Business Performance Management: In Principle and in Practice

Enterprises are constantly in search of methodologies that allow them to increase performance while maintaining or improving overall quality levels. Business Performance Management (BPM) is just such a management methodology because it incorporates high level executive performance metrics with the granulated level of detail at the operational level that most technology driven project and processes demand.

BPM can be described as a comprehensive, value-added IT enabled methodology where the various enterprise constituents such as IT, finance, vendors, and end users are enlisted to define, measure, analyze, improve, and control all of the enterprise’s processes.

There are several performance management methodologies that are in demand in the contemporary business environment with Six Sigma, Total Quality Management (TQM), and the Balanced Scorecard being perhaps the most prominent. However, regardless of which BPM solution is being implemented they all have one thing in common: they are IT dependent and IT driven solutions.

BPM relies on another concept as one of its most basic premises: business process reengineering, or BPR, which involves, as its name implies, a complete overhaul of a system or a process with the intent of achieving substantially greater quality, efficiency, or both, in terms of results. Since the two pillars of any enterprise are its employees and its processes that combine to produce its product or service, any comprehensive strategy to improve results must affect change in one of these two foundational areas of business enterprise.

BPR concentrates on improving the processes of the organization to affect improvement which, depending on how extensive the process reengineering is, might require a reorganization of the enterprise’s structure. Herein lies one of the key differences between BPR and a simple reorganization; while they are not mutually exclusive, reorganization implies a structural/functional reorganization of the enterprise. Yet, a reorganization of a company does not demand, necessarily, a change in any of the processes that take place within departments to the level that BPM, through process reengineering does. Duties might shift across departments and people but the manner in which processes are completed might not change at all. However, most BPR initiatives require a major reorganization of the enterprise to accommodate changes in its processes rather than for any real structural purpose.

BPM is IT enabled meaning that the level of granularity or detail achieved is uniquely dependent on analysis of variation of performance data in order to eliminate that variation. A process variation is any result that falls outside of tolerance levels for the product or service or, in terms of BPM methodologies such as Six Sigma, that vary above or below the upper and lower control limits of accepted results. One type of variation in organizations today is the assignable cause variation of which the factors causing the variance are readily identifiable and should be corrected immediately. Another type of variation is the un-assignable cause variation of which the factors contributing to it are apparently unavoidable and thus, inherent in a process itself. These types of variances are the most problematic for an enterprise and to which BPM’s techniques and tools are designed to isolate and then remove.

BPM and its related methodologies, principles, and associated software applications are powerful tools that can be implemented to improve the performance of any given enterprise but certainly one that seeks to build a business case for continual improvement over time. BPM is a value-driven solution for technology initiatives which can dramatically change the character as well as the output of an enterprise for the better.