Business Performance Management Systems

By Corbitt, Terry | Management Services, March 2004 | Go to article overview

Business Performance Management Systems


Corbitt, Terry, Management Services


Managers now have vast amounts of operational data available but it is still hard for the decision makers to incorporate this information into strategy. Business performance management systems are designed to link the data with top-level planning, monitoring and reporting.

Business Performance Management (BPM) also known as Corporate Performance Management (CPM) or Enterprise Performance Management (EPM), is designed to provide this crucial strategic link. It enables operational information to be fed into strategic planning, scenario testing and forecasting. Progress can be monitored to see whether it meets expectations and, if not, figures can be updated quickly and fed into new plans that are cascaded back through the ranks. It also enables you to benchmark your performance against your competitors.

Although it depends much on technology, effective BPM is not only a question of software. "There are packages that claim to do all of these things but IT always comes second to strategy management and processes" said Michael Coveney, director of strategy management at Comshare. "If you have bad budgeting processes and implement great technology, you still end up with bad budgeting processes."

He went on to say that a good BPM system should do four things:

* Plan and measure things that drive value

* Align processes for planning, budgeting, forecasting and reporting in order to formulate, communicate and monitor strategy.

* Give people an incentive to do the right things and exploit the technology.

In most BPM systems only about 40% of the data comes from ERP systems since these tend to record transactions, rather than market trends and actions, and focus more on what has happened than on why it happened.

John Taylor, managing director of Cartesis said "The software element of BPM is small unlike ERP systems which are largely software. BPM often involves changing the way in which head office interacts with local offices and subsidiaries. There is usually some process change involved and that is where many of the benefits emerge." This is because the crucial point of BPM is to enable a business to identify changes in its marketplace or potential problems, plan the best response, implement it efficiently and monitor success continually.

IT provides the number crunching and the speed but many of the key messages of BPM concern culture change and communication. Mark Stimpson, director of product management at Cognos, reported that: "One organisation we worked with had an 18 month planning cycle and we needed to move it to a monthly rolling forecast. One way to do this was to get as many people as possible at the coalface to contribute to planning. This increases accuracy, spreads the workload and builds their commitment. It helps people to realise that planning is part of their job, not something that you do once a year, dread and get it over with as quickly as possible."

With these attractions why have organisations been reluctant to adopt BPM? Few people would deny that conveying the right information to the decision makers in a format that they could understand would be a good thing. However there have been many promises in the past and financial directors are wary of spending yet more money on IT systems. Another problem is that the principle of improving efficiency by gathering information from all parts of the organisation has become a cliche.

Everyone knows that vast amounts of data can be collected; the problem is always how to assimilate it so that it translates into constructive change. …

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