Understanding the Consolidating BPM Landscape
The market for business performance management (BPM) continues to grow as companies seek to add value and cut costs through management and governance initiatives. But the lines among analytical, business intelligence and ERP applications are blurring. Companies need to view their entire business applications portfolio as one integrated, complementary and consistent systems architecture.
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Many organizations have implemented transactional ERP solutions but have found these systems don't meet their needs in important areas -- planning, budgeting, modeling, forecasting, and accurately managing results to key performance indicators (KPIs). BPM provides a framework for aligning information-management processes with planning and reporting in a collaborative-enterprise fashion. It provides business information where and when needed in the enterprise, as well as ensuring that planning and budgeting processes can effect shifts in strategy in a top-down, coordinated, and controlled manner.
The BPM market is undergoing consolidation as business intelligence (BI) and ERP vendors acquire many of the pure-play best-of-breed solutions providers in order to round out their application suites and add missing analytical and planning components to their solutions. Recent examples of this trend include Business Objects acquiring SRC; Cognos acquiring Adaytum; Lawson acquiring ClosedLoop; Microsoft acquiring ProClarity; and Actuate acquiring Performancesoft.
While it may appear that these vendors are offering more complete and robust solutions for their customers, it takes most of them six to 18 months to demonstrate sufficient integration between newly purchased and legacy products. Also, many of these acquisitions will take even longer to present a single-suite "marriage" of best-of-breed applications with a complementary BI infrastructure.
Although the current consolidation trend is expected to continue, at present prospective buyers are less inclined to invest in larger single-suite solutions. The market remains divided between prospective buyers who recognize the importance of building BPM systems on top of a solid BI platform and prefer a single-source strategy, and buyers who seek a best-of-breed strategy, where each functional module is chosen based upon its ability to excel at addressing specific requirements. A single-source BPM may be advantageous, but BPM is not a one-size-fits-all proposition and there are no silver-bullet solutions.
BI vs. BPM
The evolution of BI in most organizations can best be described as haphazard. Most systems have been implemented in an uncontrolled and/or uncoordinated manner. Many organizations satisfied their needs for better information from ERP and legacy operational solutions through the use of reporting tools, often using multiple tools to support various business areas. Though multiple tools supported the unique needs of disparate business units, they came with a cost -- support was more complex, and multiple databases were difficult to integrate or reconcile. In addition, BI systems tended to be based on lagging indicators, reporting on history with little if any target-setting or planning/forecasting capabilities. In today's real-time business world, the value of data increases the more easily it can be accessed and the timelier it can be delivered.
However, BPM, as the evolution of BI, assumes a consistent, integrated BI platform. Essentially, it's a new way to think about BI. As such, in order to have success with a BPM project, fixing or more effectively organizing a BI platform will be the critical first step. Consistency is key because BPM assumes that all reporting, metrics, dashboards and business plans are built with the same assumptions, including common definitions of results and their underlying data. In addition, BPM makes BI more "proactive" by enabling planning, metrics management, strategy setting and mapping, budgeting, and forecasting. In essence, BPM will enable BI to be more operational by linking goals and targets with results.
Defining the BPM Architecture
In its simplest form, BPM requires a consistent budgeting and reporting platform. This minimalist approach may be perfectly acceptable for the first phase of a BPM project that targets budgeting, for instance. Organizations often build a BPM platform through a series of phases or project steps, achieving incremental value with each step.
Clearly, however, it's essential to have an encompassing vision of BPM's ultimate enterprise-wide role. Integration with ERP and operational systems and a standard BI platform to ensure that data integrity and consistency is achieved -- leading to the holy grail of business-information management, the elusive "one version of the truth" -- is critical.
