The Next Wave of Business Insight
Business performance management (BPM) initiatives are attracting red-hot interest, The Data Warehousing Institute reveals in a new report that documents a wave of BPM solutions being built, planned, or considered.
Wayne Eckerson, TDWI research director and the report's author, describes BPM as a "strategic and technical framework to drive all parts of the organization toward a common set of goals." Offering a broad, analytical, and real-time picture of an organization, BPM uses business intelligence and incorporates planning, budgeting, and scorecarding as integral elements.
BMP is also fairly closely linked with CRM. "BPM enables companies to identify key value drivers, which are things that when executed properly enable the company to achieve its strategic objectives," Eckerson says. "Most companies have one or more customer drivers, such as reducing churn, increasing cross-sells or upsells, increasing customer satisfaction, etc. Any of these can be defined as KPIs within a BPM system that users are measured against."
Surveying more than 600 corporate and data professionals, TDWI found that only 13 percent of respondents had deployed BPM solutions, but that 33 percent were designing or building an initiative, and another third was contemplating BPM.
According to the study, the need for "greater visibility into the business" (i.e., collecting better information, more quickly) was the single greatest impetus for companies deploying or considering BPM.
This type of visibility is the same that CRM project leaders look for when implementing CRM tools to support their initiatives: The report cites ties to CRM practices for example, a BPM initiative can be launched in the same cross-functional manner as CRM solutions that coordinate front- and back-office functions.
About 57 percent of respondents said ROI has been high or medium, leading Eckerson to conclude that "while BPM offers substantial benefits to many organizations, it has not been wildly successful in all instances, at least not yet."
As with CRM the biggest challenges have been delivering trustworthy data, and establishing key performance indicators that are valid and effective. Organizations are struggling with KPIs, with less than half saying their KPIs were very or fairly effective.
Most existing BPM deployments are enterprisewide, the survey found, but practitioners recommend starting small. The survey revealed that half of organizations start with fewer than 50 users, but plan to expand to about 175 over the next 18 months. As with many current CRM initiatives, this suggests that systems may start small yet reflect enterprisewide interest.
The report also forecasts a shift from building to buying. Although about 60 percent of organizations with existing BPM initiatives built their own systems, less than one third businesses exploring BPM plan to do the same. Vendors, many of which until now have issued only point solutions like scorecarding applications, have begun rolling out comprehensive BPM solutions.
"Right now, most companies are implementing point solutions within BPM, namely budgeting and scorecards," Eckerson says. "Most companies agree with the BPM philosophy but have not yet integrated applications in a way that enables them to communicate and execute strategy in a concerted way. Today BPM is an early adopter market, but in the next five years it will be a common way to manage the business."