Will these definitions be accepted broadly? I expect them to be; in fact, standardization is already occurring. Performance-oriented conferences and some software companies are beginning to standardize around these basic definitions of the acronyms. Progressive financial managers are now more prone to use “CPM” to define the added value that performance management brings to their organization, while more and more business intelligence and Balanced Scorecard consultants are referring to “BPM.” There will always be niche players that seek to expand their service offerings by blurring the line between what their software can and cannot do. Often this blurring will bring new ideas into the market and provide fresh perspectives on solving old problems, so it may not be unhealthy as long as it is isolated to the fringes of the market.

However, even if the market standardizes on better definitions and moves away from much of the confusion that has plagued it in the past, performance management continues to face some challenges. First, BPM is still missing a widely accepted, unifying method that will enable customers to easily grasp how to achieve it. Debate about approaches, principles, and concepts is infinitely more difficult when even practitioners cannot agree on what the acronyms mean — but collectively, as believers, we must also seek the elusive method that will simplify BPM concepts. We don't have to limit ourselves to just one method. Competing methods are good because they help prompt open discussion, which can inch performance management over a second hurdle. Healthy debate about the strengths or weaknesses of different approaches, theories, and concepts related to a specific discipline is helpful in moving a method to methodology status. Yet this is often missing with BPM.

Finally, BPM's progress is inhibited by the fact that the method has not implanted itself into academia. Leading academics often propel new methods and methodologies into the spotlight, but ideas that are born in the marketplace have to earn their way into the hallowed halls of our best universities. Farrokh Langdana, Ph.D., director of Rutgers University's executive MBA program, says, “For the past several years, we have been watching the progress of BPM as an influence on how executives manage, and we formally added it to the program in 2008. It has become a critical component in how organizations manage their own behavior.” But to date, only the more progressive universities and those influenced by Asia-Pacific markets have begun to teach or lecture on BPM.

What Will Our Future Hold?

Believers in BPM must mature in our views and in our conversations. The average prospective buyer of performance management software is becoming more informed about BPM and how it applies to their business challenges. Those of us who are familiar with its key concepts must begin to focus our discussion on the mechanics, the processes, and the actions that make BPM successful, so that common methods can begin to emerge.

Consider the possibilities. The recent collapse of global financial markets should have been easy to spot in advance. Had we analyzed the data, we would have seen that these organizations were taking on risks that had the potential to bring even the largest, most respected institutions to their knees overnight. It is likely that somewhere within these organizations, business intelligence analyses revealed the risks — but the discovery was ignored. In the type of performance-oriented environment that BPM encourages, risk information would have been pushed to the forefront. It is impossible to know whether anything would have changed, but if more people knew about the risks, they would have been more likely to address them. Similarly, a comprehensive BPM system might have forestalled the problems several years ago with Enron and Worldcom. Bad things were going on internally, but only those who stood to benefit from the illicit activities knew about them. A properly implemented BPM solution would have revealed the disparities between recognized revenue and real revenue.

BPM isn't just about preventing failure; it is about realizing opportunities. One of the most well-known performance management initiatives, FujiFilm USA's rebate program, began with a simple question: Should a rebate be $3 or $4? The company used performance management software to answer this question and ended up changing the entire rebate industry, as well as gaining FujiFilm a competitive advantage in the marketplace. Scott McNulty, the former director of business development for FujiFilm and the visionary behind the BPM initiative, is a believer. “BPM is a means to innovation and revolutionary new products, services, and concepts,” he says. “In my opinion, innovation cannot occur without a BPM structure at the foundation.” (See Making Opportunities Perform.)

The FujiFilm story reflects BPM's potential if it becomes a methodology. Performance management has the potential to give practitioners a competitive advantage. All types of companies can use BPM software and processes to achieve better management through better information. In the end, the market will decide whether BPM makes the cut. But it is important to understand the collective impact that we believers have on how the market defines the acronym and how much value performance management initiatives bring to solving modern-day business problems.

David F. Giannetto is CEO of the Telos Group. He wrote the book “The Performance Power Grid” and is a professor in Rutgers University'sexecutive MBA program. You can reach him at dgiannetto@telosconsulting.com.

Before discovering business performance management (BPM), Scott McNulty, the former director of business development for FujiFilm USA, spent four years digging through disparate data and systems to determine the combination of key variables that would optimize consumer purchasing, brand recognition, and customer loyalty. Rebates were a crucial tool at his disposal, but the rebate industry had always been driven by the strength of personal relationships. The availability of rebates, as well as their size and terms, was often decided based on phone calls and favors. McNulty felt that hard information about relationships between key variables — such as the amount, frequency, and duration of rebate offers, and the products and vendors involved in each rebate program — could help him make rebate decisions that would give FujiFilm an advantage.

This belief led him to adopt BPM's approach to managing more effectively using better information. Once he had a new BPM software system in place, the information began to flow. Overall expenses for rebates came down quarter after quarter, while sales and repeat purchases improved and inventory turnover increased. Each day, the BPM technology delivered performance data to the rebate program manager and summarized rebate information for the management group. But McNulty was not satisfied. He believed that consumer-goods rebates, which represented a significant expense for his organization, were also a key ingredient in creating and maintaining brand image and loyalty. He wanted to improve the overall customer experience, so he brought a wider group into the web of management information he was weaving.

First, he integrated the back-end rebate processing system with the BPM software. This enabled the system to draw connections between seemingly unrelated data points, which drastically reduced rebate processing time and improved overall accuracy. Total costs fell and the bottom line rose, which freed up rebate dollars to be spent on improving the customer experience. Then the BPM system passed rebate information into a new customer service center, within which representatives could instantly see the overall status of a particular customer's rebate and the customer's importance to FujiFilm based upon frequency of purchase. The system predicted the customer's state of mind before a customer service rep answered the phone. The data analysis was so thorough that the system even predicted when an individual customer was getting ready to purchase additional CDs or DVDs so that the representative could send him or her an electronic rebate to prompt the purchase. FujiFilm could spur a $20 purchase for almost zero cost, and it could do so over and over again.

This rebate system was so progressive that it gave FujiFilm an estimated two-year advantage over competitors. Without intending to, McNulty had revolutionized the entire rebate industry. And his quest to optimize his company's use of performance management did not end there. Once he became exposed to the potential of BPM, he began using it in other large-scale initiatives. “The BPM methodology is the consistent factor behind my most successful ventures, including the first automated rebate system [for which FujiFilm won a Business Finance Vision Award], the human bar code project [www.humanbarcode.com], the most advanced online storage company [www.xstorage.com], and the world's largest interactive archive of space and science assets [Webby Award winner www.spacesounds.com],” McNulty says.