Investigating Operational Processes

Compared with many of the higher-level BPM initiatives, OPM provides value directly to the business processes of an organization. The Operational Performance Management Study examined specific business activities and processes by various business domains. A critical aspect in transforming an organization to be more responsive to opportunities is providing the capability to monitor business activities and processes. To understand the ways in which companies have matured and evolved in relation to this capability, Ventana Research investigated the current and planned demand for frequency of information delivery by each business domain.

The first business domain many finance executives always want to understand is the demand and revenue potential of products and services and how to manage costs in marketing and servicing customers -- that is, the customer relationship management set of business activities and processes. The study found that customer-centric business activities and processes are shifting toward more frequent measuring and monitoring.

Organizations are rapidly moving toward real-time and daily frequency for monitoring and measuring call center and order-to-fulfillment operational activities. Exhibit 4 on page 13 shows the current vs. planned variance and reveals an overall shift to daily and real-time.

The second business domain of concern is managing the cost of producing goods and services in the most efficient manner, traditionally defined as the supply chain and supplier relationship management set of business activities and processes. The supply chain- and supplier-centric business activities and processes are also shifting toward more frequent measuring and monitoring. Organizations are moving directly toward real-time and daily frequency for monitoring and measuring distribution, inventory management, and fulfillment. Exhibit 5 on page 13 shows the current vs. planned variance and indicates that the largest shift is from monthly to real-time.

The last business domain focuses on how employees conduct business processes that support the overall organization. Ventana Research defines this as the employee-centric relationship management set of business activities and processes. The employee-centric business activities and processes are shifting toward more frequent measuring and monitoring of activities over processes. Companies are moving directly toward real-time and daily frequency for monitoring and measuring expense and head-count management, and resource and project management. Employee recruitment and work force retention had the lowest response. Exhibit 6 shows the current vs. planned variance and indicates the largest shift is from less frequently than monthly to real-time and weekly.

What Ventana Research found is that organizations are still managing their business by monthly and quarterly results. The pressure on business management to be more responsive and track their operations to planned operational costs and revenue targets is clearly indicated in the research where there is a planned shift toward weekly, daily, and (in some cases) real-time monitoring of business activities and processes.

Meeting User Needs

Organizations must learn what technology can do to manage and improve operational performance. Ventana Research continues to see organizations depend only on operational reports from BI vendors to improve operational performance. With a better understanding of the technology evolution in this area and the value that can be delivered, managers can build a better business case to justify the budget to purchase and deploy these projects. Understanding and managing the challenges that organizations face helps ensure a project's success.

Exhibit 7 reveals the variety of challenges companies must address when purchasing and deploying projects for measuring and monitoring business activities and processes.

Overall Experience With Measuring and Monitoring

An organization's experience can affect future initiatives, such as managing operational performance. Delivering value to business and providing business operations the necessary information and tools to be more effective are critical. Unfortunately, Ventana Research's experience proves that premature execution of initiatives is typical and that a lack of strategy and careful planning can lead to less-than-expected results.

Ventana Research asked respondents to indicate whether expectations have been reached in the area of managing operational performance. This research demonstrates that most organizations felt these types of initiatives met expectations only 37 percent of the time and fell below expectations an aggregated 41 percent of the time, as exhibit 8 shows. This indicates a neutral to negative experience with OPM, in which many early projects and investments have not met companies' expectations. Organizations must realize it is critical to set appropriate expectations. Doing this will require better project planning and participation across the organization to better meet expectations in the future.

Reap the Rewards

The Ventana Research Operational Performance Management Study validated that OPM is a strategic priority within organizations of all sizes and industries. It also found that organizations are currently implementing and planning to address this business requirement to measure and monitor business activities and processes within the next 12 to 24 months. Any organization without an OPM initiative will be at a competitive disadvantage. OPM is as much a discipline as it is a methodology. Organizational discipline is required to systematically improve financial performance and manage overall business performance effectively.

Ventana Research sees many of these types of initiatives under way but unfortunately without a strategy that connects financial

and operational processes. Without careful thought, these initiatives will not meet the expectations of management and drive operational performance to its fullest potential. The opportunity now exists for finance organizations and business areas to improve operations in a concerted fashion so that employees can make the right decisions and take the right actions. Realizing that business performance management is not complete without a direct link to operational performance management will provide only half the results. By linking them together, companies will reap the full rewards of success.

Ventana Research Operational Performance Management Study The Ventana Research Operational Performance Management Study provides vendors an in-depth understanding of the existing and developing market and customer adoption. Leveraging enterprise application (e.g., ERP, CRM) investments and utilizing BI to improve operational performance are gaining significant momentum. With new advancements in application server and enterprise application integration technologies and business process management, new opportunities and pitfalls await in traversing the software market and finding success. By the combining of all these technologies, Ventana Research is just beginning to see the first steps to fulfilling the potential of OPM. This study cut through the hype to discover exactly how companies currently measure and monitor business processes and what their plans are for OPM. The study surveyed over 1,300 respondents via the Internet. The sample was gathered with 52 percent of respondents from Intelligent Enterprise, 18 percent from Data Warehouse Institute, and 26 percent from an independent research panel. The respondents were predominantly from North America (79 percent) and Europe (9 percent), with a minor sampling from other geographies. The roles of the respondents were split across executive management at 9 percent, line-of-business management at 25 percent, IT management at 28 percent, and IT staff at 32 percent. The respondents were evenly spilt across varying employee and revenue sizes.

Mark Smith is the CEO and executive vice president of research for Ventana Research, a research and advisory services firm focused on the performance management market. Ventana Research is a premium content partner of Business Finance and Business Performance Management (BPM) Magazine.

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