The BPM Transformation: Where it is Today, Where it's Going Tomorrow
In the enterprise software market, new products and marketing messages are emerging around business performance management (BPM) driven largely by executives' needs for tighter control of their businesses in the face of a rapidly changing economy, a more dynamic competitive environment, industry-shifting accounting scandals, and new U.S. Securities and Exchange Commission regulations. BPM provides a "closed-loop" integrated management process with enterprise metrics, business plans, and reporting. Many will look to BPM solutions to provide the necessary visibility into accounting processes mandated by legislation like Sarbanes-Oxley.
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Access white papers, product demos, and presentations from companies whose reputations have been built on helping BPM practitioners get the most from initiatives.
- BPM 101: Selecting a Business Performance Management Vendor" -- new white paper from BPM Partners
- "The Finance Challenge of Aligning the Business With Strategic Goals," a podcast featuring Palladium Group's Phillip Peck
- Ventana Research white paper "Decision-Making and Performance: Improving Essential Business Analytics and Technologies"
- “XBRL at a Glance,” white paper from XBRL US
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To establish a clear picture of the realities of the BPM market, META Group surveyed 459 influencers, purchasers, and end-users of BPM tools and systems. The study analyzed the BPM cross-application analytics requirements necessary to achieve information-management goals, corporate plans to meet these goals, and perceptions of the vendors and service providers that serve this market. The findings also provide insight into how -- and how much -- enterprises understand and will invest in BPM and how BPM will continue to evolve as an integrated enterprise analytics model.
BPM Initiatives
BPM initiatives remain a front-burner issue for most companies due to the aforementioned issues. In response to questions about the status of their BPM initiatives, 85 percent of respondents expect to have BPM projects underway in the next 18 months. This percentage is broken down in exhibit 1. This is a surprisingly high level of projected adoption for solutions that are just beginning to gain traction in the marketplace.
Expectations for fully deployed, fully integrated, cross-organizational implementations are also promising, if not optimistic. Although companies with greater than $1 billion in annual revenues are the most likely to have BPM initiatives in place in 18 months, respondents from all company sizes indicated plans to begin BPM initiatives. META Group attributes these high expectations of BPM adoption to the long-awaited resurrection of IT investment and to the increasing awareness of the value of integrated analytics in facilitating more effective, and adaptive, strategic and operational business management.
There are few surprises why companies initiate BPM projects. Analytics tools, and specifically comprehensive solutions such as BPM, are intended to result in better decision-making, the adoption driver cited most often in the survey. The next most cited responses, "improve efficiency of reporting and planning," and "better resource allocation" are also directly related to improving the efficiency of corporate operations and tightening controls over the costs of doing business (see exhibits 2-3).
Certain BPM drivers are clearly more relevant to larger companies. "Improve efficiency of reporting and planning" was selected by almost three-quarters of respondents from companies with revenues of more than $100 million. In large companies where factors such as the number of data sources, number of data views, time to report delivery, and other internal variables can become obstacles to reporting, business planning, or other BPM activities, the promise of an integrated BPM solution is very attractive.
With new legislation, such as Sarbanes-Oxley and the U.S.A. Patriot Act, requiring public companies to better account for the business activities in every corner of the enterprise and to certify financial results, it is not surprising to see the strength of "accountability and transparency" in the list of top-adoption drivers. "Increase levels of accountability and transparency within the enterprise," was noted as a major driver by almost half of all respondents from companies with more than $100 million in annual revenues, but it was a significantly greater driver for finance respondents than for respondents in other divisions.
BPM Leadership
The breadth and potential impact of BPM initiatives requires the participation of senior executives, but the successful completion of BPM projects requires an additional level of cross-departmental cooperation -- especially between the IT and finance organizations -- which is not always evident in large companies.
The seniority of final decision-makers on BPM initiatives reflects the key role BPM can play in the organizational alignment of performance to goals. Almost half of all respondents indicated that the CEO is the final decision-maker on BPM initiatives. At companies with greater than $100 million in annual revenues, BPM responsibilities are more delegated and CFOs are more likely to shoulder the responsibility (see exhibit 4 below).
The CFO's prominent role as a leader of BPM initiatives is not unexpected. BPM is the next phase of the businessanalytics market that has seen its greatest potential realized in financial analytics activities. More surprising was the fact that respondents most often cited the CIO as the champion of BPM projects in their organizations. The prevalence of the CIO as the leader of BPM efforts is more easily understood when the technical scope of a full BPM implementation is considered. Building on the financial analytics foundation and integrating it with enterprisewide management reporting and performance metrics capabilities to create a "closed loop" means that BPM initiatives are as much an IT transformation project as a finance transformation effort.
