We live in a profoundly different world from the one we enjoyed in 1999. So much has happened since the heady pre-Y2K days, and in many senses we are living today with the fallout of that period. Between 1996 and 1999, it seemed anyone could list any company; any customer would buy any vendor`s products; the listing boom - locally and internationally - and the Y2K spending spree fuelled a run on world markets that drove the world to unimagined heights.
Since then we`ve had the "perfect economic storm", the post-e meltdown, the events of 11 September, and, perhaps most disturbingly, the chain of financial irregularities which have shaken the confidence of world markets, investors and the very foundation of the capitalist system.
Against this gloomy backdrop, there is a greater requirement than ever for companies to be able to analyse what is going on in their businesses in its current state, and to report correctly and credibly, often due to regulatory pressures.
This has ushered in a new discipline entitled business performance management, or BPM. Far from a new buzz phrase created to stimulate sluggish IT sales, BPM is all about the bringing together of a number of complementary technologies and business requirements and solutions to allow management a 360-degree view of their business.
BPM helps companies manage through extraordinary complexity by enabling managers to measure performance, anticipate results and drive profitability across key business activities.
The power of BPM is in extending visibility to all operating units and every corner of a company. It lies in the fact that BPM creates one single view of the truth, accepted as accurate by all key stakeholders in the business; and it allows all key business activities to be measured against this repository.
BPM combines management process with business applications to allow companies to set goals, plan targets and measure, predict and report results in a collaborative way across an extended organisation (the enterprise). It allows what-if scenario setting, and simplifies activities typically seen as show-stoppers, such as integrating business systems in the event of mergers or acquisitions.
BPM addresses the following requirements, providing full visibility into key business aspects:
* Financial performance management, across the entire spectrum of financial activities, including budgeting, financial and business planning, cash management, consolidated reporting and quarterly financial performance reporting.
* Organisational performance management, enabling managers to direct and coordinate organisational performance across core business activities and across all functions inside and outside extended organisations. Examples include the definition of goals and performance metrics, headcount planning, compensation planning and management, budget management and evaluation of forecasted and actual performance measures.
* Customer relationship performance management extends core business performance management across all customer acquisition and retention activities, such as customer segmentation, marketing activity planning, call centre planning and performance reporting.
* Supply chain performance management enables managers to drive performance across supply chain activities such as procurement, manufacturing and inventory planning.
* Channel performance management enables alignment and drives the optimal performance of the channel, through activities such as sales target setting, sales plan management, territory planning and indirect channel planning.
The consequence of integrating all these activities under one integrated umbrella is to provide full visibility, not just for companies themselves, but also for their business partners. They bring together in one common informational framework all the stakeholders that drive businesses today: internal management, customer-facing personnel and externally facing management, who are required to engage with trading partners and suppliers. Of particular importance for business executives often struggling to make sense of the vast amounts of data in their businesses is the fact that all these systems will source all their inputs from a common repository, ensuring one view of the truth for management in all areas of business. This removes the situation where executives cannot agree strategy or decisions due to varying versions of data.
Conclusion
Executives today are faced with three major new requirements: to gain an insight into increasingly dispersed businesses; to integrate critical components of their businesses so as to improve planning and bridge the gap between strategy and execution; and to discharge their duties in line with new corporate governance principles and expectations. Business performance management is the technology-enabled delivery mechanism for addressing all three, and for delivering enduring competitive advantage.
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