BPM Software Buyer's Guide: BPM Finds Its Missing Pieces

See the BPM Software Buyer's Guide 2011 here

A faster monthly close. One version of the truth. Less painful budgeting. These are benefits that business performance management (BPM) software vendors have been claiming for their products for years. BPM Partners' 2011 Pulse Survey shows that their customers agree. These are real gains that many organizations have achieved after implementing performance management systems.

This is, of course, something of a rarity. How many technology initiatives actually realize the benefits promoted by vendor marketing? Not many. Performance management, though, really appears to deliver on its promise.

Or so it would seem ... but there's more to the story.

While BPM adopters are reaping many valuable rewards, their initiatives are falling short in two key areas: achieving strategic alignment and improving the bottom line. Unfortunately, those two benefits are critically important when it comes to realizing the ultimate vision of BPM -- better performance.

The Holy Grail of Performance Management

Why is BPM falling short, and what can be done about it? To find the answers, we first need to step back and examine the components that make up performance management. They fall into three main categories: strategic, financial, and operational performance management. Strategic components include long-range planning and modeling, dashboards, scorecards, and key performance indicators (KPIs) tied to the initiatives that support them. Financial performance management usually comprises budgeting, forecasting, consolidation, and reporting. The operational aspect of performance management covers operational analytics and profitability optimization for each major business unit and function.

Each component is important and valuable in its own right. Together, however, they constitute what I call "the holy grail of performance management" -- a system that can set adopters on the path to strategic alignment and ultimately an improved bottom line. The strategic plan and KPIs cascading down throughout the business, operational efficiencies and revenue opportunities consolidating up, and all of it being tracked and measured by the financial systems -- that's the ideal BPM implementation.

So why doesn't everyone follow this course? Two main reasons: It requires someone senior in the organization to lay out this vision and a roadmap to get there, and the vendors must be able to provide all of the necessary pieces in a single package or as easily integrated components. Both of these requirements have been difficult to fulfill in the past.

While internal challenges may persist, the technology challenges have lessened. More vendors than ever before are now providing solutions that include components from each major category. Firms that specialize have made their products easier to integrate with other systems.

Vetting the Vendors

If you're just starting out with performance management, you probably want to begin by addressing a pressing need -- enhanced reporting or better budgeting. The financial performance management suite vendors are focused on these areas. There are many solid choices to consider. In addition to the mega-vendors (more on them in a moment), some of the most successful financial performance management vendors include Longview and Tagetik, both offering unified suites for midsize to large organizations; Adaptive Planning and Host Analytics, providing cost-effective SaaS solutions; and PROPHIX, with its high-end capabilities priced for the mid-market.

Organizations planning to implement all aspects of performance management over time may want to purchase from a vendor that offers strategic and operational components in addition to financial capabilities. Your choices here include Oracle Hyperion, with its broad, deep product set; IBM Cognos, which provides strong business intelligence tools as well as mid-market offerings; and SAP, which leverages users' familiarity with Excel to anchor its comprehensive product line. Several new vendors have entered the performance management market in the past year, and one of them, Cogniti, is specifically focused on the integration of strategic, financial, and operational planning and execution.

If you already have a BPM system and you're looking to add some of the missing pieces that your current vendor doesn't offer, you can choose from numerous products. Acorn Systems, for example, is a leading choice when it comes to profitability optimization. While most budgeting products really focus on budget collection, XLerant focuses on budget creation through a guided process. Many other specialized vendors can be found in this year's Buyer's Guide.