I recently attended the sixth annual BPM Summit. The conference featured a number of fascinating presentations related to performance management, but what most struck me about the meeting's content was the level of market maturity it suggested. No presenters felt compelled to explain what business performance management (BPM) is or to describe the fundamental benefits of using this type of software. The discussion seems to have moved beyond these basics to topics such as how the framing of information affects the way people understand that information, how top businesses are prioritizing performance management activities in today's economy, and how organizations are tuning their BPM processes in preparation for new reporting standards. The whys of BPM have become so widely accepted that the conversation can delve more deeply into the hows.
Does this mean, then, that BPM has achieved staying power? For David Giannetto, CEO of the Telos Group and author of this issue's first feature article, the answer is “Not yet.” Although performance management has gained traction, Giannetto believes that it remains a method, not a methodology. By his definition, “a methodology is a system of principles, practices, and procedures applied to a specific branch of knowledge, whereas a method is a subset of a methodology, the process by which a goal is realized.” What does it matter which bucket BPM fits into? As Giannetto goes on to explain, it may matter a great deal to BPM's future. A method is subject to replacement as soon as a new fad comes along, while a methodology permanently transforms the way companies operate. Consider the relationship between the Balanced Scorecard and the notion of management by metrics. Although the Balanced Scorecard is popular, it will be superseded whenever businesses prefer a new method of performance monitoring. In contrast, companies are likely for the foreseeable future to continue tracking metrics as a core management activity. BPM may not have yet reached the status of methodology, but Giannetto suggests actions that we, as believers in its potential, can take to increase its staying power.
In this issue's second article, Andrew Pateman, vice president and leader of the strategy practice at the Palladium Group, describes a model that may help BPM in its quest to fundamentally change business. Palladium's new framework for business management consists of six stages. As Pateman explains, most organizations already practice some of the activities that this model encompasses, but those that adopt all of them — and fully integrate them into a comprehensive performance management process — are most likely to see big gains. The more companies gain through processes like this, the more likely BPM is to become a full-fledged methodology.
While the Palladium Group's “execution premium” model is a holistic process for making performance more transparent, many companies are facing a mandatory technology implementation with the same goal. Before year-end, the SEC is expected to finalize a rule requiring public companies to file financial reports in extensible business reporting language (XBRL) format. The requirement will affect only large, accelerated filers at first. Still, the results of a recent survey conducted by BPM Magazine and sponsored by TITAN-Pinnacle reveal an alarming lack of XBRL knowledge among corporate executives and finance professionals. In our third article, KPMG's Michael Ohata explains what finance and business managers need to know, now, about the technology.
Before performance management practices can become a permanent part of how business is done, a large number of BPM software implementations must succeed, and conventional wisdom suggests that studying failures may be the best way to learn how to succeed. That's why we asked Mike Davidson and Richard Holt, of Alvarez & Marsal, to describe the characteristics of the struggling initiatives they encounter. Their article pinpoints the problems that most often undermine BPM software implementations and explains steps project managers can take to bypass obstacles.
Finally, this issue probes the benefits of moving from spreadsheets to more sophisticated performance management processes. Ventana Research's Mark Smith describes how companies can improve sales compensation to boost their overall performance. And we spoke with Kent Wegener and Joel Feldman, of cookie maker Otis Spunkmeyer, about their move to better planning. Their only regret: That they didn't move off of Excel years sooner. Success stories like this one illustrate BPM's potential to continue enhancing corporate performance for many years to come.
Meg Waters is editor in chief of BPM Magazine and of the monthly e-mail newsletter BPM Express. You can reach her at email@example.com.