The Participants

• Jonathan Becher, CEO, Pilot Software Inc.
• John Colbert, VP, BPM Partners Inc.
• Carie Gaytán, BPS Global Process Leader, FP&A, Johns Manville
• Chris Iervolino, Senior Managing Director, ITEC Consulting
• Ken Jantz, Management Analyst, Metropolitan Nashville Airport Authority
• Rebecca Moehring, Enterprise Data Warehouse Strategist & Architect, American Electric Power
• Rod Radojevic, Director, Best Practices, Geac
• Gary Reck, Managing Director, Resources Global Professionals
• Marc Schnabolk, President, Cartesis Inc. North America
• Michael Schroeck, Partner, Global Business Intelligence Leader, IBM Business Consulting Services
• Tony Stokman, Manager, Planning, Analysis & Reporting, Rite-Hite Corp.
• Phil Strand, Senior Business Director, Financial Intelligence Practice, SAS
• Cynthia Svensen, Director, Finance Transformation, Pitney Bowes Inc.
• Todd Swift, VP, Business Performance Management, Gentiva Health Services

BPM Magazine: Where should a business performance management (BPM) initiative start?

John Colbert, BPM Partners Inc.: Our advice is to think of where the pain is the greatest. You've identified your strategy, your direction, and maybe even have some foresight to a vision of where you want to be. You need to start where the pain is most acute. In many organizations, that pain point winds up being in the budgeting area. We recommend that you have a broad view of what BPM can be for your organization, but first go ahead and pick out one slice -- and start there with a vision of where you can go after that is complete. BPM can be very broad; if you bite off too much too early, you could have a challenging initiative.

Michael Schroeck, IBM Business Consulting Services: We believe that to be successful with BPM, companies must consider three important dimensions within their approach. First is the data and information needed to make better decisions. The second one is tools and technologies. The third and most important, based on our experience -- and the one that's often overlooked -- is the organizational dynamics, including the people, process, organization, and culture. We also think it's very important to take a top-down/bottom-up approach to BPM. Spend time putting in place your nominal enterprise strategy around common data, technology, and process standards that will support the enterprise over the long term. Then as you begin the bottom-up, maybe it's a particular application area, a type of information -- planning, budgeting, whatever it might be -- you're developing those solutions with an eye towards where you're going as an enterprise.

Phil Strand, SAS: As you look for a BPM solution, tie your business intelligence platform to it. You need to make sure that behind your scorecards, you're able to check into other places, whether you can drill into your ERP systems or whatever the case might be. Integration is another very strong piece. You want to make sure that your BPM process goes across your enterprise.

Rebecca Moehring, American Electric Power: We have a solid base for ad hoc analysis and reporting but a very disconnected picture from a business performance management perspective. We have lots of scorecards, all of them done with different technology and not necessarily aligned to what our enterprise strategy is. So for us, BPM is about bringing people under a common umbrella, bridging the gap between the executive layer, which is fairly well thought through, and the foundation, which is our data warehouse.

Jonathan Becher, Pilot Software Inc.: I think we as an industry sometimes confuse BPM with BI. Don't start with the data. Don't start by trying to keep score and showing that some people are doing red and some people are doing yellow, etc. We as an industry too quickly go to data and start worrying about data warehousing and datamarts. Data is the least interesting part of BPM. The more interesting part is goal management, or even initiative management. I think if you integrate all three of those you're much more likely to satisfy the cultural issues.

BPM: Have you encountered cultural barriers to acceptance of BPM within your companies?

Chris Iervolino, ITEC Consulting: I thought your question was going to be more along the lines of, Have you ever come across a project where culture has not been an issue? BPM exposes more people to more data and helps people better understand everyone else's business function and participate, to a greater or lesser extent, in those functions. I think of a BPM strategy as a great facilitator of changing culture.

Todd Swift, Gentiva Health Services: I'm going to speak more from my consulting days, but I think it is a big challenge. The key to successful BPM is organizational alignment and visualization of your strategy. To do that requires a lot of organizational change management. It's very important to get the executives bought-in, from the CEO to the CFO to the VP of sales and marketing -- they all have to agree on: What is our terminology? What are our top 50, 60, 80 key performance indicators that link to the business strategy? That's the biggest challenge with this kind of project.

Tony Stokman, Rite-Hite Corp.: Over the past several months, I have begun to get input from our presidents regarding what measures are important to them as we embark on business performance management. Because every executive has different goals, it was difficult to arrive at one version of reporting. At the very top of the corporation, I found that one version of BPM was adequate for the owner, CEO, and CFO. However, as I worked with the many corporations, I found that each one was unique and required their own specific version of the Balanced Scorecard and BPM. I have found that focus group meetings have helped, in which I meet with representatives from the different groups. It is extremely important to listen to your customers as far as what profitably drives their particular business or department.

