Articles on the challenges of business performance management (BPM) usually focus on selecting the right product and getting it properly implemented. While it is true those tasks are fraught with risk, the greatest BPM challenges have little to do with technology.
One of the biggest problems with performance initiatives is the lack of an easily quantifiable ROI. We know that having more efficient processes, cleaner and more consistent data and tools for better decision-making will most likely lead to bottom-line improvements. Unfortunately, being able to calculate those improvements up front is nearly impossible. So what can you do to help get the project approved?
Three approaches have a reasonable degree of success. The first is to build a consensus for the need to improve specific processes. In the majority of cases, this effort is focused around budgeting. In most companies, many people agree that budgeting is "broken" - too painful, too slow, too costly. If you get the right people on board, it is likely that their voices will be heard, and at least implementing the budgeting component of BPM will become a funded project. Once budgeting is done, it is not too difficult to get buy-in to leverage that foundation and move into other areas of BPM.
The second approach, also built around budgeting, is to demonstrate the potential cost savings of making the process more efficient. By comparing your current spend in this area with comparable companies you can determine where you stand. If you spend more than the average company on the budget process, BPM will help you close the gap. If you spend less than the average company but more than the best in class, BPM can help take you to the next level.
The third approach is to get senior management to speak with their peers in other companies who have completed a BPM initiative. There is no better spokesman for BPM than an executive who has seen the cost savings firsthand or found a spending problem or revenue opportunity that would have been missed without a BPM system.
Developing a Comprehensive Vision of BPM
Once you have moved forward with one aspect of BPM (budgeting), the challenge is to fill in the missing pieces. While each element of BPM provides benefits on its own, the true value only comes into play when it is fully implemented. If you have a dashboard but haven't cleaned up the budgeting process, the plan numbers on the dashboard are suspect. If you have moved to a new budgeting system but didn't implement a dashboard, then the access to key performance information company-wide is still limited. If you skipped consolidation, you missed out on streamlining the financial reporting process with intercompany matching and eliminations, currency conversion, journal entries and combining data from multiple ledgers. If you didn't move onto operational analytics, you don't have a holistic view of the business and missed an opportunity to make BPM more relevant to managers in those operational areas.
The primary reason many companies haven't yet implemented all of these pieces is not the cost. Many unified, all-in-one BPM solutions provide all of these capabilities out of the box for one price. The real reason is that the sponsor, or project driver, usually has an agenda tied to their greatest pains. That is why you often hear that a senior executive sponsor is critical for BPM success. This executive will hold the vision for comprehensive, holistic BPM that addresses the needs of the company as a whole. If you don't have an executive sponsor, BPM will end up as a point solution and fall short of its true potential.
Tie to Strategy
Make sure your BPM system is tied to your corporate strategy. A set of key performance indicators directly tied to the current corporate strategy is required. In some companies, a performance dashboard takes the financial ratios and statistics found on old reports and place them on the dashboard. To truly achieve the full benefits of BPM, you need senior management to review and update the corporate strategy and define key financial and operational indicators that measure progress on the path to achieving their strategic objectives. Those measures should be on the dashboard that everyone sees. Until this happens, you may have a greatly improved reporting system but not true BPM.
The challenges described here are difficult but not insurmountable. These challenges are less about technology and more about business goals. One of the best ways to address these issues is to make sure someone on the team has already worked with one or several other companies to meet these same challenges. You might hire someone who has worked for a company that successfully implemented BPM, or you might engage a consultant that has helped other companies with BPM. Either approach, while requiring additional investment, provides tremendous benefit by building upon a decision framework and roadmap that has already been proven. With the potential impact that improved performance management can have with your company, a comprehensive, well-designed BPM initiative will be worth every penny of investment.
BPM Partners has a spreadsheet preloaded with survey data that calculates the potential dollar savings once you input a couple of pieces of information about your current budgeting process. You can contact BPM for a copy.
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