Intelligent Enterprise

Better Insight for Business Decisions

RSS
Webcasts
Whitepapers
Subscribe
Home

October 8, 2002

Five Easy Pieces

Many corporations want to adopt the methods of business performance management. But where do you start and where do you go from there?

by Philip Russom

Business performance management (BPM) is a method for running a business "by the numbers." Business entities are quantified, which lets you monitor their changes over time to improve corporate performance. In an enterprise of any size, however, the entities can number in the thousands and relate to each other in a complex hierarchy of metrics, key performance indicators (KPIs), and perspectives. Luckily, technologies for business intelligence (BI) — especially reporting and online analytic processing (OLAP) — are a good fit for automating the measurement, monitoring, and management tasks of BPM.

The constant interplay between business best practices and software automation is part of the positive synergy of BPM, a symbiosis that benefits both parties. However, this interplay also makes designing and implementing a BPM project challenging, because the two parties are so intertwined.

This column sorts out many of the business and IT tasks of BPM. Here, I'll show you an overview of the five stages that a typical BPM project moves through, as well as a few of the steps within the stages. Corporations considering a BPM implementation can develop a project plan by starting with the outline of stages and steps presented here.

Commitment Building

Most BPM projects involve changes or challenges to corporate culture, and so require a deeper commitment and stronger sponsorship than other types of projects.

Management mandates BPM. Many BPM projects entail a certain amount of process reengineering, especially in companies with no history of measurement. As an essential first step, upper management at the CxO level must mandate a change of this magnitude.

Measure people, but remove blame. Many corporate workers are leery of methods that measure them personally. To allay these fears, managers should focus on improving overall organizational performance, not finding blame with individual workers.

Managers must be trained in the methodology. Metrics and KPIs tend to be more actionable than data presented via other BI methods. Yet, managers still need training in how to develop or modify processes and policies that leverage the metric approach.

Business Planning

As with all projects, you should look carefully before you leap, by developing a detailed plan that addresses business goals as a preparation for software automation.

Manifest a business plan. BPM requires a good, old-fashioned business plan that serves as a performance manifesto. The plan should establish the goals of the corporation, represented as target values for metrics and KPIs.

Model the business. A performance-oriented business plan must identify entities of the business that need to be measured and monitored. And it should model a hierarchy where metrics roll up into a higher level of metrics, then KPIs, and then perspectives.

Software Automation

Once the performance-oriented business plan is complete, it's time to transfer its business model to a data model and its performance plan to reports.

Model metrics multidimensionally. The hierarchy of metrics from the business plan now can be modeled in BI software. Metric data structures are multidimensional, due to the roll-up hierarchy and time series data representing a history of performance.

Map metrics to data. With the model digitized, IT can use a standard tool for extract, transform, and load (ETL) to map data sources to metrics in the data model.

Amass data. The ETL process is hampered when data does not exist online to feed metrics. Avoid risky data integration tasks such as keypunch or consolidated spreadsheets.

Make metrics accessible via BI media. Once a data warehouse or data mart is populated, IT can build metric-oriented reports, often in the style of dashboards.

Recurring Execution

With software automation in place, business end users can enlighten their daily work with the knowledge of how various entities within the business are performing.