“Today’s increasingly competitive and fast-paced business environment constantly pushes companies to look for opportunities for performance improvement. As a result, it’s not unusual for companies to have multiple projects and initiatives going on at the same time. While their intent is to promote business survival, too many of these initiatives product disappointing results; close to 40 percent fail to deliver on their promised results or get canceled outright.”

“Large scale corporate improvement initiatives are critical to companies’ survival in today’s competitive and fast-moving business environment. Most improvement initiatives are cross-functional and require simultaneous changes to people, processes, organization structure, and technology. Consequently, these initiatives usually represent a significant investment in terms of cost, time, and effort. Their complexity makes implementation challenging, risky, frustrating, and difficult to coordinate. It is no wonder that many BPM implementations don’t live up to original expectations or even fail outright.”

Background Perspective for a BPM Initiative

This series of articles has attempted to present an overview of the emerging area of “Business Performance Management” (BPM), which is arguably one of the more important emerging trends in organizational management practices. For example, annual published surveys¹ of important technology issues for financial executives have repeatedly stressed that one of the top areas of concern to CFOs in major organizations around the world continues to be “the need to leverage analytical information to improve business performance and drive shareholder value (analytical information is another way to describe business performance management).” These same surveys clearly point out that CFOs continue to invest heavily to improve their analytical information. Thus, this is definitely not an area that can be considered a “passing fad.”

As already pointed out previously in this series, BPM is really just one label for a new kind of management improvement technique. For best results, organizations are being advised to consider an organized approach to the selection and use of any or all of the many new management improvement tools that are related to performance measurement and management. Much of the recent advanced business software that has emerged and started to become popular provides the foundation for many of these new management improvement techniques:

• Enterprise Resource Planning (ERP)
• Supply Chain Management (SCM)
• Customer Relationship Management (CRM)
• E-Business Reporting (E-BR)
• Business Intelligence (BI)

Overall BPM Implementation Approach

Several of the latest BPM gurus have suggested the following general approach for any organization considering how to use these tools:

• Recognize that all of these tools are aimed at helping managers improve the short and long term performance of the organization and that many of them are complementary and/or overlapping. It is up to the successful manager to get to know enough about each of these new techniques to minimize unnecessary redundancies and maximize synergies of complementary tools in their application.
• Recognize that Information Technology is mainly an enabler of these various tools and that it is not their core! Too many managers think that IT is the central focus of these tools, rather than a supporting technique to implement them. While it is true that most of these new management improvement techniques involve the use of IT (i.e. BPM software) to facilitate their implementation, IT by itself does not provide any of the “know how” to implement these techniques properly.
• Recognize that all of these tools have a central focus on helping managers to manage their organizations more efficiently and effectively. This implies starting with managers’ most important activities, (i.e. “strategic management”), as the starting point for assembling a “toolkit” of specific management improvement tools, techniques, practices, principles, and concepts that are most appropriate for the specifics of their managers’ analytical requirements and their organization’s environment, risks, and operations.
• Survey the various business performance management tools available today and select those that appear to most appropriate to the requirements of their organization. These will often involve various computer software packages that will require a training and indoctrination effort to prepare people within the organization to understand, use, and interpret the results of the selected tools.
• Develop specific business performance measurement systems (e.g. management dashboards, balanced scorecards), implement these systems, and then review and refine the results obtained until they appear to either serve their intended purposes or should be abandoned.

Steps in a Successful BPM Initiative

Once senior management of an organization commits to the concept of a BPM feasibility study, the next step is to create a BPM project team. This team would have to be carefully chosen from people at managerial/professional levels in the organization, with the necessary skills and enthusiasm to lead this project, and with the demonstrated support of the senior management group. Some experts have argued that professional accountants are in a unique position through their understanding of business and management information and thus often may be the logical choice to participate or even lead BPM projects and subsequently applications.

From the point of choosing a BPM project team, much of the approach to a BPM project is little different that that of most other kinds of management investigation projects. There are well established project methodologies² that could be used to establish a viable approach to a BPM project (e.g. define project scope and work activities, work out project schedule and budget, staff project team, set up communication channels with all affected, create vendor relationships, monitor project progress, etc). The following is an outline of a suggested implementation strategy:

Establish the right organization structure to investigate BPM for the organization.	This should be a group of senior competent, and motivated staff who are comfortable with the nature, purposes, and approach of BPM through either or both of past experiences and/or training programs. This group should report to a senior manager and should be independent of any specific functional area manager.
Create ways and means for people in the organization to generate ideas for innovative activities and initiatives.	Have the above group meet to brainstorm opinions on (1) felt needs for improvements within the organization, (2) overall opportunities for improvements in management techniques at the organization, (3) organizational willingness to try out new approaches to problem solving, and (4) specific potential BPM applications within the organization.
Convince senior management that proposed BPM initiatives are worth the risks.	Ensure that senior managers are well acquainted with: (1) the nature, purposes, approach, benefits, costs, and risks of BPM, (2) comparable examples of successful BPM initiatives in other similar organizations, (3) potential BPM applications already identified within the key areas of the organization, and (4) a proposed project plan for BPM application development in the organization.
Develop a BPM project plan based on ‘best practice’ methodologies.	Define in detail: (1) scope of BPM project, (2) best available BPM project team members, (3) proposed schedule, work breakdown structure, budget, staffing, (4) cost/benefit/risk analysis, (5) appropriate software tools and (6) communication, monitoring, and milestone approval plans.
Evaluate adequacy of data sources to support BPM analytic models.	Consider the adequacy of electronic data sources for key data requirements of potential BPM applications—i.e. existence, structure, access tools.
Benchmark BPM applications at other companies.	Evaluate nature of data analysis and models best suited for initial BPM applications—i.e. descriptive and predictive models.
Evaluate availability of appropriate BPM software.	Consider the availability of commercial off-the-shelf BPM software packages, with a short list based on criteria such as complexity, learnability, ease of use, data compatibility, comprehensiveness, etc.
Design and test appropriate models.	An analysis and modeling of decision making activities throughout the organization at all levels (e.g. strategic, tactical, operational) and in all functional areas (e.g. accounting/finance, marketing, production, distribution, human resources, etc.).
Create BPM application systems.	Create a short list of suggested applications for initial focus based on criteria such as complexity, magnitude of potential benefits, time to complete, available skills, available data, and development cost. Develop and test operational models for suggested applications.
Train staff who will interact with new BPM application.	Design training programs for developers, project leaders, senior managers, senior user staff, and any other users of BPM applications. Develop practice applications to promote user knowledge and retain consultants assist project team in BPM system development.
Execute BPM applications and evaluate results.	Test and debug applications and evaluate validity of results. Present results to senior managers and obtain approval for action plans based on BPM system results.
Integrate BPM results into management’s decision making process.	Design appropriate strategic execution plans to integrate BPM results into the organization’s overall strategic mix of initiatives.

