Businesses today are trying to be more effective in their operations to optimize results. Though ERP systems have automated transactions, organizations still cannot manage themselves. Measuring and monitoring from a business process context is essential to manage operational performance and the framework for developing a process-centric view for measurement of an organization is an essential step to maximizing operational performance. Business intelligence and business process management technologies are converging to support new capabilities. This new avenue of Performance Management is a required activity for every business and the opportunity for gaining a competitive advantage.
Mark Smith has more than 18 years of industry experience in business and technology and is responsible for the overall direction of Ventana Research. He drives the global Performance Management research agenda covering both business and technology areas Smith is an expert in Business Intelligence and Business Process Management and has redefined how to leverage human capital for Workforce Performance Management.
Smith believes the basic management of processes within a company is broken because there is no real link between transaction applications and the processes. In addition there is confusion on the purpose of ERP and business processes and an absence of process models explaining business operations. Throughout there are limited gains in efficiency with little strategic value and competitive advantage. New tactics are required.
Smith defines Operational Performance Management as, “The practice of managing the effectiveness of operational-centric business activities and processes to a common set of goals and objectives.” The business drivers are the need for timely and relevant information. He defines business processes as, “… a collection of business activities that are comprised of a set of business tasks, that create business events, that are performed on a routine basis for a defined purpose and result.” BPM is defined as the ability to manage business process and provide the methods to automate and improve activities and tasks for a particular business purpose.
The challenges to BPM adoption are:
- Change issues The change issue is so large that the value-to-cost ratio is not perceived to be high enough to justify
- Investment issues: Existing investment into business practices and enterprise applications are addressing this challenge
- Pessimism: The business process re-engineering of the 90’s did not deliver systems that facilitated value.
Improving operational performance requires a continual process of understanding the processes, optimizing the process, and then aligning the processes. The challenges to the adoption of operational performance management include:
- Not fully understanding the potential
- Cultural changes and issues of information visibility
- Shortage of skilled workers
- Budget not available
The challenges in adopting the existing approaches include:
- The ERP applications are not designed for cross-functional business activities and process monitoring
- Most process management applications require automation and process control before enabling measurement and monitoring
- Traditional approaches to business intelligence do not have access, event, or rules-based processing to meet the business requirements for timeliness
The advantages of operational performance management include:
- Enabling individuals to respond quickly to business events
- Enable cycle reduction time between events and decisions at the BPM level
- Enabling individuals to maximize roles and responsibilities by giving them the information to drive action and prioritize to goals and initiatives.
The general framework of operational performance management boils down to just three things. First, integrate the data. Second, put it into a process model to manage the information. Third, figure out the performance level.
According to Smith, the demand for aligning business and information technology to improve process performance is the next wave and provides the greatest business opportunity for the near future. The opportunity is to leverage and build on the ERP and CRM investments already made while elevating the focus to operational management.
