Business performance management… A Q&A with Christina McKeon, Infor

Christina McKeon, director of product marketing, Performance Management, Infor, is responsible for driving Infor's global PM strategy. McKeon works with users, managers and executives within organisations to understand market drivers for PM. She has more than 17 years experience including working for manufacturers of power management devices and pulp and paper products.

What is Business Performance Management? How has the technology developed over recent years?

Christina McKeon. Business Performance Management is a combination of business processes, people, and technology all aligning to achieve an organisation's strategic goals and objectives. BPM is most effective when you pursue a closed-loop approach, following a cycle from strategy to execution and incorporating the results of the strategy into the next cycle for continuous improvement. The key processes of BPM include strategy management, planning, budgeting, consolidation, and forecasting. BPM technology automates each of these key processes helping companies move away from manual, spreadsheet approaches. Reporting and analysis is also a key function within BPM, as it provides line-of-sight by activity so you know where you stand on execution at any point in time.

Over recent years, BPM technology has moved more to a business model approach and away from spreadsheet-based approaches and application silos. Historically, most companies used spreadsheets to accomplish core business processes. However, spreadsheets are a productivity tool and can actually create more problems when they are used in place of BPM. In addition, many BPM solutions were designed as stand alone products. Companies could have a budgeting solution and a consolidation solution that didn't talk to each other – makes it hard to compare actual results to the budget! The best BPM systems are those that were architected will all components of BPM working together in a single system. This allows you to do it right once.

Why do organisations invest in BPM solutions? What are the drivers for BPM adoption? Strategic and / or operational?

Organisations typically invest in BPM solutions for one or more of three reasons:

1. Reduce time spent on manual processes
2. Save money wasted on manual processes
3. Improve the quality of their information

The drivers can be both strategic and operational. For example, a CEO who issues a mandate that the organisation is going to have better access to more accurate and timely information in order to improve decisions AND manages the organisation to that directive is pursuing strategic BPM. A more tactical or operational example might be a finance controller that is compelled to adopt a BPM solution in order to comply with regulatory requirements such as XBRL. While this second example is a starting point, it is more tactical and primarily affects finance employees. It can also be seen as a starting point for a larger and more strategic BPM effort if you expand BPM beyond consolidation.

More recently, organisations have looked to BPM to help them as they come out of the economic downturn and begin to pursue growth strategies. Strategic planning is essential to testing multiple business scenarios and choosing the plan that achieves more profitable growth.

What kind of metrics / KPIs do BPM systems generally use? How do companies decide which goals to set and why?

BPM solutions offer hundreds of metrics and KPIs. It's critical to know which KPIs to choose and use to manage the organisation. First, know what the high level corporate direction and goals and objectives are – typically three to five KPIs that the CEO is focused on. Then, determine how your area of the organisation will operate to support these high level goals – leading to three to five KPIs for your functional area. These KPIs keep filtering down to the individual so that each individual's performance is aligned to the overall goals and objectives.

Company goals are driven by where the company wants to go, and this path should be laid out by the C-level executives and communicated down into the organisation. Do you want to penetrate a new untapped market? Then you might want to track market share. Do you want to up-sell to an existing customer base? Then you might want to track repeat business. Do you need to retain certain customers? Then you want to track customer churn by market segments. Do you need to wind down sales of one product line and ramp up sales of another? Then you might want to track your product mix.

How is the information generated by these KPIs or metrics generally analysed and used?

KPIs are used to measure, monitor and measure the business. Despite the fact that no two companies may be using the same set of KPIs, there are some similarities in how companies track them. They all track them over time, and they all track variance. KPIs are often shown over weeks, months, quarters or years to gauge performance trends and patterns. Also, most companies start out setting a target for performance in the form of a plan, budget, or forecast. This target is then compared to the actual results so companies know how they are tracking to what they predicted to happen. Reviewing performance over time and comparing it to targets is key to understanding what happened and why, and then incorporating that analysis into the next planning, budgeting or forecasting cycle.

