Demystifying BPM: a chief technology officer answers a series of key questions about Business Performance Management systems.

Q What are some of the biggest myths or misperceptions about Business Performance Management systems?

A very basic misperception is that Business Performance Management is simply another name for Business Intelligence. While Business Intelligence is a critical component of Business Performance Management, it is the inclusion of process, as well as information, that makes the crucial difference. Business Intelligence is about gaining understanding, whereas Business Performance Management is about using that information to generate coordinated action and drive the business to meet its strategic objectives.

Another misperception is that Business Performance Management is a methodology for reengineering the way businesses manage themselves. In fact, Business Performance Management allows organizations to express their own approach by offering a mechanism for businesses to quickly and efficiently adopt best practices if appropriate, which accelerates reengineering, if necessary.

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Q BPM is sometimes variously referred to as EPM (for enterprise) or CPM (for corporate). Are these synonyms, and are these various abbreviations a potential source of confusion for corporate buyers?

The terms really are interchangeable, though as with any emerging category, the analysts and vendors have aligned themselves with preferred acronyms. I expect that over time, they'll eventually merge into one common term. Hyperion chose to move forward with "Business Performance Management" because we believe the word "business" conveys a much stronger relationship with the business user and embraces the entire business community, including non-corporate and non-enterprise organizations.

Q How would you differentiate Business Intelligence systems from Business Performance Management?

As noted earlier, Business Intelligence and Business Performance Management are really two very different things. People continuously try to compare the two, but it's really not an apples-to-apples comparison.

Business intelligence is a technology defined by query and reporting tools. It's a set of technologies chosen by information technology (IT) departments to gather and analyze information--it's very data- and software application-centric. Business Performance Management, on the other hand, is a practice that includes people, processes and technologies that work together to provide a holistic view of the business at all times. It's not just raw data. It's real, actionable information that individuals and executives can use to make decisions, reach business goals and create high-performance, accountable, successful companies.

Q Is there a company size (in terms of employees) or complexity at which a Business Performance Management system becomes compelling?

I believe that every company already does some kind of Business Performance Management-even if they're one person running a business with a lot of paper-based processes. At its heart, Business Performance Management is just part of running a business. But I think the need for a technological approach to Business Performance Management grows as organizations become larger and more process-oriented. It's less about company size, and more about where they are in terms of their maturity as a company.

Q What kind of implementation challenges are posed by multiple legacy systems?

The challenges should be minimal, assuming that the vendor's products inherently support the myriad databases, enterprise resource planning (ERP), customer relationship management (CRM) and legacy systems that most companies need to tie into. Hyperion Solutions, for example, are designed specifically to work in a mixed-vendor environment enabling customers to gain access to valuable information locked in their transactional systems regardless of which vendors provide them.

We truly believe that Business Performance Management software must be "agnostic" and span across heterogeneous systems. This enables companies to rapidly deploy business performance management applications with minimal disruption and lower total cost of ownership and results in a single, consistent view of the business. It also offers freedom of choice by preventing customer lock-in.

The flip side of that, and where the challenge comes into play, is when a company doesn't look very carefully at a vendor's offering and then becomes bogged down with lengthy integration issues or even worse, ends up stuck with expensive technology that is never able to tie it all together for them in the long run.

Q Are there common mistakes that companies make in the course of implementing a Business Performance Management system?

There are certainly many approaches to implementing Business Performance Management that are less likely to succeed than others. The first is what I call the "big bang" implementations. This is where a company will attempt to build the entire application at one time and then find that the project will take 18 months or more. By that time, the requirements will have changed more than once and the goals will have become too fluid to see success.

The second is extensive reengineering. Organizations will typically have more success by using their current processes as the baseline for the initial implementation, with minor reengineering to correct obvious defects, and then make incremental changes over time.

Third is simply reinventing the wheel. Building custom solutions from scratch should be undertaken only when the benefits are clear and it's certain they can be combined with more packaged elements to deliver the complete system.

Q Is there a "best way" to implement Business Performance Management within a company?

Your best bet is to take an incremental approach that shortens time-to-benefit. It's important to choose a solution that will allow you to really start anywhere and then gradually include more and more aspects of the management process.

Some companies may decide to start with query and reporting, while others begin with financial management. Neither approach is the "best way" for every company--just the best way for your company. An incremental approach ultimately allows businesses to achieve the ongoing objectives of the various organizations by tackling the most important issues of the day first--whatever they may be--and eliminates those protracted, "big bang" project scenarios.

Q How are the various government-mandated requirements such as Sarbanes-Oxley and Basel II impacting the implementation of Business Performance Management?

They have certainly raised the level of awareness around financial management. More importantly, though, they've made it mandatory for companies to be accountable again. Now, companies are realizing that controls over transaction systems are only the beginning; they also need controls over headquarters consolidation and reporting, budgeting and forecasting and analytic processes that lead to regulatory filings and investor/shareholder communications. Concepts like "cascading certifications," "preventative controls" and "real-time monitoring" as part of the financial reporting cycle are becoming more common as these new regulations take root.

Business Performance Management software enables companies to bridge the gap between shareholder expectations and reported results, which helps companies both meet the current financial regulatory compliance requirements and provide a long-term competitive advantage. The value in the resulting improvements in transparency, predictability, timeliness and accuracy of financial information extends beyond compliance to increased organizational, process and technology improvements.