To improve their business process agility, many Global 2000 organizations are looking to deploy business performance management (BPM) principles and solutions (both suite-based and those assembled in-house from best-of-breed BPM tools) to enable a closed-loop measurement and planning process for core business processes. Meanwhile, many analytics vendors (e.g., SAS, PeopleSoft, SAP, Hyperion, Cognos, Comshare) have been touting the benefits of a closed-loop approach and are repositioning their solutions as BPM suites.

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Situation analysis: BPM principles and tools enable a closed-loop, participative approach to management. Senior executives create a business plan, which is translated into operational budgets. Management (including line supervisors) cooperatively agrees on appropriate metrics to measure progress toward the goals identified in the business plan. The operating units then report back on metrics achieved and expenditures.

This closed-loop planning and measurement cycle requires IT tools, connectivity, and, most important, a common data model and repository that ensures that the data can be shared and remains consistent within different tools (e.g., OLAP, management reporting, business planning). For example, if management uses financial results in its planning tool, those numbers must match the data used in financial reporting tools, budget tools, etc. Similarly, the definition of specific entities (e.g., business units) must be the same in each tool.

However, due to the promise of increased accountability and real-time (vs. monthly) reporting, BPM can swiftly grow to unmanageable proportions. Organizations cannot move every business process from batch to real-time mode; it is also not feasible to apply a closed-loop methodology to all processes. Too many factors, including corporate politics, business procedures, technical problems that appear in any large IT system, and management bandwidth limitations will send any excessively ambitious BPM effort spinning toward disaster. Therefore, we recommend planning globally but acting locally (at least initially) to deploy BPM planning loops. Users are also advised against too much (time, resources, and money) planning and measurement "for their own sake," vs. driving them toward business results.

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