’t have time to think about or were simply unaware of. Now with your clean and prioritized list of business requirements, you are prepared to start the actual process of vendor selection.

RFP or Not?
The RFP (request for proposal) process is tedious and labor intensive for all concerned, and in the end, probably not very useful. So why do people do it? They need some way to filter down the long list of potential vendors to a more manageable handful of best fit candidates. There are other ways to cut down the list (see the next section), but if you must go through the RFP process make sure you do it right. The single biggest mistake people make is to not ask sufficiently detailed questions. For example, I can almost guarantee that if you ask every BPM vendor, “Does your product works with Excel?” you will hear nothing but “Yes” straight across the board. Does that help you differentiate between the vendors? Of course not. However, if you follow up that question by drilling into the specifics (e.g., Do you have an add-in? Is the interface an external load file? Can you execute commands from within Excel to directly access your database? Does your interface support both read and write access? Can I use existing models?), you begin to have enough information to differentiate the vendors. Also, customize your RFP for business performance management. Pulling out an old warhorse generic RFP that IT has used countless times before that asks questions such as: “How many characters is the account field?” is not going to add much value.

Which Vendors?
Who will receive your RFP? Or, if you skip the RFP, how will you create your vendor short list? Some companies sidestep making a short list by just looking at the vendors with the biggest marketing budgets – mainly because they have seen or heard of them most often. If you do that, you run the risk of paying top dollar for features you may not need. Someone’s got to pay for that marketing, after all, and it could be you. Or, you may miss out on a lesser-known vendor with a product that is a better fit. A little more in-depth research is in order. Most people start their research on the Web. A quick Google search will turn up any number of free whitepapers, reports, and buyer’s guides. Free research material is free for good reasons: either it’s just marketing material in disguise, or it’s a high-level overview designed to entice you to purchase more detailed information. If you are going to purchase BPM software for hundreds of thousands of dollars, and probably spend an equal amount on services, shouldn’t you make a small investment to make sure you consider the right vendors? It makes sense to purchase in-depth reports from a recognized industry analyst or to look to a third-party BPM expert for guidance and advice.

Once you have identified your vendor short list, it’s time to put the vendors through their paces. With that in mind, in the second part of this article, we’ll take a look at the actual vendor evaluations, scoring process, selection and negotiations.

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?