Putting Theory Into Practice

No matter how you look at it, today's operating environment is fundamentally different from anything most of us have ever experienced. The tough economy; the crisis in corporate governance; the growing influence of stakeholder interests on organizational performance; and the new emphasis on fundamentals -- on people, systems, and solid investments -- all of these factors have radically altered our business environment. To effectively manage in the face of these newrealities, we must seek a better way to manage our increasingly complexbusinesses.

That better way is business performance management (BPM). And in this, our second issue of Business Performance Management magazine, our contributors focus on how business, finance, and IT executives can meet the myriad challenges they face by putting the concept of BPM into practice.

What is BPM? How does it work? How can your organization put it to work, and how can you benefit from it? These are fundamental questions we seek to answer in this issue through contributions that break new ground in the development of a theoretical and practical foundation for BPM and BPM-related disciplines.

Andy Neely and Chris Adams, of the Cranfield School of Management's Centre for Business Performance, have developed and tested an interesting new framework that they call the Performance Prism. This model helps organizations design, build, operate, and administer their performance measurement systems in a way that ensures metrics are directly relevant to all of the company's key stakeholders. In today's business environment, organizations that excel in meeting the needs of stakeholders -- customers, employees, suppliers, investors, regulators, and other important "communities" -- will be rewarded, as evidenced by the authors' analysis of DHL's successful application of the Performance Prism.

Steve Player, Jeremy Hope, and Robin Fraser, of the Beyond Budgeting Round Table, also emphasize the importance of meeting stakeholder needs in their article on how to replace the traditional budgeting process with management tools that offer continuous planning and adaptive control. The companies that have already migrated to a budgetless business environment have achieved more accurate forecasting and refocused their stakeholders on external-facing metrics that directly reflect their prospects for long-term performance.

Surely, when speaking of any aspect of BPM -- the Performance Prism, budgetless planning, or any new organizational system or process initiative -- one must consider the implementation challenges ahead. Inertia, politics, and an organizational culture that relies too heavily on how things have always been done represent the biggest barriers to success. Jim Bramante, of IBM Business Consulting Services, argues that proactively managing change is critical to a successful BPM journey. His article will help you develop a change strategy as an essential component of your BPM initiative.

Although its principles have been developing since the mid-'70s, BPM has only recently come into its own as a unifying force for better business management. It's important to understand how BPM evolved in order to facilitate its continued growth. Blythe McGarvie, president of Leadership for International Finance and former CFO of the Bic Group and Hannaford Bros., has been a "first mover" in BPM throughout her career. In this issue, she has contributed a first-person, real-world account of the successes and failures she experienced as an "accidental pioneer" in BPM, and she relates how the lessons she learned apply to BPM initiatives you may be currently considering or managing.

Also in this issue, META Group's David Baltaxe and John Van Decker debut the results, and provide their analysis, of a comprehensive survey they recently undertook on the current status and future outlook of BPM. No matter how you slice it, BPM is a growing trend in business, finance, and IT management today, and for good reason.

As always, I welcome your thoughts and comments.

David Blansfield is editorial director and publisher of Business Performance Management and chair of the BPM Summit. You can reach him at dblansfield@penton.com.