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The Essential Elements of Business Performance Management

Business performance management is a management process enabled by an information system. A BPM solution has six essential elements:

Decisions. The goal of BPM is to make better business decisions and, ultimately, to better achieve the organization's mission. The BPM process entails obtaining performance information, making decisions and executing those decisions using that information.

Strategic objectives. Strategic objectives are important because they describe how the organization will accomplish its mission. Without them, there is nothing to guide decision-making. As Yogi Berra said, "You've got to be very careful if you don't know where you're going, because you might not get there."

Measurement systems. To manage performance, an organization needs a measurement system with objectives, what the organization wants to accomplish; metrics and measures of actual performance; and performance targets.The relationship between the measured value of the metric and its target value communicates whether (or the extent to which) the organization is meeting or progressing toward its objectives. Many organizations use a management framework to structure their objectives, performance targets and metrics. Common management frameworks for BPM are the Balanced Scorecard, economic value added (EVA) and Six Sigma.

Data. For most organizations, lack of data is not an issue; they are drowning in data. The question for each organization is whether it has the data it needs (of the right timeliness, precision and quality) to calculate the performance metrics it has chosen.

Data visualization techniques. The information presentation's objective is to provide relevant business context, thereby making it easy to understand. Because scorecards and dashboards are information-dense, they must be carefully designed to present information for easy comprehension by human decision-makers.

Enabling software. BPM requires an underlying IT solution. Typical elements of this solution include data from transactional and other systems, transformation of that data into the performance metrics, storage in a data warehouse and presentation of the metrics to the decision-maker. The information presentation layer of a BPM solution is usually built using one of a class of software products called business intelligence (BI) tools. 


Bill Collins is practice leader of DecisionPath Consulting's business performance management practice. Before joining DecisionPath, he spent 23 years in operations and IT positions with several Fortune 500 manufacturing and distribution companies. Collins is APICS certified at the Fellow level and can be reached via e-mail at bill.collins@decisionpath.com.

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