Adjusting and refining. One more type of data must be integrated into a truly unified performance management system, and that's data from sources outside the organization. In the background of analyses of why actuals don't meet expectations lies market data: customer data, economic data, competitor data, weather data, and more. Companies that link this information to key performance measures can discover how external factors affect their performance. Even if you can't control interest rates, you can understand their impact on your firm.

For example, an integrated agricultural product company wanted to know what its future production would be. The organization grew a crop, transported it, processed and packaged it, and then delivered it to retailers. By tracking the impact of weather, soil, and fertilizer on crop yields, managers were able to gain insight into their packaged product supply six to eight weeks earlier. This knowledge enabled them to formulate effective transportation, promotion, and pricing plans to match supply expectations.

Conventional automated performance analysis and predictive analytics uncover the links between the data elements a management team controls and the organization's key performance measures. These tools might show that profits really do increase with the number of direct-sales reps hired (but not with the number of telesales reps or independent agents). But this kind of analysis will take you only so far. How do you ensure that the sales reps you hire result in the profits you intended? Unified BPM provides insight into the drivers of your KPIs. You can understand how your processes contribute to your performance. You can understand which operational events contribute to your performance. And you can see this at a holistic level, where performance overall, not just locally, is what really matters.

Unifying external information with companywide data, including data about the company's processes, enables a key aspect of making adjustments: determining the impact of one change in strategy or tactics on other organizational goals. Impact analysis tells you what your changes will mean to other parts of the organization. If I increase sales volume, what will that mean to the cost of production, to the customer service costs, etc.? Unified performance management systems enable impact analysis by automating the analysis of the company's business drivers and how changes in them affect the organization.

Making BPM a Closed-Loop Cycle

Actively managing performance is, simply, running a business -- running the entire business as one entity. It's a continuous cycle of planning, executing, measuring results, and planning the next actions. In the context of a larger strategic initiative, that means continuous performance improvement. The best-run companies also look at their risks, both financial and process based, as part of the performance management cycle. Because of the vast quantities of data it integrates, unified performance management makes all of these analyses possible on an ongoing basis. It saves companies from having to consolidate data from multiple sources and gives executives access to this data in nearly real time.

Unified performance management is a set of active processes, not a static engine. There is a constant evolution as competition grows more fierce, as new products and processes come into being, and as other external forces (demographic, political, climatic, etc.) change the rules of the game. By combining external market data with information about the entire company, and centralizing both financial and process data organizationwide, unified performance management makes companies more capable to compete in this always-shifting environment.

Christian Gheorghe, senior vice president and CTO of SAP, leads the company's alignment, development, and deployment of SOA-enabled services for business user applications.

John Hack is the manager of corporate performance management solutions development at SAP. His team works closely with customers to create prepackaged business processes and industry solutions.