To improve something, you must measure it periodically and track changes over time. Although many business people have understood this for a long time (for centuries, actually), recent years have seen numerous attempts at codifying this thought into a methodology. Leading business administration journals are littered with articles about what is often called "business performance management" (BPM). Judging by the articles, books, seminars and consulting devoted to BPM, it is possibly the most quickly proliferating business practice today.
The measurement tasks of BPM lend themselves readily to software automation and apply well to e-business, where conducting business electronically means that the measurements are easily captured. Software for "electronic business performance management" (e-BPM) can be implemented in a variety of ways. It ranges from simple metrics for reporting through an executive dashboard, to the extreme rigor and complexity of the balanced scorecard, to the pragmatic middle ground of domain-specific metrics (arranged hierarchically so they roll up into key performance indicators) that enable the monitoring, analysis and management of a business.
Although the goal of e-BPM is to manage performance in e-business environments, software for e-BPM always takes an analytic approach to the problem, enabling e-BPM with analytic technologies that may include reporting, online analytic processing (OLAP), data mining and data visualization.
THE HURWITZ TAKE: Note that the business practice of performance management was designed for measuring business entities (such as sales figures, product movement and operational costs). When applied in the context of e-business, however, it also needs to measure IT system events (such as hits per page, load on servers, network traffic or transactions per second).
With business conducted electronically, managing performance means measuring both business and IT entities, because the two are inextricably linked and not always easily distinguished. For example, a page hit is customer behavior as well as a load on a server. An online transaction yields actionable information about purchaser preference and product movement as well as an impact on the systems that process it.
Why Implement E-BPM?
- E-BPM leads to enlightened online marketing. Perhaps the strongest benefit of the analytic approach of e-BPM is that it enlightens your visibility into online marketing campaigns to make them more effective. With the metrics of e-BPM, you can measure events within a campaign to accurately assess success. This gives you quantitative justification for initiating or discontinuing marketing initiatives, as well as better data for rationalizing expenditures and their ramifications on marketing budgets.
- e-BPM leads to revenue lift. Closing a sale online is hard to do. E-BPM yields better-targeted promotions and clears the path to purchase (both enlightened by visitor behavior analysis), so more sales close, resulting in revenue lift. E-BPM gives you fresh information based on measurable results so you can quickly redefine and relaunch marketing campaigns as a way of optimizing them for a revenue lift.
Who Needs E-BPM?
E-BPM is obviously a good fit for companies that are conducting e-commerce through a Web site. These companies whether a pure dot-com or a brick-and-mortar company extending into e-commerce seem to have the most urgent need because many are at a life-cycle stage where they are under pressure to make profitable their investment in Web site branding and infrastructure.
But, e-BPM is not just for transactions. Let's not forget that the majority of the millions of Web sites focus on fulfilling the important function of content delivery. These, too, need e-BPM to answer important questions such as "How successful is my Web site at delivering information?" and "Which topics within my content get the most interest from visitors?"
Furthermore, size is not necessarily an indication of need. E-BPM can improve effectiveness and efficiency for a wide range of web sites, regardless of company size, Web site size and the volume of activity on the Web site. Hence, any company of any size conducting business functions through a Web site would benefit from e-BPM, whether the functions are for B2C, B2B, marketing or content delivery.
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