The Basics of BPM
Improving outdated budgeting-and-planning processes is a critical starting point, and pre-requisite, for BPMbut it's not the endgame.
Over time, a carefully conceived and well-implemented business performance management strategy can help a company better execute its strategic plan, increase profitability, and strengthen its balance sheet. Yet many companies initially set off down the path toward BPM, also known as corporate performance or enterprise performance management, with a much less ambitious goal in mind: overhauling outdated and inaccurate manual budgeting-and-planning processes.
BPM is a strategy that combines management methodologies, processes and technologies to help companies ensure they are meeting their strategic goals. BPM softwareincreasingly bundled in BPM suites from vendors such as Hyperion Solutions Corp. and Cognos Inc.leverages underlying business intelligence data and provides users with easily understood analytical applications and reporting tools, such as dashboards and scorecards. According to IDC Research Director Kathleen Wilhilde, the worldwide BPM and financial analytic applications market was valued at $1.59 billion in 2005, with an annual growth rate of 11.2 percent forecast through 2010.
But despite BPM's high-level strategic promise, implementing the technology is essentially a bottom-up process that begins with accurate forecasting. Budgeting-and-planning is an area of perennial concern for most organizations, according to Murray Beach, managing director with Natick, Mass.-based Boston Corporate Finance, a technology-focused investment bank. "Managers and boards of directors are constantly evaluating their own performance, and the company's, against the budget, so the accuracy of the budget as it's being drawn up is essential," says Beach. "As businesses become more complex, the challenge of making the budget accurate and transparent has expanded tremendously."