Carie Gaytán, Johns Manville: We're going after all of our core business processes across the whole organization with very strong executive sponsorship. But culture is still going to be an issue for us, and getting traction for the initiative. We're a very consensus-driven organization. What BPM is going to do for us is help us make decisions and respond to changes in the marketplace a lot more quickly. The data piece will help us get the right information. But how do we get this organization that is not very swift to actually respond a lot more quickly? That's a big cultural shift for us.

Ken Jantz, Metropolitan Nashville Airport Authority: I guess we've been relatively lucky, because the whole initiative started with our CEO, and he continues to push it. We are not a government agency -- we're a self-funded authority -- but the airport has always been considered a government agency. And unfortunately, a lot of that culture was embedded in the airport when the CEO came on board.We did a five-year strategic business plan, which we update on a yearly basis. We did a new mission statement that listed our core values, and with that as a basis we developed a five-year business plan. It very specifically identified what kind of performance we expected to meet in each of those core values. And from that, we picked the key performance indicators to assess how well we meet those values.

BPM: Are many BPM projects being driven by the CEO?

Marc Schnabolk, Cartesis Inc. North America: Executives' need for accurate data seems to be driving a lot more initiatives than I've ever seen before in my software career, and I've been in the BI and BPM space for over 20 years. For the first time, we're getting involved in a lot of investigations where the senior managers are asking questions to the finance and IT teams, in their thirst for information that is not only sound and accurate but also provides a competitive advantage. There are many factors driving this, like the era of compliance, maturing BPM solutions, and the proven benefits of BPM solutions.

Schroeck: I think the risk and compliance environment has really helped. For example, as a result of Sarbanes, there's a heightened awareness starting at the board of directors, and certainly on the part of CEOs and CFOs who are signing off on the integrity of this information, around some basic BPM principles: accuracy, consistency, integrity, timeliness, and transparency. This has reinforced the importance of these basic BPM concepts at the highest levels of these organizations. And I think that bodes well for organizations as they tackle some of the culture challenges that inhibit many companies' BPM efforts.

Cynthia Svensen, Pitney Bowes Inc.: My company is very, very large. And from our standpoint, at a true executive level you don't get that kind of support -- at the CEO, CFO level, you do not. At a business-unit level you do, among the people who are actually out there impacting sales, managing their organization. We have very old-line businesses and many newer-line businesses. I think the newer-line businesses do it much better. The older-line businesses really do tend to rely solely on revenue growth, net income growth, and everything's financial.

Moehring: From a culture perspective, what I've found is that the visionaries and the champions are on the functional side -- and they're typically not executives; they're a layer below that, people who are a little bit closer to the process itself.

Becher: We don't think that the top-down, executive-sponsor model works very well in anything other than a small organization. Getting a very large organization on the same page is very difficult; that's yet another cultural issue. So pick a progressive group, a small department, and get them rallied around what you're trying to accomplish. You do that with in-person sessions, providing feedback mechanisms so the individual contributors can understand what they have to do with the goals.

Gary Reck, Resources Global Professionals: I spent 10 years as an executive in one of the top two (as identified by Gartner) BPM vendors in the marketplace today. And while I was there, our company tried to implement a companywide Balanced Scorecard initiative internally. Even at that company, we never made it through the entire process. The time it takes to go down to the field level and build this from the ground up and meet it from the top down ... to me, the executives didn't get it; they didn't want to spend their time on it. They didn't think that their investment was worth it. What are you guys seeing?

Rod Radojevic, Geac: Direct CEO involvement is fairly limited. They may have a vision for what they want, but typically the business performance management implementation and execution is left to others in the organization. As a vendor looking at our population of well over 1,000 BPM customers, I'd say roughly 25 percent of them have done it enterprisewide. Maybe 50 percent have addressed specific business pain points and have a more limited set of users. The rest are at the beginning of the process.

BPM: In a company that doesn't have strong executive buy-in, how can a midlevel manager make a case for initiating a BPM improvement project? Is ROI usually a viable argument?

Schnabolk: ROIs are the most inconclusive things in the world because they can be made to deliver any conclusion you go after due to subjective data on soft costs such as productivity gains.

