Performance management is a very hot button in the realm of Business Intelligence, marketed today under various monikers including Enterprise Performance Management (EPM); Corporate Performance Management (CPM); and Business Performance Management (BPM), all of which refer to roughly the same thing: the strategic and tactical use of data to improve business performance. In the BI world, BPM, CPM or EPM -as it is sold - is largely about measurement: defining what to measure, how to measure and present it, and how to put information to use.
But let's look a little closer. The U.S. Navy defines performance management as "the process of defining a mission and desired outcomes, setting performance standards, linking budget to performance, reporting results, and holding public officials accountable for results." All of the things just described fall into carefully documented steps and controls aimed toward a desirable outcome. Just as the Navy calls performance management a "process," EPM as we'll call it is on a parallel trajectory with business process management. Past a certain point, the two are inseparable.
For the unacquainted, business process management is an old science that came to formal definition with the great assembly lines of Henry Ford and others who meticulously documented steps in the manufacturing process. By doing so they were able to produce cars in new models and with different options by adjusting and constantly improving existing defined processes. Today, simple and repeatable processes for both products and services are a newfound goal of corporations that work across many divisions or have grown through M&A. In some ways, EPM's end game is to attach data to critical process points, which can be used variously to uncover bottlenecks, lower cost, improve productivity and yes, improve performance. In the current state however, there is little connection between BI and process in tactical and operational settings.
Analyst Keith Gile of Forrester Research calls business intelligence "the process of making better business decisions," and he places much of the value in business intelligence squarely in the process context. Gile's recent report, "The Emergence of Process-Centric BI," points out that most BI source data comes from data warehouses, marts and cubes, which provides strategic value but doesn't generally support tactical and operational use. This effectively outsources a core function. "The business might have declared what the metrics and processes were supposed to be," Gile says. "However when IT created the business application and fashioned the process definition in whatever way made sense, IT became the de facto metric owner, rather than the steward of the system."
Gile reminds us that highly aggregated data provides deep history, but also the greatest latency. As data use spreads to the tactical (e.g. management reporting) and operational (call center), it becomes more transaction oriented and follows different business rules, which might even lead to different conclusions. Forrester Research says a strategy of process centricity shifts focus from a single version of the data to a single version of the business rule. This also links process definition to the people being measured, which assures accountability, the research group argues.
On the technology side, "process definition technology does exist in the form of business process management solutions ... [but] today's BI solutions do not understand how to define processes centrally or how to assimilate these defined processes from external sources." Gile's observation is already transparent to anyone charged with BI or process, a rather glaring technology gap that may well be addressed soon in the marketplace. By itself, the business process marketplace is contested by content management, enterprise application integration and application platform vendors who all claim to be the process platform. Today though, BI Reporting and business process management are still largely manual tasks, and alignment will come more from human resource allocation than from automation.
As data can be put to use closer to real time, operational reaction time will improve. Though properly identifying processes does much more than simply speed things up, analyst Jim Sinur of Gartner Inc. likes to say we are slowly moving from the idea of data management toward the idea of event management. That's an outcome well in the future for most companies, but it underlines the value of systemic data measured from transactional applications (ERP, CRM etc.) and applied to operational processes.
Whatever the current state, our readership does associate performance management with process. In a recent survey conducted by Business Intelligence Review and Gantry Group, readers presented with a list of several options mostly identified business performance management with the phrase "the embedding of BI into operational processes." We'll have a feature case study on process-oriented BI in the July issue of BI Review.
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