The result of a successful BPM implementation includes raising the overall level of management understanding of the importance of good information and analysis for improving the level of decision making sophistication as well as much improved levels of efficiency, effectiveness, and profitability of an organization. Management decisions will often be made more quickly, more confidently, as well as more effectively. Well implemented BPM systems can often significantly improve morale of staff working with these systems as a result of their feelings of improved efficiency and effectiveness.

Conclusion

Today’s IT is far ahead of most organization’s abilities to harness the BPM tools that this new technology provides. Even though strategy mapping, dashboading, and scorecarding are becoming more well known, they are still quite rare today, even in many large and established organizations. As already mentioned, most organizations still need to become prepared for BPM initiatives that will often revolutionize decades of traditional management concepts and practices.

Any computer system under development should be tested thoroughly and the computer systems associated with a BPM application are no different. This is particularly important for a BPM application because that application will often be innovative within an organization and there won’t be any easy way to readily determine whether or not the BPM application is producing accurate and reliable results. For example, if the BPM generates a set of metrics of organizational performance that have never before been produced, it may be impossible to verify that the reported metrics are valid.

It is often particularly important that the outputs from a BPM application be interpreted carefully. Often a complex area of performance management may involve a variety of contradictory metrics, all of which are important in evaluating overall performance. For example, performance attributes such as speed, efficiency, timeliness, reliability, consistency, and overall effectiveness may not all harmonize in pointing to good or bad performance.

Appendix—Bibliography of Web Sites

This series of articles on BPM only scratched the surface of this important new development in management improvement techniques. There are many excellent reference sources for this exciting new category of techniques. In particular, the sources indicated below will serve as an excellent primer for anyone seriously interested in learning more.

http://www.bpmstandardsgroup.org/

The BPM Standards Group represents all the major categories in the BPM industry—application vendors, tools vendors, implementation consultants, IT/data warehousing experts, industry analysts, management consultants and system integrators. The customer/user perspective is represented through an affiliation with the members of the BPM Forum, a business oriented thought leadership group of senior level practitioners in operations, finance and information technology. BPM Forum members will be invited to test and validate the BPM Standards Group concepts.

http://www.bpmforum.org/

The BPM Forum is a membership organization for BPM practitioners and is committed to improving BPM practice in organizations. Driven by demands for improved operational conditioning and corporate governance, the forum helps research, develop and promote cutting-edge methods to strengthen financial management disciplines, drive performance accountability; tighten budgeting and planning practices; strengthen operational visibility and insight; and ensure performance improvements across large organizations.

http://en.wikipedia.org/wiki/Business_performance_management

Wikipedia.org provides a useful and high level overview of the emerging BPM discipline.

http://www.dmreview.com/article_sub.cfm?articleId=1057929

This article provides a list of the top ten BPM software packages on the market today. The primary criteria for inclusion in the list are: 1) a fairly comprehensive offering, 2) a focus on the BPM market, 3) a significant track record of success in the field, 4) demonstrated company viability and growth, and 5) continued innovation.

http://www.business.com/directory/management/consulting_services/business_performance_improvement/

Business.com is a comprehensive directory of a large number of BPM sites offering software and consulting services.

http://www.capterra.com/landing/budgxbpm

Capterra.com is another directory of BPM software products, free seminars, white papers, comparative analyses, and on-line demos.

Bibliography

• Performance Management, Finding the Missing Pieces (To Close the Intelligence Gap), Gary Cokins, John Wiley & Sons Inc, 2004
• The Balanced Scorecard: Translating Strategy into Action, Robert S. Kaplan and David P. Norton, Harvard Business School Press, 1996
• The Strategy Focused Organization, Robert S. Kaplan and David P. Norton, Harvard Business School Press, 2001
• Competing for the Future, Gary Hamel and C.K. Prahalad, Harvard Business School Press, 1994
• Unleashing the Killer App, Larry Downes and Chunka Mui, Harvard Business School Press, 1998
• Performance Management and Control Systems for Implementing Strategy, Robert Simons, Prentice-Hall, 2000
• The Performance Prism, Andy Keely, Chris Adams, Mike Kennerley, Pearson Education Limited, 2002
• The Basics of Performance Measurement, Jerry L. Harbour, Productivity Press, 1997
• Beyond Strategic Vision, Michael Cowley and Ellen Domb, Butterworth-Heinemann, 1997