What BPM Consumers Want

Given the upheavals in the economic environment, we decided to ask BPM Pulse Survey respondents to identify areas of performance management that are of heightened interest these days. It's no surprise that profitability optimization, enhanced operational analysis, scenario (what-if) modeling, and improved strategic planning topped the list of important focus areas (Exhibit 2).

We also drilled down into the core business processes that require greater emphasis in these trying times. Respondents identified profitability analysis and enhanced reporting as two areas of expanding interest within their performance management systems.

Voices of the Vendors

Due to the nature of competition in the performance management and business intelligence markets -- in particular, the reality that the technology vendor community aligns on higher areas of prospect interest -- it's helpful to get the vendors' perspective on what's different in today's buying cycles.

Meg Dussault, program director with IBM Software Group, reports that "there are four new focus points we have noted through discussions with existing clients and prospects: cost management, profitability optimization, risk management, and new opportunity assessment."

Those are pretty overarching themes, so let's dig into them a little more deeply:

• Cost Management -- This is about better managing the costs you can control. You need to understand the relationship between cost and value to figure out what can be deferred or omitted and what cannot. The worst thing to do is to scale back on investments that can best position your organization to withstand this tough environment and win in the longer term.
• Profitability Optimization -- You need to understand the customers, products, and regions that are driving the best contribution, because that's where your priority needs to be. Focusing efforts on your most profitable customers and products, while paring back the less profitable ones, will surely provide the bottom-line impact that you need to achieve.
• Risk Management -- The way in which your organization addresses risk impacts everything from cost of capital to compliance. Given the constant and rapid changes rocking the financial, market, and competitive environments today, organizations need to be able to set tolerances that make sense, monitor potential exposures, and change course as appropriate.
• New Opportunity Assessment -- Any change brings new opportunities; you need to exploit the favorable winds that others haven't yet noticed. To do that, you have to understand the profit potential of opportunities and prioritize the most promising prospects.

Stephanie Buscemi, vice president of marketing for enterprise performance management and governance risk and compliance at SAP, emphasizes the need for flexibility and agility in turbulent times: "Today's successful companies are able to apply their resources to initiatives and functions in the enterprise that can deliver the greatest value," she notes. "They're agile, and they operate flexible processes to capitalize upon opportunities that present themselves during a crisis. Performance improvement projects should not only drive cost reduction but also provide strategic insights and identify new opportunities to improve margin and drive profitable growth while mitigating business risk."

Organizations should recognize that performance management means much more than just a new set of reports, insists Jonathan Hornby, director of worldwide marketing, performance management, at SAS. "Don't just report on performance, but focus on improving and optimizing performance across the enterprise," he says. "The top-of-mind challenges that we see include controlling costs without sacrificing future growth objectives, understanding what drives cost and profits, and creating organizational alignment to improve agility."

Fundamental economic changes are driving broader adoption of new planning processes that found only a minority following in better times. "Virtually everyone is talking about doing rolling forecasts," reports Rand Heer, founder and CEO of Alight Planning. "Underlying this is strong confirmation that last year's budgets are not useful now, and forecasting is needed to keep up with rapid changes in the economy and their businesses. Scenario planning is another important undercurrent. If you can't predict the future -- and none of us is doing a very good job of that -- then thinking through alternate scenarios becomes more critical."

At the same time, the vendor community is recognizing that in these leaner times, cost considerations are crucial. "Companies that had sizable six-figure budgets last year and were looking only at the Big Three vendors (IBM, Oracle, and SAP) have become more cost-conscious and risk-averse," reports Greg Schneider, vice president of marketing with Adaptive Planning. "As a result, they have been expressing greater interest in the software-as-a-service (SaaS) model, which has lower upfront cash outlays; a lower-risk, pay-as-you-go model; and shorter implementation times. The model is not only economically attractive, but also allows our clients to have a more immediate impact on their business."