Business Performance Management
What is Business Performance Management?
Business Performance Management is most commonly described as a set of processes that help companies or organizations optimize their business performance. It is specifically designed to organize, automate, and analyze business methods, metrics, processes and systems that drive an organizations performance.
It also involves the merging of data from a range of sources, querying, and analysis of the data and putting the results into practice to find the most desirable outcome. Business Performance Management improves those processes. Real-time reviews help organizations to identify and fix problems before they grow into extreme issues.
The Business Performance forecasting tools help the company take counteractive action in time to meet earning projections. Forecasting is designed to meet a certain level of predictability which is put into good use to answer the various what-if scenarios an organization is faced with. Business Performance Management is also useful with risk analysis and predicting outcomes of merger or procurement scenarios and coming up with a plan to overcome potential problems.
Business Performance Management provides the Key Performance Indicators we spoke of earlier. Using the two together give the organization a bit of a competitive edge as well.
Business Performance Management Tools
Business Intelligence vendors have designed many tools that ease the work where gathering large amounts of data for analysis is involved. These new and fast becoming demanded programs are not only known for efficiency but also time saving. The tools that are normally used for Business Performance Management may include the following;
Data Warehousing – This is the main repository of an organization’s past data, essentially it is corporate memory. This contains the raw material for the organization’s decision support system.
Data Mining – (DM) This is the principle of sorting through the large amounts of data and picking out all of the relevant information.
Decision Support Systems – (DSS) These systems are a class of computer-based information systems designed to aid an organization in making informed decisions.
Document Warehousing – This tool tells an organization why things have happened, where as the Data Mining explains what has happened. The two can be linked together and become powerful support for the Decision Support System.
Executive Information Systems – (EIS) This is a type of management information system. It is designed to facilitate and support the information and decision making needs of an organizations executives. It helps to provide access to both external and internal information relevant to meeting strategic goals.
Management Information Systems – (MIS) These systems cover the applications of people, technologies, and procedures to solve business problems. They are used to analyze other information systems applied in the operational activities within the organization.
Online Analytical Processing – (OLAP) This is an approach designed to quickly address and provide answers for an analytical query that is multidimensional in nature. This is normally used in relation to sales and marketing.
Text Mining – This is sometimes also referred to as Text Data Mining as well. It is the process of deriving high quality information from text. This information is usually derived by dividing patterns and trends through the means of statistical pattern learning.
Business Performance Management Program Design
Before an organization can design a Business Performance Management program that works to benefit them the best, the need to ask a few questions and make some resultant decisions. The first step may include what the short, mid, and long term goals of the company are. Hypothesizing what initiative will eventually produce the desired results or performance is a major step as well, it allows the organization to get a rough idea of what they are expecting as a final outcome.
Current information gathering competency needs to be assessed to, this is very important to the process, past and present data will be needed to get a feel for how the organization operates. The financial consequences of a new Business Intelligence initiative should be estimated, the organization needs to determine if the Business Performance Management program will truly generate enough revenue to recover from its cost. More simply put the organization needs to determine if it is necessary to assess the cost of the present operations and the increase in costs associated with the Business Performance Management initiative.
An organization also needs to consider the risk that the initiative will fail and they will have essentially wasted precious funds on a veiled venture. This risk assessment should be converted into a financial metric and included in the planning to get the best idea of what is at stake.
Next the organization will need to determine who will benefit from the initiative most and of course who will pay. The must ask themselves who has a stake in the current procedure, and what kinds of customers or stakeholders will benefit from the initiative. Then they also need to consider who will benefit indirectly, and what the calculable or potential benefits are. Considering if the specified initiative is the best way to increase satisfaction for all kinds of customers or if there could be a better method is very important as well.
Then an organization should look at its metrics-related queries. These information requirements should be fastidiously converted into clearly defined metrics. The organization should follow this with establishing a approach or a procedure to determine the most acceptable way of measuring the required metrics.
The Business Performance Management program should then be monitored in order to ensure that the organizations objectives are indeed being met. Adjustments in the program may be necessary. The organization will need to test the program for validity and strength.
Business Performance Management General Opinion
Over the last few years, Business Performance Management customers have come out of the wood work from many different areas and industries. In the past budgeting was their primary focus, and they placed dashboards and the key performance indicators they contain in a secondary position.
Despite the range of industry the size of Business Performance Management customers have tended to fall within a narrow category: the top end of the mid-market to the middle of the enterprise market. As can be expected there have been exceptions on both the low end and the high end, but the majority of Business Performance Management customers have tended to fall into this general range.
Today, the enthusiasm and the drive are beginning to draw many more large companies in, sparking their interest where Business Performance Management is concerned. Once they decide to invest in a Business Performance Management initiative, the bigger companies tend to jump in wholeheartedly.
Generally, large organizations accept almost all of Business Performance Management, not just budgeting and dashboards as some companies do. Aspects of Business Performance Management including operational analytics and profitability optimization are of the importance to these larger organizations.
At the other end of the company size scope though, the smaller organizations and companies are starting to jump a head with Business Performance Management as well. In many cases, their growth has made it nearly impossible for them to continue using older and less advanced budgeting processes, and the hearty, cost-efficient solutions that are available today offer a desirable substitute that would not have been an option only a few years ago.