Publish date February 6, 2018
“That which is measured improves. That which is measured and reported improves exponentially.” – Karl Pearson
Effective Business Performance Management (BPM) is central to the success of all organizations. The purpose of BPM is to enable an organization to deliver its goals as effectively as possible.
What is BPM?
Outlined below are slightly differently defined terms – Business Performance Management, Corporate Performance Management, IT Performance Management.
(Additionally, Forrester gives insights into Marketing Measurement and Insights Playbook for 2018 . Likewise, Gartner talks about Magic Quadrant for Cloud Strategic Corporate Performance Management Solutions )
The dazing rate of accelerated changes these days have forced enterprises to focus more on their business performance. Over the past two decades, more and more enterprises have started using Business Performance Measurement (BPM) systems. With the help of BPM systems, organizations can have better control and visibility over their operations which traditional accounting systems did not provide. By optimizing their business performance, enterprises can step up better business values. It can be rightly said that Business Performance Measurement offers the perfect environment for organizations to align enterprise goals with operational planning and strategies.
Failure on this key aspect is the gap in being able to deliver what the customer’s wants –
The problems range across a variety of topics: data quality and information system integration problems, lack of linkage to strategy, fundamental differences in how a strategy is formulated and executed in the firm, ill-defined metrics, etc. that can undermine successful BPM systems use.
Additionally, performance measurements in service organizations are frequently out of step with the business environments they serve. This misalignment is not for the lack of measurements. Rather, traditional measurements focus more on internal goals rather than the external realities of customer satisfaction. In relevance to understanding Customer Service and overall customer experience, and gauging the Value provided to the customer, it is in the context of not just the Business outcomes the customer wants, but as a combination of the Customer’s perceptions & preferences of the services or products of his/her (customer’s) choice. My blog on, ‘One Number You Need to Grow on Customer Understanding would help provide the reader with additional dimensions of customer experience measurement.
How Does BPM Work?
Broadly speaking Business Performance Measurement systems include three principles:
Usually, all these three steps run simultaneously and not necessarily in the mentioned sequence.
Which Is the most implemented BPM Framework?
Performance measurement frameworks need to be balanced, multidimensional, comprehensive and integrated into the organizational performance measurement framework. Performance measurement frameworks include metrics and a budgeting approach. To implement Business Performance Measurement systems, various frameworks are used. The framework helps the top management to align enterprise objectives with strategy, planning, and execution. Some of the most commonly used frameworks include balanced scorecard, economic value add, quality management, activity-based costing, customer value analysis and action profit linkage model
Undoubtedly Balanced Scorecard is the most used framework for businesses globally. This framework, strings together the organization’s mission and vision with strategic objectives, strategy, and actions. Through strategy mapping, the logical and cause-and-effect between the strategic goals are showcased in a simple graph. For each objective, one KPI (Key Performance Indicator) or measure is identified. The same is also regularly tracked to ensure progress is made towards the aimed outcome. KPIs are an excellent means of organizational efficiency. It helps to bring out the gaps between actual and the targeted performance.
Some of the key features of effective KPIs are:
The Balanced Scorecard lets managers introduce four new processes that help companies make that important link.
Impact of BPM on Businesses
Enterprises can maximize their ROI with the help of a well-planned Business Performance Measurement system. Higher levels of efficiency are driven due to the realization of the following factors:
Limitations Of BPM
In current times with constraints on resources and highly volatile market, leading enterprises are leaving no stone unturned to optimize their business performance. A well-planned and implemented BPM system can bring onboard efficient and effective alternatives by bringing out the areas of improvement. In short, BPM is here and is sure to stay for a long time to help businesses attain their fullest potential.
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Lakshmi Nanduri – Program manger @YASH Technologies