Business Performance Management

Jul.30, 2009 in Business Intelligence CRM

Business Performance management(BPM)consists of a set of processes that help
organizations optimize their business performance. It provides a framework for organizing, automating and analyzing business methodologies, metrics, processes and systems that drive business performance through Business process management.

BPM as the next generation of business intelligence(BI). BPM helps businesses make efficient use of their financial, human, material and other resources in Business process management.

In the past, business owners have sought to drive strategy down and across their organizations, they have struggled to transform strategies into actionable metrics and they have grappled with meaningful analysis to expose the cause-and-effect relationships that, if understood, could give profitable insight to their operational decision-makers by Business process management system.

BPM software and methods allow a systematic, integrated approach that links business
strategy to core processes and activities. “Running by the numbers” now means something: planning, budgeting, analysis and reporting can give the measurements that empower management decisions with process management system.

History
Reference to non-business performance management occurs in Chinese Sun Tzu’s The Art of War. Sun Tzu claims that to succeed in war, one should have full knowledge of one’s own strengths and weaknesses and full knowledge of one’s enemy’s strengths and weaknesses. Lack of either one might result in defeat. A certain school of thought draws parallels between the challenges in business and those of war, specifically:

1.collecting data – both internal and external
2.discerning patterns and meaning in the data(analyzing)
3.responding to the resultant information
4.Prior to the start of the Information Age in the late 20th century, businesses sometimes took the trouble to laboriously collect data from non-automated sources. As they lacked computing resources to properly analyze the data, they often made commercial decisions primarily on the basis of intuition through Process management system.

As businesses started automating more and more Business Process management systems, more and more data became available.
However, collection remained a challenge due to a lack of infrastructure for data exchange or due to incompatibilities between Business Process management systems. Reports on the data gathered sometimes took months to generate. Such reports allowed informed long-term strategic decision-making. However, short-term tactical decision-making often continued to rely on intuition for Business process management.

Increasing standards, automation, and technologies have led to vast amounts of data becoming available. Data warehouse technologies have set up repositories to store this data. Improved ETL and Enterprise Application Integration tools have increased the speedy collecting of data. OLAP reporting technologies have allowed faster generation of new reports which analyze the data. Business intelligence has now become the art of sieving through large amounts of data, extracting useful information and turning that information into actionable knowledge for Business process management.

In 1989 Howard Dresner, a research analyst at Gartner, popularized”Business Intelligence”as an umbrella term to describe a set of concepts and methods to improve business decision-making by using fact-based support systems. Performance Management builds on a foundation of BI, but marries it to the planning and control cycle of the enterprise – with enterprise planning, consolidation and modeling capabilities for Business process management.

Definition and scope
BPM consists of a set of Business process management system and analytic processes, supported by
technology, that enable businesses to define strategic goals and then measure and for BPM against those goals. Core Business Process Management processes include financial and operational planning, consolidation and reporting, business modeling, analysis, and monitoring of key performance indicators linked to strategy with Business process management.

BPM involves integration of data from various sources, querying, and analysis of the data, and putting the results into practice on Process management system.

Business Process Management enhances processes by creating better feedback loops. Continuous and real-time reviews can help to identify and eliminate problems before they grow. Business Process Management forecasting abilities help companies take corrective action in time to meet earnings projections. Forecasting is characterized by a high degree of predictability which is put into good use to answer what-if scenarios.

Business Process Management can help in risk analysis and in predicting outcomes of merger and acquisition scenarios and in planning to overcome potential problems in their daily Business process management system.

BPM provides key performance indicators(KPIs)that help companies monitor efficiency of projects and employees against Business process management targets.
Methodologies

Various methodologies for implementing Business Process Management exist. The discipline gives companies a top-down framework by which to align planning and execution, strategy and tactics, and business unit and business objectives.
Reactions may include the 6 Sigma strategy, balanced scorecard, activity-based costing (ABC), Lean 6 sigma, Total Quality Management, economic value-add, Lean sigma and integrated strategic measurement as an Business process management system.

The balanced scorecard is the most widely adopted BPM methodology. BPM Methodologies on their own cannot deliver a full solution to an corporate BPM needs.

Many pure methodology implementations fail to deliver the anticipated benefits due to lack of integration with the fundamental Business process management.

Business Objective (Metrics / KPI-Key Performance Indicators)

For business data analysis to become a useful tool for BPM, an corporate must understand its Business objective and goals – essentially, it must know the desired direction of progress. To help with this analysis for BPM, someone prescribes KPI to assess the present state of the business and to prescribe a course of action.

Metrics or KPI are critical in prioritization what has to be measured.The methodology used helps in determining the metrics to be used by the organization. Managerial folk-wisdom says that one cannot manage what cannot be measured. Identifying the key metrics and determining how they are to be measured helps the organizations to monitor performance across the board without getting deluged by a surfeit of data; a scenario plaguing most companies on Business process management.

More and more businesses have started to make data available more rapidly. In the past, some data only became available after a month or 2, which did not help managers react swiftly enough. Recently, banks have tried to make data available at shorter intervals and have reduced delays. For example, for businesses which have higher operational/credit risk loading (for example, credit cards and “money management”), a large multi-national bank makes KPI-related data available weekly, and sometimes offers a daily analysis of numbers. It also provides real-time dashboards. Data can become available within 24 hours, given automation and the use of IT systems for Business process management.

Most of the time, BPM simply means use of several financial/non-financial metrics/KPI to assess the present state of a business and to prescribe a course of action.

Some of the areas from which top management analysis could gain knowledge by using BPM may include:

customer-related numbers:

New customers acquired
Status of existing customers
Attrition of customers (including breakup by reason for attrition)
Turnover generated by segments of the customers – possibly using demographic filters
Outstanding balances held by segments of customers and terms of payment – possibly using demographic filters
Collection of bad debts within customer relationships
Demographic analysis of individuals (potential customers) applying to become customers, and the levels of Approval, rejections and pending numbers
Delinquency analysis of customers behind on payments
Profitability of customers by demographic segments and segmentation of customers by profitability
Campaign management
Realtime dashboard on key operational metrics
Overall equipment effectiveness
Efficiency and productivity
clickstream analysis on a website
key product portfolio trackers
marketing channel analysis
Sales data analysis by product segments
Callcenter metrics

The above list more or less describes what a businesses might monitor for their Business process management.

Items of generic importance might include:

consistent and correct KPI-related data providing insights into operational aspects of a company
timely availability of KPI-related data KPIs designed to directly reflect the efficiency and effectiveness of a business information presented in a format which aids decision-making for management and decision-makers ability to discern patterns or trends from organized information via Business process management system.

BPM integrates the Businesses processes with CRM or ERP. Companies should become better able to gauge customer satisfaction, control customer trends and influence shareholder value.