Many companies have taken a localized approach to business performance management (BPM). Even when all divisions of a company use the same technologies, each group plans independently. This splintered approach is an understandable result of organizational entities that exist as collections of discrete processes and functional areas -- but it is regrettable.

The fundamental problem managers face as they make day-to-day decisions is an inability to link their actions to key performance measures. They want to know whether hiring more sales reps will improve profits, or what would happen if they cut R&D spending. The challenge is that the levers which management controls (the processes and the people) don't have a simple effect on the company's key performance measures. What managers need is more enterprise intelligence, actionable information that enables them to know where their problems are, in real time; know who their top performers are without combing through a stack of reports; know where their company is at risk, before the numbers turn bad; and, most of all, know which processes could improve performance.

It doesn't make sense to try to answer these questions from the isolated perspective of one function or business unit. The company is a single organism. Departments are intertwined, and each contributes to the whole, for better or for worse. Decisions made in customer support affect sales. Decisions made in manufacturing affect revenue recognition. Sales promotions not linked to production systems can disrupt supply. Local optimization may not yield optimal global performance. The next stage in the evolution of business performance management is unification of the enterprise.

Effective performance management cycles through the following steps: setting goals, making detailed plans, executing on them, monitoring what's happening (and why), and then adjusting and refining behaviors. The performance management processes that make up these steps are all interrelated, and what happens in one step in one area of the company will likely have ramifications throughout the organization. Unified performance management integrates all the processes involved in BPM with the relevant data, across the entire enterprise, to achieve these results:

The Unification Ideal

Goals. In many companies, strategy is set at a high level, then decomposed into initiatives, which are then broken down into smaller projects, each with its own plan and metrics. Each functional area executes its own set of plans. Markets change rapidly, however. In response, some companies are adopting an "agile strategy" approach to goal-setting, an approach that provides feedback into strategy execution as the strategy is implemented. Cross-functional teams meet regularly to analyze the effectiveness of plans as contributors to the strategy. A BPM system is the obvious place to store information on initiatives' impact on organizational performance, but applications that provide only a narrow view of one area of the organization aren't very helpful for organizations working toward an agile strategy. These companies face the time-consuming task of consolidating data from a variety of BPM systems each time executives need to reconsider the company's goals.

Planning. Business performance management has evolved from a slew of disparate toolsets to integrated systems. Planning, budgeting, review of actuals, and statutory reporting can now be done from one system. This is good. Unfortunately, however, most BPM systems still focus on financial data. They may capture some operational metrics for integrated performance reporting, but the underlying operational detail is lost. Additionally, these systems tend to create functional silos: HR data goes here, sales forecasts go there, operating expenses are shuffled to another bucket.