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July 26, 2002

Process and Reality Through BPM

BI vendors are defining a new decision-support category, BPM, to provide an enterprisewide analytic view that integrates strategy and business operations

by Seth Grimes

Remember business-process reengineering (BPR), the late-1980s would-be information revolution? BPR attacked the prevailing industry perspective, which, for analytic purposes, saw organizations as little more than collections of distinct business functions. BPR's manifesto was a call to refocus on production as a series of linked transformations of inputs into outputs, transformations that associate disparate functions rather than treating them in isolation.

BPR is about streamlining in the name of efficiency and competitiveness. It relies heavily on analysis, a need that has been met for about a decade by the business intelligence (BI) category of decision-support software. And now data analysis researchers and vendors are promoting business performance management (BPM) as an evolutionary successor to BI, one that can provide a holistic view that surmounts operational category boundaries.

With BPR, you consider the sequence of organizational functions that contribute to production, but instead of losing chains you gain them: supply chains, value chains, and the like. These chain models fit BPR's process orientation. They're also now well established, underlying the supply chain, CRM, sales and marketing automation, financial, manufacturing, and other systems that have emerged to automate industry operations. But the BPR revolution's work has remained unfinished because chain models fall short of providing holistic, strategic views. An enterprise comprises many processes woven into a tapestry, and although BI can enhance an organization's ability to understand and optimize particular processes, it has yet to facilitate comprehensive, enterprise-level analysis.

Base BI techniques — data cleansing, metadata management, query and reporting, online analytic processing (OLAP), data mining, statistical processing, and so forth — can work at many different levels. Nothing prevents an organization from applying BI tools to data warehouses and data marts that draw simultaneously from multiple, disparate data sources.

Nonetheless, BI is associated with information silos — data and analyses that cover only a portion of an organization's operations. It's hard to harmonize systems in multivendor, multistandard environments. The best attempt has been portals that collect enterprise information without truly integrating it.

Performance Management Initiatives

The BI market's maturity is surely prompting vendor BPM initiatives, but so is the imperative to boost efficiency and profitability. Businesses believe that they can pursue key goals — reduced costs, greater productivity, and faster cycle times — by providing analytic capabilities at all organizational levels, aligning corporate strategy with line operations, applying predictive techniques, and embedding analytics in operational systems that work at or close to real time. They also want to make sense of exponentially growing volumes of operational data, which, as noted, often lack any integrating principles. Meeting these goals is BPM's aim.

I looked at the performance management (PM) initiatives of six leading BI vendors and at several industry analyses while researching this column. My first conclusions are that BPM is very much in a definition phase and that market adoption will be limited well into 2003.