The Myths of BPM

Business performance management (BPM) is a hot topic this year in the software industry. Yet, with any new technology endeavor comes a host of misinformation, some unwitting and some intentional. Here are BPM's top five myths to watch out for.

1. BPM Is Not Business Intelligence.
Certain "BPM vendors" will claim they are not "BI vendors." But this difference is more useful for marketing purposes, rather than having any real bearing on how BPM applications are created or sold.

The truth is that you can’t do BPM without BI. And you can’t do BI without a data warehousing infrastructure. Beware of anyone trying to sell you on the notion that BPM is a distinct market category from BI or data warehousing. BPM is the culmination of BI. It turns BI from a bottom-up technical activity done by business analysts to a top-down management activity guided by chief executives. BPM uses BI to enable organizations to monitor and proactively manage operations using metrics to represent key business strategies and objectives.

2. BPM Is Not BAM.
Since most real practitioners don’t know or care what either acronym means, this discussion is largely moot. Nonetheless, BPM enables users to measure and manage performance using metrics aligned with key business strategies and objectives. Business activity monitoring or BAM is a Gartner Group term, which as far as I can tell, involves monitoring and measuring more nitty-gritty operational processes that cut across traditional organizational boundaries.

Both endeavors entail using BI tools and a data warehousing infrastructure to collect, analyze, and monitor performance against Predefined metrics. Both set thresholds on metrics, highlight out-of- Bounds exceptions, and let users drill down into more detail to get at the root cause of deviations. However, BPM focuses on the individual and Group performance against business strategies and objectives, whereas BAM focuses on the performance of operational processes.

So it seems to me that BAM is a form of BPM, which is a BI application that sits on a data warehousing infrastructure: another variation on the same theme.

3. BPM and Scorecards Are Synonymous.
It is true that most BPM applications are implemented as scorecards. By "scorecards" (with lowercase “s”) I mean graphical charts (e.g. stoplights, gauges, or dials) that visually depict whether performance falls within acceptable, preset thresholds. Yet, a Balanced Scorecard (capital "b" and "s") is a specific type of methodology for measuring and managing business performance devised by professors Robert Kaplan and David Norton. A Balanced Scorecard monitors key performance indicators in four areas of the business: financial, customer, internal processes, and learning and growth.

Organizations can deploy scorecards using Balanced Scorecards or a number of other management consulting methodologies, such as Six Sigma, or they can simply decide on their own what metrics are most indicative of future performance and measure those.

4. A Scorecard Is Not a Report.
Actually, a scorecard is just a nice looking exception report. Yes, a scorecard may have other features, such as strategy maps that depict the relationships of metrics in the scorecard. But the widespread appeal of scorecards has more to do with the fact that they provide a quick and easy way for business managers to spot “exceptions” in the data and see those processes that are under-performing or over-performing according to predefined rules.

The best scorecards let users click on a graphic or summary table and obtain more detailed data in the form of a pivot table, list table, or line item transaction. In essence, a scorecard consists of both summary and detailed reports delivered dynamically to users on demand.

5. Scorecards and Dashboards Are Different.
Scorecards and dashboards are more similar than they are different. They both provide visual representations of metrics that users want to track on a regular basis. They both use graphical techniques to depict performance and both can provide links to more detailed data.

Some claim that a dashboard is an embedded object with a fixed view, like a static chart embedded within a portal window. Yet, you can certainly embed a scorecard in a portal and dashboards can contain dynamic charts.

To me, a dashboard is a generic visual interface that enables users to easily keep track of key metrics they need to do their jobs. It’s like an automobile dashboard that lets drivers quickly see if they are running out of gas or going faster than the speed limit. A scorecard, on the other hand, is simply a type of dashboard. The major difference is that a scorecard always sets limits on the metrics to show if performance is within an acceptable range.

The bottom line is that a dashboard quickly informs users *what* they are doing, while a scorecard will tell them *how well* they are doing. The automobile equivalent of a scorecard would be if your speedometer beeped or blinked every time you exceeded the speed limit.

Conclusion.
It always takes time for terminology to catch up with the reality of how organizations implement technology. The key is to remember that you can’t implement BPM or scorecards without a solid business intelligence and data warehousing infrastructure. If you don’t have such an infrastructure, your BPM provider will need to build it for you. But make sure the BPM application isn’t another silo of information that will need to be re-integrated into the enterprise in several months or years.

The best BPM applications track key metrics managed by employees at every level of the organization. Thus, they are enterprise in scope and leverage a "single version of the truth" that is managed by an enterprise data warehousing infrastructure. Although your BPM application may not start out as an enterprise resource, make sure it is architected to evolve in this direction.