Starting Out Right with BPM

Too many business performance management (BPM) software initiatives run aground because of poorly defined initial objectives, according to Sanjay Sehgal, principal in Archstone Consulting's CFO advisory services practice and leader of the firm's business intelligence group. Sehgal talked with Business Finance to explain how companies can take their BPM vision from hazy to holistic.

Business Finance: What are some of the common mistakes that companies make as they launch into a business performance management project?

Sanjay Sehgal: What happens with a lot of organizations is they have an immediate need or pain point -- whether it be an inefficient close process, or planning and budgeting being done in spreadsheets, or modeling -- and they rush to immediately solve that one issue rather than taking a moment to step back and realize they're dealing with a systemic set of processes that are interlaid. When you think of the close, budgeting, KPIs, they're all interrelated around information that's needed for C-level executives across the organization.

Without developing a vision about how they're going to move forward and address this, some folks just run down the path of implementing a technology perspective. And in some cases it becomes an IT exercise. They basically enable an inefficient set of processes or create yet another process that's not integrated with the organization.

BF: What problems does that generate?

SS: You've created data definitions without actually looking at that issue across the organization. You've created silos of information sets and silos of technology solutions that perhaps again lead to inefficiencies. You've got multiple versions of the truth. And you haven't built the most efficient vision for governance; you've got various people supporting different applications, and data standards that are running amok, and so you end up redoing some of that.

BF: How long should companies spend on defining the vision?

SS: Typically we see BPM blueprints emerge in a six- to eight-week time frame, maybe 10 depending on the complexity of the organization and the processes. You use that period to step back for a moment to understand the opportunities for improvement and integration.

The beauty of BPM is that you can extend it as wide as you want from a process perspective. You can take it to budgeting, planning, and forecasting, or to financial consolidation. You can take it to management reporting -- for example, sales reporting and trade promotions analysis. That's where you start to increase the weeks of effort, depending on how broad and cross-functional you want to go. But success, for us, is ensuring we capture all of this, because it's information that people need within the organization.

BF: What's the next step?

SS: At the end of the vision element you'll have a variety of opportunities for the organization to improve itself; they could be process-related, people-related, or technology-related. Then you go through a prioritization process. You balance the opportunities against costs and complexity and speed of implementation. Once you work through that exercise, which takes a few days, you come up with a prioritized set of opportunities and you can then say, "This is what we'd like to do." And that becomes your road map that the organization can then execute against.

BF: How detailed does the road map need to be?

SS: The whole thing is about adding value, and you can't forget the governance piece, or the process piece, or the technology piece. Those three, interrelated, create the value for the organization.

If you forget things like change management, for example, people begin to create shadow processes. They may have some processes that are required to help them on a day-to-day basis get to a certain solution set. If you don't think through those sub-processes, those things always stay. People will say, "OK, just give me the template and I'll fill it in and send it in to you." And then you haven't really done anything.

So you need to think, "How do we get the details behind this? We've thought about going through a solutions set, but have we thought about developing common data definitions across the organization? What's the model if we need to change the definition of, let's say, net sales or gross-to-net?" You need to develop some sort of governance model that can be adapted by the organization. So we talk about filling in the details; if you don't put a bit of information and definition around this, you miss that piece of the governance model.

Likewise on the process side: You need to make sure you look at the entire process end-to-end, define the rules for the people aspect, define the technology enablers and all of the details that will allow the organization to create value out of this BPM vision and roadmap.