Stokman: That's probably the biggest struggle. But I did an analysis the other day in a half-hour that would have taken me three or four days in Excel. Now, two years after we bought BPM software, we save thousands of hours per year related to report production and analysis. I have a very small department -- there are three of us -- and we've now moved to bigger and better things. We're not spending days and weeks every month doing the mundane reporting; we're now analysts and really driving this information to the company. Executives now are looking at their scorecard and saying, "OK, there was a problem yesterday with my margins; I want to drill down into the details." So then they can give their operations manager an immediate call, or the salesperson a call, and say, "Why did we sell something at such a low margin?"

Schroeck: I agree. A lot of it is soft dollars, but take a look at the amount of time people in finance and analysis are spending chasing information, keying information into spreadsheets, reconciling that information, aggregating it, rekeying it into more spreadsheets, and then finally trying to produce meaningful management reports. There is a tremendous opportunity to automate and streamline these processes. There is also an opportunity to decommission stand-alone reporting systems, which are rampant throughout most organizations. There are clearly some hard dollars to be saved through BPM investments.

Colbert: We often talk about having a broad vision across the enterprise and the importance of executive sponsorship. At the same time, there are situations where executive adoption isn't quick to happen. In that case, choose a department of the company and try to show in a demonstrable fashion how it can perform better. You want to be careful not to create a silo that's going to stand by itself forever. But at least get some tangible traction. Then show this concrete evidence to the executive team. Look at turnaround time for information availability; look at accuracy of data; look at the better decisions being made because the department can do more analysis versus number-crunching.

BPM: If BPM is not initially implemented enterprisewide, how can a company choose its performance metrics?

Swift: Companies have to realize that the KPIs they put on executive dashboards are going to drive behaviors. I saw a lot of instances, when I was in consulting, of KPIs driving the wrong behavior. So you've got to make sure you understand that these key performance indicators that you're going to put on a dashboard are going to change the behavior in your organization, especially if you tie them to compensation plans.

Strand: Another good reason why starting with your data is a dangerous thing: You'll end up with what look like a bunch of KPIs, but they're not; they're just a bunch of metrics on a dashboard.

Swift: That's really where impatient executives say, "Just give me five or six KPIs." They don't have the cause-and-effect relationships, and they don't understand that an incorrect KPI without other related KPIs can drive the wrong behavior.

Colbert: We see a lot of frustration around selection of measures and KPIs. You can have dozens, even hundreds, of measures and metrics, but we traditionally recommend only a handful of KPIs. If you have more than a dozen KPIs, you start to get beyond what you can really manage successfully. A key challenge to address is that when you have an appropriate KPI, you need to think through what you will do if it falls outside of a predetermined threshold.

Schroeck: Performance metrics need to be aligned with the strategy, but also they need to reflect your entire value chain. So, for example, if something happens in operations, you need to understand the effect it may have on customer satisfaction. Therefore, your measurement systems must look across the entire enterprise. BPM needs to be more than the executive dashboards. It needs to be driven down through the organization, such that business-unit leaders' measures are aligned with the corporate strategy.

Moehring: Do you measure performance at the executive level the same way that you measure performance at a department level?

Schroeck: Clearly, the specific measures and level of detail will be different, but the ability to roll that information up and align it will be consistent and very important.

Moehring: What we're finding is that the people who are very visionary at the process level, at the plant-manager level, at the regional utility level, and in the distribution side of the business, they're looking at measures to understand what to do that are very different than the measures that an executive looks at. And clearly, they have to align. That's the challenge that we have right now: Understanding how to create that alignment so that you can see whether good performance at the operational level translates to good performance at the executive level.

BPM: How can the CFO help align performance metrics, and drive BPM improvements, companywide?

Schroeck: We think, as we look forward, finance is going to play a huge role in aligning measures with strategy. This was borne out by the results of a recent IBM CFO survey. Clear and away, the 900-plus CFOs who participated in the survey identified business performance management as the single most important area of investment in terms of providing value to the organization. You're going to see a shift in investment of resources from risk and compliance towards BPM.

Becher: The stats say there are more successful projects outside of finance than inside of finance. Customer-facing operations tend to have much higher success rates than finance, unless you're just doing a pure budgeting exercise. Part of that has to do with -- no offense to anybody in this room -- the ability for that kind of organization to accept change.

Schroeck: Historically, finance hasn't been the most innovative in terms of applying and sponsoring BPM. And that comes out in the survey too. But CFOs are really stepping up. If you look at their traditional data-stewardship role in the organization, it's been to maintain the integrity, consistency, and reporting of financial information. Going forward, we think finance is going to play big in leading BPM efforts.