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Real-World BPM: Vendor Selection

  • November 01 2004, 1:00am EST
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Let's look at a real company choosing a BPM vendor and see how it works in the real world. Novamex, a leading marketer of branded Mexican food and beverage products in the U.S., manages numerous top brands using its nationwide network of more than 50,000 distribution points.

Last year, CEO Luis Fernandez asked project leader Karla Legaspy to find a budgeting and reporting tool to upgrade its Excel-centric methodology and supplement its general ledger. At the time, Novamex's C-level team had to wait until the end of the month for reports; and while a basic balanced scorecard was in use, it was posted on a bulletin board and only updated sporadically.

Legaspy described the analytic system at 400-person Novamex as "walk around and ask everybody." She headed a task force, which began by researching on the Internet and talking to peers at other companies. Some of those peers knew little of reporting software and were stretching Excel to handle budgeting and reporting. Others were already using industrial-strength reporting systems.

"By talking to the major BPM vendors, seeing the capabilities of their budgeting tools and the possibilities for integration with other performance management functions, our goal began to evolve." Legaspy's team realized BPM could be strategically important to Novamex. It became apparent they faced a bigger project, one that demanded more in-depth research of Novamex's requirements and the solution choices. It became difficult for Legaspy and her colleagues to balance those tasks with their ongoing workload. "In addition," she points out, "we didn't know the methodology for selecting a solution in this unfamiliar area."

Legaspy's group recommended that Novamex engage outside expertise for guidance and impartial advice. With approval of senior management, Novamex retained BPM Partners to help choose a performance management solution.

"Because it was the first performance management project for our team, the need to involve outside expertise was clear," commented Novamex's CFO, Tomas de Leon. "Given the importance of the project, we needed early successes, and we recognized that this particular consulting firm could help us achieve that."

Legaspy's team spent several weeks working with one of the consultants, a veteran of many BPM software implementations, to define Novamex's requirements clearly and completely. It emerged that Novamex needed to track a variety of metrics, including sales, gross margin, earnings, return on capital and return on equity. Specialized measures would include economic value added (EVA), product profitability, and profitability by customer. Novamex wanted these metrics in real-time, and its users would need to drill down from strategic goals to key performance indicators. Finally, with operations in both Mexico and the U.S., Novamex needed automated consolidation.

The outside experts helped Novamex create a detailed RFP, which was distributed to several vendors. Vendor responses were scored using a structured evaluation methodology. Five day-long vendor demonstrations led up to the final selection decision. The vendors were specifically asked to prove they could duplicate functions that Novamex had been performing manually via Excel.

Comshare's (now Geac) functionality and an excellent product demonstration made it the early leader. Another contender, SRC Software, offered tight integration with Excel. Cognos sparked interest, too, with a product that rivaled the Comshare system.

The final decision: Cognos prevailed with its functionality for both short- and long-term Novamex requirements and by demonstrating strong commitment to Novamex as a business partner.

Working with an outside advisor brought useful methodology, prior knowledge of the vendors and their products and a helpful surprise in the final stage -- Novamex had not known that some of the vendor's annual fees could be negotiated.

Novamex's project objective evolved during the vendor evaluation, growing from a desire to improve on Excel budgeting and reporting to a more sweeping performance management scope. Next month, we'll look at the implementation phase of Novamex's BPM project.

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