Standard Setters: Driving Improvements in Business Performance
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The fledgling market for business performance management (BPM) software and services is making a mark on how organizations operate. The rollup of core operational and financial processes -- including budgeting and planning, financial consolidation and reporting, and the analysis and deployment of linked key performance indicators (KPIs) -- into a comprehensive software package simply makes sense. Companies using such an application can improve efficiency and heighten corporate governance.
The fact that the end-user, vendor, and investment communities continue to demonstrate a high degree of interest in BPM software proves that it has the potential to impact every area of a business. BPM Partners' 2004 "BPM Pulse Survey" indicated that 74 percent of organizations have completed a BPM project, have a project in progress, or have plans to start a project. That's up from 70 percent of companies that participated in the 2003 survey. Among the organizations that are engaging in BPM implementations, survey respondents cited three key justifications for their project: upgrading systems they already own, increasing competitiveness, and generating a strong return on investment.
Vendor growth is also on the upswing; the number of vendors included in the January 2005 Business Finance BPM buyers guide was more than 30 percent higher than the number listed a year earlier. Vendors' revenues continue to grow across the board, with industry analyst firm IDC projecting an 11 percent compound annual growth rate for the market through 2008. Wall Street has recognized this growth by rewarding market leaders Cognos and Hyperion with a 73 percent and an 88 percent increase in share prices, respectively, over the past 24 months. And BPM technology platform provider Applix has seen a 350 percent rise in its share price over the same period.
Mixed Messages in a Growing Market
This dizzying growth rate makes apparent why this market needs standards. A couple of years ago, insiders began to worry that the challenges associated with early enterprise resource planning (ERP) and customer relationship management (CRM) rollouts could manifest themselves in this burgeoning market as well. Implementers lacked a road map to guide them through deployment, and the risk of projects going astray was very real. A group of leading BPM consultants and vendors decided to come together to mitigate these risks by developing a definition of BPM and a framework that would include the processes BPM supports, an architecture for the technologies that enable BPM software, and benchmarks for the content that drives it (see Developers of the BPM Framework).
The roots of business performance management software can be found in analytic applications (e.g., budgeting, planning, consolidation), business intelligence (e.g., reporting, slicing and dicing, visualization), and data warehousing systems. As market acceptance of the BPM concept grew, many vendor and analyst organizations tried to create their unique spin on the category. What resulted was a market with multiple ways of describing the same business challenges. Two examples are the acronyms CPM, for "corporate performance management," and EPM, for "enterprise performance management"; both terms mean essentially the same thing as "business performance management." To compound the confusion, a separate group of business applications share the BPM acronym. Business process management vendors have found value in riding the coattails of performance management software. Process management is certainly important in today's enterprise, but those "BPM" applications focus on improving all kinds of business processes, from documentation to workflow to process modeling.
In addition to the confusion over acronyms, the performance management market a few years ago suffered from a lack of clarity over what that term even entailed. Several vendor organizations called themselves the undisputed leader in business performance management -- but each had a completely different offering. They ranged from dashboard-specific software to sophisticated planning tools to services for implementing a single type of application.
At the first formal BPM Standards Group meeting, participants established a charter to develop standards for current and future users, vendors, analysts, and consultants. The group's first decision was to settle the acronym wars, and its selection of "BPM" reflects its conviction that performance management is beneficial not only for corporations, but also for nonprofits, municipalities, and other organizations. Participants also began to work on defining, once and for all, business performance management software's core components. Although some organizations are still debating whether BPM or CPM should be the lead acronym, there is now little dispute regarding which processes, technologies, and content comprise a successful BPM implementation.
