Business performance management

History

An early reference to non-business performance management occurs in Sun Tzu's The Art of War. Sun Tzu claims that to succeed in war, one should have full knowledge of one's own strengths and weaknesses and full knowledge of one's enemy's strengths and weaknesses. Lack of either one might result in defeat. A certain school of thought draws parallels between the challenges in business and those of war, specifically:

    * collecting data

    * discerning patterns and meaning in the data (generating information)

    * responding to the resultant information

Prior to the start of the Information Age in the late 20th century, businesses sometimes took the trouble to struggle to collect data from non-automated sources. Businesses then lacked the computing resources to properly analyze the data, and often made commercial decisions primarily on the basis of intuition.

As businesses started automating more and more systems, more and more data became available. However, collection remained a challenge due to a lack of infrastructure for data exchange or to incompatibilities between systems. Reports on the data gathered sometimes took months to generate. Such reports allowed informed long-term strategic decision-making. However, short-term tactical decision-making continued to rely on intuition.

In modern businesses, increasing standards, automation, and technologies have led to vast amounts of data becoming available. Data warehouse technologies have set up repositories to store this data. Improved ETL and even recently Enterprise Application Integration tools have increased the speedy collecting of data. OLAP reporting technologies have allowed faster generation of new reports which analyze the data. Business intelligence has now become the art of sieving through large amounts of data, extracting information and turning that information into actionable knowledge.

In 1989 Howard Dresner, a research analyst at Gartner (until 2005, now Chief Strategy Officer at Hyperion Solutions Corporation), popularized "BPM" as an umbrella term to describe a set of concepts and methods to improve business decision-making by using fact-based support systems.

The term "BPM" is now becoming confused with "Business Process Management", and many are converting to the term "Corporate Performance Management" or "Enterprise Performance Management".

What is BPM?

BPM involves consolidation of data from various sources, querying, and analysis of the data, and putting the results into practice.

BPM enhances processes by creating better feedback loops. Continuous and real-time reviews help to identify and eliminate problems before they grow. BPM's forecasting abilities help the company take corrective action in time to meet earnings projections. Forecasting is characterized by a high degree of predictability which is put into good use to answer what-if scenarios. BPM is useful in risk analysis and predicting outcomes of merger and acquisition scenarios and coming up with a plan to overcome potential problems.

BPM provides key performance indicators (KPIs) that help companies monitor efficiency of projects and employees against operational targets.

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