t is fair to say that standards have been missing in business performance management (BPM), exacerbated by the fact that there is not only disagreement over what BPM is, but even what it’s called. Media websites are referring to performance management and process management interchangeably, which confuses getting your internal process work flow documented and selecting the optimal key performance indicators to keep your organization aligned and on track. We’ve even seen two articles in the same magazine refer to BPM by different initials (BPM, CPM and EPM seem to be the most common). This lack of clarity in this burgeoning category of business performance management is felt by many of your peers, several of the vendors and even service companies that implement BPM for a living.
As the market grows, the need for standards is readily apparent. Without a framework or roadmap for companies to successfully deploy BPM, concern developed that the challenges associated with early ERP and CRM implementations could also manifest themselves in this burgeoning market. The risk of end-user implementations going astray is very real. A consensus on the definition of business performance management combined with a best practices framework could help mitigate these risks. The framework would include the processes supported by BPM, an architecture for the technologies that enable it and benchmarks for the content that drives it.
Major Players Tackle Standards Definition
It bodes well for the future that organizations are being formed to set these standards and share best practices, and they include the most influential companies and analysts.
To acquaint you with the main players, we’ll drop some important names in the business performance management category. Applix, Hyperion Solutions Corp, IBM, IDC, Meta Group,SAP AG and The Data Warehousing Institute joined with our company, BPM Partners Inc., in late-March, 2004, to announce the BPM Standards Group. As a group, our goal is to establish BPM standards that can be used by software vendors, service providers, the media and, ultimately, users. The early involvement of global software vendors and consultants has been crucial, and more leading BPM experts have joined the group from Cartesis, Cognos, Deloitte, Geac, OutlookSoft, PwC and Unisys.
At the first formal BPM Standards Group meetings, a charter was established to develop standards for current and future BPM market participants—users, vendors, analysts and consultants. The group’s first decision was to settle the acronym wars, and its selection of BPM reflected its conviction that not only corporations can benefit from performance management—not-for-profit organizations, municipalities and other non-corporate entities could also benefit from BPM. With a clear definition of BPM and its associated components, vendors would be able to direct their expertise at either a subset of necessary BPM technologies or services, or a full suite of applications that can help an enterprise succeed with their performance management initiative. Although there are still some organizations debating whether BPM or CPM should be the lead acronym, there is now little dispute regarding core processes, technologies and content that comprise a successful business performance management implementation.
Early Results from Improved BPM Standards
As a first deliverable, the BPM Standards Group has developed a common definition of business performance management that provides appropriate context for performance management, including the following principles:
- BPM is a set of integrated, closed-loop management and analytic processes, supported by technology, that address financial as well as operational activities;
- BPM is an enabler for businesses in defining strategic goals, and then measuring and managing performance against those goals; and
- Core BPM processes include financial and operational planning, consolidation and reporting, modeling, analysis and monitoring of key performance indicators (KPIs) linked to organizational strategy. BPM Standards Group March 2004
A few points are worth highlighting from the above definition. First, note that the over-arching summary is focused on integrated, closed-loop management and analytic processes. Technology supports these core processes, but technology does not drive business performance management on its own. Second, business performance management is not only financial in nature—the drivers for business performance management are both operational and financial. For business performance management to maximize its impact in the company, it requires cross-department support within the enterprise—not solely within the finance group. Finally, the definition includes a sample of the core processes that drive BPM. These processes are not viewed as exclusive, but are a representation of processes that can help organizations define, measure and manage performance against a set of strategic targets.
The second deliverable is the BPM Framework document. This document is intended to provide a structure that is common to all business performance management initiatives. This framework encompasses the three pillars that assure business performance management success—Core Processes, Strategic Content and Enabling Technology.
Enabling Technology Framework
A breakthrough supposition of the BPM framework is that organizations cannot simply “get business performance management” solely by investing in technology tools. Recognition that tools are the enabler for a strong process-driven focus is the foundation of true business performance management. That said, the technology framework is a critical part for allowing BPM to scale throughout an organization. The BPM framework provides a technology architecture that highlights the enabling technologies and provides an overall perspective of how components integrate source data, core processes and end users. Inclusion of data warehouse, data marts, business intelligence and collaboration tools is intended to provide helpful guidance for executives looking to tie business and technology programs.
Figure 1—the BPM Technology Architecture provides a logical link between transactional source data, key BPM processes and customizable user interfaces.(SOURCE: BPM Standards Group)
Strong Benefits for Practitioners of BPM
With the release of the BPM Framework, end users, new vendors and service providers now have a clear definition of BPM and the components that support it. This framework is intended to provide information that can educate industry participants and help them successfully implement a project that by definition is high visibility and carries a large degree of risk. Combining the framework information with a team’s knowledge of their internal processes, industry benchmarks and ability to execute corrective actions in a timely manner can provide a fundamental shift in the competitiveness of any organization. Looking into the future, learning more about BPM projects championed by others who have gone before you is an excellent way to mitigate risk by avoiding potential danger zones.
Practitioners of BPM can leverage the work done by the BPM Standards Group in several ways. The first and most obvious would be to access the published documents and other content on the Standards Group website and consider the information provided as a jumpstart to your BPM project research. Successful BPM executive sponsors should invest time in identifying business drivers and key performance indicators prior to formerly launching detailed technology discussions. Using the Appendix as preliminary pick-list for measures that are important to your organization could be a starting point. In addition, the technology architecture chart can provide a high-level outline for conversations between business users and your supporting technology team. Finally, you are invited to contact the analysts, vendors and service providers who are directly listed as contributors to the documents. Contact details for these contributors can be found through their company Websites or requesting general info at firstname.lastname@example.org.
What's Next for BPM Standards?
The clear priority is to leverage best practices developed by others who have gone through a successful BPM implementation. This includes end-user, vendor and service provider perspectives. One area of particular interest includes an implementation roadmap. This would include detailed implementation process checklists, examples of successful implementation teams and suggested pitfalls to avoid. Additional areas of interest include further development of industry specific metrics and measures, and identifying variants of core processes that are unique to particular industries.
For access to the BPM Standards Framework document directly, you can go to the websiteand download the document.