What are the challenges / issues that face companies implementing BPM solutions and how can these be overcome?

Companies can plan ahead to eliminate challenges that might occur during implementation. First, know what the total cost of ownership (TCO) is and when you can expect your software investment to provide returns. Ask your vendor for an ROI calculator that tells you when and what benefits you will gain from the implementation. Infor offers such a calculator at https://roianalyst.alinean.com/infor/performance/launch.html. Second, knowing what implementation resources you need and where the skills will come from is critical to preventing delays and unexpected costs. Determine how consultants will be used whether the consultants are in-house, sourced from the vendor, or sourced from a third party firm. While in-house may seem to be the least expensive route, you may not have the right knowledge sets internally to do a complete implementation. You might consider a combination of consultants to keep the costs down and ensure you have the right skill sets for each phase of the implementation. Finally, when it is time to roll the BPM system out to end users, assign a business manager who will be tasked with communicating to current and future users. Communicate implementation progress to users, and notify them if requirements need to be adjusted. This communicator will understand the business and work with the project manager, confirming that the requirements definition is fulfilled.

How does BPM differ from other systems such as BI, document management or ERP? How can these systems work together, without problematic overlaps?

ERP is a transactional system that runs the business and feeds BPM. BI typically reports what is in the BPM solution and is often a technology embedded in BPM. Document management has generally not been used with BPM, and resided separately from BPM in an organisation. The key to having these systems work together without overlaps is proper scoping and integration. Proper scoping helps companies determine their needs for BPM and uncover all existing technology they have in place. It also identifies the fitness of existing technology. Will it meet our needs? If not, can it be upgraded to meet our needs? Does it need to be replaced? What are the costs of all these options – both up front fees as well as ongoing costs? This step must be taken before purchasing any software. Integration can be accomplished by vendors building them to work together from the start or by building a specific integration that easily connect the systems.

What type of organisations typically implement BPM systems? How can smaller companies in particular make good use of BPM technologies?

BPM systems have historically been adopted by larger companies. Medium sized companies are just starting to adopt BPM more rapidly while few smaller companies are making use of BPM. There still seems to be reliance on spreadsheets in all sized companies, but recent economic conditions and pending regulatory requirements have highlighted the need for BPM. Smaller companies are under the same market pressures as larger companies and can make good use of BPM to provide more detailed and accurate budgets, forecasts, and analysis.

How important is SaaS becoming for BPM? What advantages does this bring for orgs and individual users? Can you give me some specific examples of this in practice?

SaaS is beginning to emerge for BPM. Concerns over security, nondisclosure and firewall issues have kept adoption of SaaS low in BPM. A SaaS version of BPM can be funded as an operating expense, which helps companies with small capital budgets fund a BPM initiative that would have traditionally been sourced from a capital budget. Maintenance costs can also be lower with a SaaS subscription than with on premises software. While Infor offers hosting of Infor PM 10, its BPM suite, our customers around the world to date have chosen on premises software.

How important is socialisation becoming in the BPM sphere? How can BPM systems be integrated with social networks? What are the business advantages to doing this?

Socialisation has not yet broken into the BPM sphere. There are certainly opportunities to improve collaboration within a BPM system by using social media. Because of the audit trails and transparency required in BPM systems, any integration with social networks would need to carefully considered before pursuing.

What other developments or challenges do you expect to see in BPM over the next 12-18 months? What interesting directions might the technology take?

BPM will begin to be deployed more broadly and aligned to broader performance management initiatives. While BPM applies across an organisation, most BPM deployments to date have focused on finance and financial processes. The need to perform better and grow will push more companies to start fully using BPM and link strategies to operational activities and financial planning to operational planning.

Analytics will also start to play a larger role in BPM. As companies get better at knowing where performance is, they will naturally start to ask more questions. Why are we performing at this level? What caused us to get where we are? How do we determine where performance needs to be? How do we get there? These questions will raise the bar for analytics and push vendors to provide BPM solutions that help companies get accurate answers to these questions quickly.