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Business performance management

2004-11-01
 

Business performance management (BPM) is a set of processes that help organizations optimize business performance. BPM is seen as the next generation of business intelligence (BI). BPM is focused on business processes such as planning and forecasting. It helps businesses discover efficient use of their business units, financial, human, and material resources.

BPM involves consolidation of data from various sources, querying, and analysis of the data, and putting the results into practice.

BPM enhances processes by creating better feedback loops. Continuous and real-time reviews help to identify and eliminate problems before they grow. BPM's forecasting abilities help the company take corrective action in time to meet earnings projections. Forecasting is characterized by a high degree of predictability which is put into good use to answer what-if scenarios. BPM is useful in risk analysis and predicting outcomes of merger and acquisition scenarios and coming up with a plan to overcome potential problems.

BPM provides key performance indicators (KPI) that help companies monitor efficiency of projects and employees against operational targets.

Most of the time, BI simply means use of several financial/nonfinancial metrics/key performance indicators to assess the present state of business and to prescribe course of action. Some of the areas which top management analysis could gain knowledge from BI:

  1. Customer-related numbers:
    1. New customers acquired
    2. Status of existing customers
    3. Attrition of customers
  2. Turnover generated by segments of the Customers - these could be demographic filters.
  3. Outstanding balances held by segments of customers and terms of payment - these could be demographic filters.
  4. Collection of bad debts within customer relationships.
  5. Demographic analysis of individuals (potential customers) applying to become customers, and the levels of approval, rejections and pending numbers.
  6. Delinquency analysis of customers behind on payments.
  7. Profitability of customers by demographic segments and segmentation of customers by profitability.
This is more an inclusive list than an exclusive one. The above more or less describes what a bank would do, but could also refer to a telephone company or similar service sector company.

What is important is:

  1. KPI related data which is consistent and correct.
  2. Timely availability of KPI-related data.
More and more organisations are moving towards faster availability of data. Previously data usually was available only after a month or two, which might not be the best idea if you want to hit Wall street targets. Of late, several banks have tried to move from availability of data at shorter intervals and lesser delays. For example, in businesses which have higher risk loading, Citibank has moved onto a weekly availability of KPI related data or sometimes a daily analysis of numbers. This means that data should usually be available within 24 hours at most times, necessicitating the use of IT systems to achieve this.

BPM integrates the company's processes with CRM or ERP. Companies become able to gauge customer satisfaction, control customer trends and influence shareholder value.



Related Topics
E-learning - an Overview
Organizational learning
Business Intelligence
Business Intelligence - Metrics /Key Performance Indicators
Expert System | What is an Expert System
Knowledge Representation
Data warehouse - A Brief Introduction

 


This article is from Wikipedia.org. All text is available under the terms of the GNU Free Documentation License.