In-Depth
Q&A: The Key to Doing BPM Right
The CEO of a business performance management consultancy says projects need a broker between IT and the business sponsor.
You’ve probably heard a lot about business performance management (BPM), which describes the process of planning, measuring, and managing business performance, often in real-time. There’s a lot of hype associated with BPM, and many vendors would have you believe that it can be all things to all companies – which is impossible, right?
Not so fast. We spoke last week with Craig Schiff, CEO of BPM Partners, a BPM consultancy and services firm. Schiff believes that most BPM solutions are mature and ready for implementation, but says that’s beside the point. Many companies aren’t approaching BPM with the right mindset, he cautions, which makes disappointments inevitable. All too often, Schiff says, BPM is driven by a specific business unit—such as finance or IT—when what’s needed is a broker, of sorts, who can mediate between the two factions.
Gartner always speaks of a hype curve that’s associated with any new technology, and BPM has certainly seen its share of hype over the past 18 months. Do you think it’s on the downhill side of that hype now, so to speak, to the point where BPM vendors are delivering bona fide solutions and companies are concluding that BPM is an essential strategy?
The vendors are offering real products today, so, yes, in that respect, it’s beyond the hype. They’ve filled in their suites either from acquisitions or in-house development, and most of the vendors are ahead of the adoption curve. Customers have been a little more hesitant, however, and in a recent survey, only about seven percent have completed a BMP implementation, with a much larger number in the planning stages. So as far as the hype curve is concerned, it’s beyond the hype and waiting for customers to catch up, which we think is starting to happen now.
What kind of players do we have in BPM? By that I mean, have we seen the emergence of one-size-fits-all vendors who shop BPM suites that can be customized for most conceivable implementations? Or are the majority of BPM products still niche-oriented or industry-specific?
The number of vendors in the space is growing rapidly, with either new vendors entering or existing vendors repositioning or repackaging what they’re already offering. You have business intelligence vendors like Cognos acquiring pieces of the application side—they purchased Adaytum a year ago, which gave them a strong planning piece, and they have a pretty strong comprehensive solution. Hyperion came at it from the financial management side, they were pretty strong from the financial applications and then they merged with Arbor, but the unified company is a lot like Cognos, offering a full suite.
The other vendors in the space tend to focus on a piece of it, either applications or tools or within, focusing on a subset. There are vendors who are primarily budgeting vendors, or primarily dashboard vendors. [In] recent research that we did, we tracked at least 60 vendors who fell into this space, that also includes the ERP vendors, who have BPM components as part of their overall offering.
Cognos and Hyperion have all the pieces, but the bulk of the products out there today are fairly generic and it takes quite a bit of consulting work in order to be customized for your industry and your company. So an important trend that we see is verticalization, because there’s a tremendous amount of commonality in terms of what you look at and what you look at in an industry. We think that 70 to 80 percent of the measurements of a company are comparable to other vendors in that same industry, and the other 20 to 30 percent are company-specific.
With respect to the BPM solutions that vendors are shipping today, what’s commonly involved? Is there an essential set of technology components that all BPM solutions generally include?
The underlying technology boils down to a data mart holding all of the central information; a planning system, that sets the benchmarks of what you’re trying to achieve; budgeting and planning; and then consolidation, which pulls together all of the actual data in a consistent manner; and then analyzing information through various tools and dashboards.
But it’s not just about technology, is it? I mean, BPM involves a number of things – tools, obviously, but also people and business processes--
Absolutely. It’s important to understand that business performance management is not about software, necessarily, and that the technology piece is really just an enabler.
BPM is really about figuring out what are the key drivers of your business, how to measure success, and then how to manage the results of that measurement, what’s driving your business, how to measure that, and what to do if the measurements aren’t meeting your targets. Once they have that, then it becomes a technology question of how do we implement the tools to enable us to do that.
If that’s the case, what’s the driving force behind BPM implementations in most companies? Is it an IT thing, or is it more often a mandate from elsewhere—from a CIO, from a CFO—that’s effectively dumped in IT’s lap?
