This article originally appeared on the BeyeNETWORK.
The greatest threat to business performance management (BPM) success comes even before it begins: getting placed on the back burner. Why is it that one of the most critical business initiatives often gets put on the project dump heap? Let’s examine several of the root causes.
Business performance management, in its truest form, is about tying execution to strategy. In a more detailed view, it is pulling together all of the company’s data – its plans, its actual transactions, its forecasts – and determining how it performed on its strategic goals. This analysis is enterprise-wide and extends to several levels in each department. The benefits should be obvious: a unified view of the company’s performance with enough focus, detail and speed to enable corrective action to be taken in a timely way. The problem is that no matter how much we would like to believe otherwise, there just are not that many visionary CEOs. It is a small number that say to their executive team, “I want a single, holistic view of our global operations tied to our strategic objectives as defined by a set of actionable key performance indicators.”
Consequently, it is rare that business performance management projects start at the top. More commonly, performance projects start at a lower level in the organization where there is a pain point. As has been the case for several years, the leading pain point today is spreadsheet-based budgeting. This usually means a small group of accountants in finance who struggle on a regular basis with this clumsy, labor-intensive process finally ask for help. A sympathetic department head may encourage them to start the process of finding a better way to do budgeting. Thus, a BPM initiative has begun.
After the team invests a good deal of time in research, they come back with initial estimates of what resources the project might require (both dollars and people). As they prepare to formalize the process (document their requirements in detail, identify potential vendors and/or possibly engage an expert), they also share their plans and initial estimates with the CFO. In some cases, this is where the project dies on the vine. The CFO may not directly feel the budgeting pains his finance accountants feel and, therefore, can’t easily justify the dollars required to address the problem. Because he gets the budgets he needs when he needs them, he may not be sensitive to the Herculean efforts required of his staff to pull it all together. In many cases, he is also not up to date on the huge benefits a BPM system can bring his organization. Rather than give his staff a blanket “no,” he may propose putting the project on the back burner (with little incentive to ever move it back to the top of the project list).
While business performance management ROI is difficult to calculate in general (how do you quantify “making better decisions”), improving the budgeting process can produce measurable productivity gains. This can result in reduced head count or reallocation of resources from data collection and number crunching to higher value and more fulfilling analysis tasks. If CFOs viewed business performance management from this perspective, they might not be so quick to defer these projects.
Another common scenario occurs when the CFO approves the project, but IT has other large projects ahead of it in their queue. Particularly with BPM projects – whether they are budgeting, consolidation or dashboard focused – IT may argue that certain data-oriented projects must come first. If they are planning to replace the ERP system or build a data warehouse, it would seem logical to complete those initiatives prior to starting down the BPM path since business performance management relies on them for source data. So again, BPM is placed on the back-burner.
The problem is that many of those ERP or data warehousing projects can take years to complete (and some are never truly “done”). Does this really mean the organization needs to be denied the benefits of business performance management for all that time? If the company truly wants to take advantage of business performance management sooner rather than later, they should not have to wait for those other projects to be completed. Most BPM systems are capable of connecting to disparate data sources and/or building their own data marts. This should allow a company to put the system in place today, have it access the required data directly and then cut over to the data warehouse when it becomes available. Similarly, for ERP replacements/upgrades, business performance management can retrieve data from whatever transactional systems are in place today and then have its access and mapping updated when the new ERP system is ready to be rolled out.
In other instances, there just simply aren’t enough able bodies to attack all the high priority projects a company may have. While implementing a new order entry system or updating the customer database are important projects, can they compare with fully understanding how a business is performing and identifying where action is urgently required? If BPM sponsors (those mid-level managers who see the value) really want their project to rise to the top of the list, they need to educate their entire team. When the CIO and CFO understand what business performance management can really do for them or how the competition is already leveraging business performance management to improve their own performance, the project will have a better chance of staying off the back burner.