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How to Increase Your Performance Management Risk, Part 3

Originally published September 12, 2007

In Part 1 and Part 2 of this series, we discussed the pitfalls of only looking at a single vendor for performance management and going through the process without taking advantage of expert assistance. In this final installment (for now), we will look at perhaps the most controversial risk-increasing approach: selecting a tools-only vendor for performance management.

Why is this controversial? The tools vendors who spend lots of time and money presenting themselves as full-blown performance management vendors will strongly disagree with what I am about to say. In addition, there are still some diehards in corporate IT departments who insist that the only right solution is a custom-built one. Let’s take a look at what they’re all missing.

The Trouble with Tools

Don’t get me wrong, business intelligence tools are very useful and, in fact, are essential in addressing many business problems. If I have a large volume of data and I am looking for ad hoc reporting, what am I going to use other than a report and query tool of some sort? If I need to move and map data from one or more system(s) to another, how will I do it without an extract, transform and load tool (ETL)? If I want to slice and dice a multidimensional data set, how can I do that easily without an OLAP cube? As a matter of fact, all of the tools I just mentioned are part of a typical business performance management (BPM) solution. The important point, however, is that they are part of the solution, not the full solution itself. If the tools vendors touted their wares as ideal components for assembling a solution, things would be great. In most cases, though, they don’t. They represent themselves as full-blown performance management solutions. Most of them offer reporting tools, ETL tools, a database, an OLAP cube and a dashboard. If someone was new to performance management, they might take them on their word, purchase their products, and think they are all set for their performance management project. This is clearly not the case. Where is their budgeting capability? How about financial consolidation? Driver-based planning? Profitability analysis? These same vendors also tend to have consulting staffs and/or partners who are experts in business intelligence tools and data warehouse technology. Where are the business experts to help you understand nuance between budgeting approach alternatives or determine the key strategic measures to properly populate your dashboard? To clarify, we are not talking about vendors such as Cognos, SAS and Business Objects who have acquired a stable of business performance management applications and experts to complement their existing toolsets. We are referring to the shrinking list of tools-only vendors. Again, they are great for data warehousing projects and one-off specialized applications. They are not business performance management suites. Many traditional tools-only vendors are moving away from this business model. Even Microsoft, a traditional enterprise tools vendor, is moving out of the BPM tools-only arena with the delivery of PerformancePoint.

Build versus Buy

Now suppose you understand that these are not full-blown business performance management solutions in and of themselves, but you want to use them to build such a solution. Well, that’s not a great idea (unless you are an application software vendor jumpstarting your product development by using them as a foundation while you focus on the BPM-specific capabilities required). In the early days of business performance management, many organizations did, in fact, custom-build their own solutions. Some used available tools; others even used programming languages and started from scratch. There was good reason to do this back then: packaged BPM applications were scarce. In the early ‘80s IMRS (later Hyperion), FASTAR/Corporate Class Software (later acquired by IMRS) and Comshare (later Geac/Infor) were three of a very few that were selling purpose-built BPM applications. There were not many components offered, and the functionality did not run deep. Most companies had little choice but to build solutions from scratch. Even as these packaged applications evolved to be more robust and fully functional systems, they were not that easy to customize for unique needs, particularly in larger companies where there was still a need to build custom solutions. That is not the case today. There is a plethora of robust, fully customizable packaged BPM application solutions to choose from. Why re-invent the wheel? Even if you have the time and money to do so, does your staff have the domain expertise? Ever try to build a budgeting solution from scratch? How about a consolidation system than can handle intercompany eliminations, multiple currencies and journal entries as well as legal, management, and product roll-ups? Do you have the time, resources and knowledge to quality assure these solutions to the same level that vendors do? How will you maintain the solution once the original architects/consultants are no longer working with your company? However, note that there are areas of business performance management that are still in their infancy. Operational analytics is one such area. Packaged solutions are few and far between. Using business intelligence tools is often the only solution to meet your needs.

The key message here is to use tools where appropriate: areas not well-served by packaged applications. When packages are available, take advantage of them to leverage the built-in domain expertise and save time, money and aggravation.

  • 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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