If you're reading this, you're probably already a believer in business performance management (BPM). You probably think that BPM represents a major change in the way we manage — or at least that it could. But two questions continue to nag at those of us who are BPM believers, whether we're consultants, software vendors, or practitioners: Can BPM transition from a niche industry, a group of software applications and best practices related to the use of those applications, into a full-fledged management methodology? Does it have the staying power to permanently change the way companies are managed, or will it fade into the background when a new fad emerges?

The answers to these questions will determine whether we still consider ourselves BPM practitioners five years from now, or whether consultants will move on to a new set of buzzwords and software companies will again shift their marketing language and value propositions. Many of us have been down this road before, and we believers would prefer not to start the journey over again anytime soon.

Method vs. Methodology

What's the difference between a methodology with staying power and a method that is vulnerable to replacement? The definitions help draw the lines. A methodology is a system of principles, practices, and procedures applied to a specific branch of knowledge, whereas a method is a subset of a methodology, the process by which a goal is realized. The distinction becomes clearer when looked at through the lens of the recent history of what we now call performance management.

The goals of BPM are not very different from the goals of the executive information system (EIS), which was proposed in the 1980s. EIS sought to deliver real-time information to the desktops of a company's managers, in order to focus those individuals on the things that are most important to the company. This sounds surprisingly similar to the overall purpose of BPM: improving organizational performance through better, more timely information. Unfortunately, the technologies of the time couldn't live up to the promise of EIS. Therefore, the larger goal — changing the nature of how companies were managed by delivering better information to decision-makers — could not be realized.

This story lies in sharp contrast to the fundamental change that did take place in corporate management in the 1980s, the rise of management by metrics. Although the concept of management by metrics had been around for some time, it spread after the emergence of the Balanced Scorecard made its application more practical. Because of the effectiveness of the method (the Balanced Scorecard), the methodology (management by metrics) is almost universally accepted today. As organizations begin to move beyond the Balanced Scorecard, or whichever means of gathering and distributing information they are currently using, few will dispute the value of basing corporate management decisions on financial and operational performance information.

BPM is not the only modern-day method competing to help us realize a larger goal. Lean and Six Sigma are two approaches that can help organizations establish a culture focused on continuous improvement (see Driving Operational Innovation Using Lean Six Sigma and Better Fostering Innovation: 9 Steps That Improve Lean Six Sigma, both in the September 2008 issue of BPM Magazine). Results have been mixed for both methods. Customer relationship management (CRM) is now in its twilight years because it has been largely unsuccessful in helping companies realize the larger goal of creating customer-centric business models. EIS, CRM, Lean, and Six Sigma are all methods, or approaches, that support strides toward larger goals that would change the very nature of how business is managed. But they are not, in themselves, capable of bringing about a dramatic shift in the fundamentals of management.

Passionate believers in BPM like to think that our ideas will grow roots deep enough to take performance management through the leap to methodology status. This may happen, but unfortunately we alone can't determine its fate. Like all things in business, in the end the market decides. In general terms, market decisions are based upon the long-term value of a product or service, but they ultimately derive from the accumulated decisions of numerous individual consumers over time. To gauge the future of BPM, we must view the market from the perspective of the average prospective buyer; to extend BPM's staying power, we must respond to that perspective.

Long-term success for BPM will require that a large number of individuals be exposed to performance management products or services; understand the value proposition BPM offers; undertake a due diligence process, the outcome of which supports moving forward with BPM; and then actually take the plunge. Within this decision-making process are some hurdles that performance management must clear. To become a methodology, BPM must show inherent value. This has never been a problem; what company wouldn't want to place better, more timely information in the hands of managers, and so drive performance improvements? Where BPM has struggled is in meeting the next hurdle, providing success stories that give executives in the due diligence process the confidence to go ahead and buy. It isn't that consulting firms and software vendors fail to provide any good references, but that there hasn't been enough widespread success for BPM to reach its tipping point.

What's in a Name?

Unlike methods that originate in academia, methods born in the hypercompetitive environment of today's software and services industry often have an identity crisis because their advocates lack the motivation to unify their message. In fact, advocates are usually motivated to differentiate themselves by drawing attention to differences in their approaches, in their protocols, and even in their terminology. While competition often leads to a stronger end result through the principle of survival of the fittest, hypercompetitive industries bombard prospective customers with marketing materials in which different companies contradict one another on the same topic. The effects of such a hypercompetitive beginning still plague BPM today.

When business performance management was born, it had an identity crisis. Competing software vendors and consulting firms agreed on a general purpose — to better solve business problems through the automated delivery of high-quality management information — but they couldn't even agree completely on a name. Business performance management, corporate performance management, and enterprise performance management all sprang up at the same time. Because these acronyms were the calling cards of competing organizations, any distinctions in definition among these competing approaches were lost on the average customer, and therefore on the market.

To add to the confusion, all three acronyms included the words “performance management,” a term that has traditionally been the jurisdiction of HR departments. It was up to customers to figure out whether a particular “performance management” solution was designed to improve business problem-solving overall or to boost individual performance, facilitate performance reviews, and control discretionary compensation. Those hoping to make the terminology more clear to customers lost all hope when, at around the same time as the rise of the performance managements, another BPM was born — business process management. The two BPMs share the common cause of improving business performance, but they seek to achieve that goal from different perspectives. Performance management identifies information as the central solution, while process management views better process definition as the critical component. Some practitioners go so far as to say these approaches are diametrically opposed.