The initiative itself is often driven out of the finance department, so it’s often the CFO, with the CEO and other heads of business backing him. As far as driving the BPM initiative itself, IT is involved and playing an important role, but there’s a common problem that when it comes time to get IT involved: the CFO assumes that all he needs is basically an IT project manager, which is missing the overarching component to pull it all together, and so that’s where some people go astray.
Is that because they [IT and business leaders] fundamentally speak a different language, or just have different viewpoints?
I don’t think it’s that they speak different languages, no. Clearly, they have different viewpoints. Some of our prospects and customers are the IT guys as opposed to the finance people, and when we talk to the IT guys, clearly they’re looking at using their ERP systems to do [business performance management]; for them, it’s a natural progression to just purchase from the ERP vendor.
The other angle is that the IT guys look at it as an extension of the data warehouse, but this goes way beyond a data warehouse. There’s a tremendous amount of business application or domain expertise that has to come into play, and [IT] tend[s] to look at it as a pure technical issue.
Quite honestly, we often get called in by the finance people to help break that tie and be this objective third party that helps to bring that overarching view to the implementation.
Is that how you’d describe [BPM Partners’] role in this process, basically as a referee between, for example, IT and business decision-makers, or IT and finance?
That’s one of them. We actually provide several different services for our customers, and this extends throughout the implementation process. One of our newest services introduced in December is an audit roadmap and workshops, which is kind of a two-day event for a fixed price, but kind of very quickly gets customers geared up to start on BPM.
We also do requirements collection, which basically helps [customers] identify the key business stakeholders, meeting with them, gathering the requirements, testing them for feasibility, helping to identify some benefits that they may have missed.
That feeds into another service, which is vendor selection, where we take those requirements, matching them with our list of 60 plus vendors, develop a custom RFP that’s fairly detailed so you get some meaningful responses, and then help them to score the RFP.
Is this a process, vendor selection, where you find that they’re really expecting you to hold their hand, so to speak, because of the range of vendors and the relative newness of it all?
Well, I don’t know about holding their hand. Mostly, it’s about coaching them through their discussions with the vendors, helping them to ask the right questions—we even sit with them through the demos. The end deliverable there is them deciding on what vendor they’re going to go with, and it’s all very well documented so they can show management how they got here.
Where does your role as a referee come in?
During the big hump, the implementation itself, that’s where our general contractor role kicks in. There are many players in the implementation phase, and again with our expertise and having done this on several large projects, we work closely with the internal finance and IT teams to make this happen. Even if you’re not working with us—if you don’t have that key engagement management role fulfilled, you’re missing a crucial piece. It’s not just an IT project, it’s not just a business project, there are multiple projects going on simultaneously and you’ve got to have someone with an overarching view [of the process].
You mentioned earlier that IT is often comfortable just partnering with an ERP vendor when asked to implement a BPM solution. I’ve seen research from Forrester Research, among others, which says that some of the ERP giants are increasingly beefing up their BPM presences, often by buying their way in. To what extent should a company that maybe doesn’t partner with one of the established BPM giants—Cognos or Hyperion—be concerned about their BPM vendor being acquired by, say, an SAP or even IBM?
I do see the trend for the bigger getting bigger and acquiring the pieces that they’re missing. As a matter of fact, when we go into a customer and do a BPM assessment, typically, they’ll start their list by saying, "Let’s look at Hyperion and Cognos," and it’s really hard to call their attention to these smaller guys.
For many of these [smaller vendors], their future does lie in becoming part of a larger company. That’s clearly what’s happening. In the past year, for example, Lawson purchased Closedloop, which is a small performance management vendor. Geac, a mid-tier ERP vendor, acquired Comshare so that they can focus on performance management, and that’s a trend that will clearly continue.
However, I don’t see a tremendous risk for the clients of the companies that are acquired, because they’re being acquired because of their expertise, so I’m not seeing that squandered. In fact, they’re building upon it.