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Business Performance Management: Build vs. Buy

Originally published June 13, 2005

While most organizations wouldn’t even consider building their own transaction processing system, the build vs. buy decision is most definitely on the minds of individuals charged with leveraging business performance management systems (BPM) today.

 Tools vs. Applications

Software technology, within any given market niche, usually begins with the introduction of tools that enable early adopters to develop their own application solutions. These early adopters are usually very familiar with their business problem, are technically well versed, independent-minded and unafraid of leveraging unproven technologies that haven’t been productized. They’re willing to take on the risks associated with new technology because their “vision” tells them that the potential competitive advantages are greater than the associated risks. Application solutions offered by vendors usually appear later in the software technology life-cycle and often replace these early tools. Whether these applications are horizontal or vertical in nature, the appearance of applications usually signals a more mature market.

Transaction Processing vs. Business Performance Management

Application solution vendors can better serve the transaction processing market. Transaction processing methodologies and requirements are better known and are more similar in nature then their BPM counterparts. In many respects, this is why transactional systems development using tools is often replaced by vendor application solutions.

Business performance management has followed a somewhat different path. First, vendors offered tools and soon thereafter some application solutions appeared including reporting, budgeting and forecasting systems. The key difference is that because of the diverse nature of BPM, tools continued to maintain a presence, though somewhat limited.  

What’s unique to business performance management vs. transaction processing is that business problems involve end-users who may not fully understand problems upfront. Tools that facilitate prototyping and rapid application development, used by individuals who understand the business, may be a better fit. They may enable overall faster deployments then application solutions, which, in part, may explain why BPM tools survived. That being said, BPM application solution vendors did quite well over the past decade, but the winds of change are in the air.

 Benefits of Tools vs. Applications for Business Performance Management

What’s going on here is that organizations are beginning to realize that perhaps the diverse nature of business performance management is better served by productized tools vs. traditional application solutions. The evidence, as collected by BPM Partners and other prognosticators, tells us that overall costs and time to implement are reported to be lower today by those organizations using tools vs. those using application solutions. 

That’s not to say that every organization should build its own BPM application. Certainly, due consideration should be given to the likelihood for success. What is interesting is that, while one would expect BPM application solutions to be more expensive then their tool counterparts, these same reports show that the time to deploy the application solution is greater as well!

The production of BPM tools offered by vendors such as Microsoft and Applix has enabled organizations to leverage BPM tools like never before. This becomes more relevant with the long time needed to customize and deploy application solutions offered by vendors such as Hyperion and Cognos. Clearly, the complexities of customizing BPM application solutions play a big part in deployment times. Perhaps the scopes of application solutions are greater than those of tool implementations. This could explain differences in time to deploy. Given the choice, however, most organizations would choose to start small and have a few small successes vs. taking the time, effort and risks larger application solutions offer. Because of the unique nature of Business Performance Management, the make vs. buy decision will continue to be pertinent. 

Whether you choose to purchase a BPM application or build one using a consultant or internal resources, the choice is yours. The first step toward deploying a successful business performance management is to consider both options.

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