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Fact vs. Fiction in Performance Management

Originally published May 16, 2007

Over the years, certain statements have been made regarding performance management that are assumed to be fact because no one challenges them. Unfortunately, accepting some of these statements as fact has two downsides. First, it potentially reduces the scope of a performance management project and could curtail the business impact such an initiative can have within your company. Second, it creates confusion around the common language that should be used in an enterprise-wide initiative, fueling unnecessary tension between team members and departments. In this article, we take a look at several of these statements and identify which truly are fact and which are fiction.

Statement: Enterprise performance management (EPM), corporate performance management (CPM) and business performance management (BPM) only differ slightly from each other.

FICTION: EPM, CPM and BPM are different terms for exactly the same thing. As is often the case, each analyst/vendor has a preferred term he/she likes to use to describe this category. For example, Business Objects uses EPM, while Hyperion uses BPM and Gartner uses CPM. Several other vendors now are just using the term “performance management” to avoid any confusion.

Statement: Performance management benefits companies of all types and sizes.

FACT: I have on occasion heard it said that performance management is only for the “big guys,” but that is not true. Large, mid-size and small companies, public and private, not-for-profits and governmental agencies are all embracing performance management. Every organization that needs strategic alignment around key objectives, wants to share a single set of actionable information, or is simply looking to maximize its investment returns can benefit. Even those that just want to automate the labor-intensive processes of Excel budgeting and financial consolidation to save some money or free up some resources can benefit. With the wide range of solutions available today, with vendors supporting purpose-built solutions for various segments of the market, it is not too difficult for even the smallest companies to find a solution that fits within their budget and IT constraints.

Statement: Performance management means dashboards.

FICTION. Dashboards are a key element of performance initiatives, but budgeting and forecasting, strategic planning, financial consolidation and operational analytics are also important components. Be careful, as some business intelligence tools vendors still refer to themselves as performance management vendors when, in fact, they promote only dashboards without support for other core analytics or financial/operational business processes.

Statement: Dashboards and scorecards are interchangeable terms.

FICTION. This one has been around a long time and people are still confused. A scorecard is a collection of key measures, essentially a report card that an organization uses to keep score on how it’s performing. This scorecard can be displayed in a report, handwritten on a whiteboard or graphically displayed on a dashboard. A dashboard is really a user interface, a highly visual way to display information with charts, gauges and stoplights. Scorecards and dashboards are a logical combination, but they are fundamentally two different things.

Statement: Real-time access to information is essential for “true” performance management.

FICTION. This is a more recent statement that is being circulated by vendors who are touting their real-time data access capabilities. Sure, certain data makes sense on a real-time basis, but other data does not. For example, if you are monitoring store inventory for a retail outlet or online bookseller, you want to be alerted before an item runs out. Thus, real-time access is essential. On the other hand, if you want to see how a sales region is performing, you need to view aggregated results over time. Just looking at a current sales snapshot can, in fact, lead you to draw incorrect conclusions about the business. You need the smoothing effect of time to really understand business performance.

Statement: Business intelligence (BI) and business performance management (BPM) are two different things.

FACT. There is a growing chorus of people saying that BI and BPM have “merged,” mirroring the actual merger of BPM and BI companies. While they are related and complementary, they are different. Performance management is really about the business processes (supported by technology) that enable a business to set strategic goals and measure how successfully it is executing on those goals and objectives. The technology that supports these processes includes BPM packaged applications such as budgeting, planning and consolidation, as well as BI tools such as extract, transform and load (ETL), report and query, and OLAP multidimensional cubes. BI is an essential part of BPM; but, while BPM is helping accelerate adoption of BI, BI can exist without BPM. The mergers we are seeing indicate recognition of the fact that performance applications coupled with BI tools are necessary for today’s performance initiatives, and purchasers have shown a preference for getting it all from a single vendor.

By shedding some light on these statements (both fact and fiction), my hope is that you will have a better grasp of how performance management integrates with your current enterprise applications. If you have other topics or statements that could benefit from further clarification, please do not hesitate to drop me an e-mail at cschiff@bpmpartners.com.

  • Craig SchiffCraig Schiff

    Craig, President and CEO of BPM Partners, is a pioneer in business performance management (BPM). Craig helped create and define the field as it evolved from business intelligence and analytic applications into BPM. He has worked with BPM and related technologies for more than 20 years, first as a founding member at IMRS/Hyperion Software (now Hyperion Solutions) and later cofounded OutlookSoft where he was President and CEO.

    Craig is a frequent author on BPM topics and monthly columnist for the BeyeNETWORK. He has led several jointly produced webcasts with Business Finance Magazine including "Beyond the Hype: The Truth about BPM Vendors," the three-part vendor review entitled "BPM Xpo" and "BPM 101: Navigating the Treacherous Waters of Business Performance Management." He is a recipient of the prestigious Ernst & Young Entrepreneur of the Year award. BPM Partners is a vendor-independent professional services firm focused exclusively on BPM, providing expertise that helps companies successfully evaluate and deploy BPM systems. Craig can be reached at cschiff@bpmpartners.com.

    Editor's Note: More articles and resources are available in Craig's BeyeNETWORK Expert Channel. Be sure to visit today!

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