Infusing BPM Into IT

Business performance management (BPM) isn't a piecemeal concept. It was never meant to be applied only to some parts of an organization and then come to a screeching halt. The grand plan behind BPM is to keep going, to permeate virtually every nook and cranny, connecting all the separate business units and departments under one transparent set of strategies, tactics and metrics. That's the stuff perfor-mance-driven cultures are made of. It's how significant performance improvement takes hold, enabling a company to respond more quickly to business change, armed with better, more timely information about how it's doing as a whole.

Most companies, however, never reach that ultimate stage because the road to a holistic adoption of BPM is often a rocky one. Some parts of the organization are more BPM-friendly than others. Perhaps the least amicable is the IT department, which has historically possessed the kind of characteristics that tend to slam the door on BPM. As a result, many IT departments are finding themselves increasingly unable to keep up with the accelerated rate of change in the business environment and in danger of becoming a serious impediment to performance improvement.

IT's Image Problem

Perhaps the most fundamental problem is one of perception. Among IT's BPM-resistant features is the way the function measures itself, often in technical terms relating to systems reliability that are less than helpful when it comes to measuring business profitability. And that contributes to IT's image problem within the organization.

"Not many executives see IT as a true business partner, which in part is why their satisfaction with IT's performance is tepid at best," says Robert S. Gold, vice president and practice leader for strategic infor-mation technology management at Lincoln, Mass.-based Palladium Group Inc., a consultancy that focuses on strategy execution. "Historically, IT has been regarded as a shared services organization, which represents a subservient view of IT, and a view which plays into the way IT is funded."

The finance model for IT -- typically not much more than a spending limit for its budget -- inhibits performance improvement, according to Gold. Preferably, IT should forecast and budget in line with the changing needs of the business. "Companies need a consumption-based forecast model for IT, one that takes into account the company's business strategies," Gold says. Such a forecast considers the IT resources the organization would need to consume in order to meet current and future objectives. "Granted, that's a radical idea, and it requires a recognition that IT can control its own spending. But that type of model allows IT to create value by enabling the business to execute strategies, contributing to business success. Viewing IT as merely an expense is counter to any sort of partnership."

Gold cites the successful case of defense industry giant Lockheed Martin Corp., headquartered in Bethesda, Md. The company made IT pivotal to its business strategy by borrowing from the military strategy of horizontal integration, which delivers information across satellites to a soldier in a tank or a plane in real time. "Lockheed Martin realizes the more its internal IT group is able to facilitate horizontal integration within the organization, the better it can deliver horizontal integration to the marketplace," says Gold. "The company uses the Balanced Scorecard to put everyone within IT, about 5,000 employees, on the same page when it comes to business strategy. That's helped IT better understand the business, opening up a richer dialog between IT and business managers." Gold adds, "Instead of limiting IT to measures around cost and quality, Lockheed Martin can use the Balanced Scorecard to also measure IT's agility and innovation."