Fundamentals of Business Performance

management

Introduction
Business performance management BPM is the use of interdisciplinary subject knowledge to measure,
monitor and plan the performance of a business to map appropriate direction for the organization.
According to TEC (technology evaluation center), BPM seeks to answer three fundamental questions
facing all organizations, small, midsize or large:
1- How are we doing? Measuring and monitoring performance with dashboard to track key
performance indicators.
2- Why? Reporting and analysis of data to gain context and understand trends and spot
anomalies
3- What should we do? Planning, budgeting and forecast to set and share a reliable view of
the future.
These three questions formed the three main Subject areas of BPM:
- Business Intelligence (How are we doing?)
- Business Analytics (why?)
- Business planning (what should we do?)
Specialization can be developed around any of the above subject areas of Business Performance
Management. This has been proven practically in the software spectrum where we have software for
data warehousing and reporting we have some that are specialized for Business Analytics (e.g. SAS),
while some are for Budgeting and Planning like Adaptive Planning.
Each of these soft-wares is BPM software but focused on specific subject area:

- Business Intelligence
- Business Analytics
- Business planning

Let us take each of these areas in turn and examine the following issues:

- What are the activities involved in each area

- What are the challenges faced
- Who/which unit of the organization is involved

Business Intelligence (BI)

BI is the use of certain concepts, methodologies and technology to ensure that one consistent set of
data is produced and reported within an organization.
This is done by putting in place, processes and technology that facilitate the pulling together of data
from various sources, eliminating duplicates and redundancies to produce on version of the truth.
Two major processes can be identified from the above definition of BI (Produce and Report):

- Produce one version of the truth

o Identifying various sources of data
o Pulling data from the various sources together in one place (either virtual or physical)
o Cleaning the data (eliminating duplicates and redundancies)
 o Conversion of data to meaningful form(information)
 This is what we call Data warehousing

- Report one version of the truth

o Present the data in a meaningful form by way of, Financial Report, and consolidation,
dashboard or scorecards or other Visual display tools.
o Allows every user to produce their own report with less dependency on technical
experts

Business Analytics
This is the area of BPM that brings out the value for every Naira spent on BI. This can only be put in
place after the two building blocks above are in place:
- Produce one version of the truth
- Report one version of the truth

Business Analytics encompasses the science, discipline, and process of business analysis. This covers
the interpretation of data, drawing conclusion and making decision. It is the transformation of
information to knowledge.

Business Analytics incorporates other disciplines such as Performance strategies, Statistical Analysis,
predictive analysis, organizational culture, process reengineering.
Business analytics aim at answering the following questions which arise as a result of Business
intelligence:
- What is happening? Statistical Analysis
- If this trend continues what will happen? Predict Analytics
- What are the actions we should take?
While BI is about acquiring information, BA is about using the information acquired to take decisions.

Business Planning and Budgeting

From the useful insight provided with analytics it becomes imperative for the organizations to proffer
solution as to how to best optimize the operations and maximize return on investment (ROI). This goal
is best achieved through planning and budgeting. Insight provided from analytics is expected to be
actionable and becomes useless if it does not lead to actions. Planning and budgeting is the process of
mapping out actions to be taken as a result of the insight.Planning is a three step process to ensure
that the organization will have resources to support the actions required to be taken. When such plans
are converted to Financial figures then it become a budget.

According to Craig Schiff, “the creation of the budget is a labor-intensive and error-prone process. In
the end, the results produced are usually out of date the moment they come out. In addition, it is
often difficult to easily track actual performance against the plan. Hence, there is the need to have
good BPM structure in place in order to make budgeting cost effective and worth the while.
When it comes to forecasting, although the level of detail is less than in the budget, many of the same
challenges exist. In addition, in a rapidly changing market, companies would like to forecast more
frequently but can’t easily accomplish this task.

Forecast accuracy has always been an issue, but in today’s environment, the margin of error you can
get away with is smaller than ever. The methods and technologies of business performance
management are used to streamline these processes. When properly implemented, companies end up
with a more straightforward budgeting process that enables them to involve more users and
accelerate the entire cycle. Forecasting builds off of these new budgeting capabilities, utilizing the
same interface, account and entity tables, and workflow process. Recently added performance
management functionality such as predictive analytics helps to ensure greater accuracy when
forecasting. “