September 24, 2002 Business Planning or Business Performance Management?Market convergence creates confusionby Mark Smith More than a year ago, I wrote about the "Evolution of Business Planning Software" and how this critical functionality can provide visibility and predictability across the enterprise. Since that time, we've seen it grow from the early successes of first adopters of Web-based planning to a maturing customer need. The notion of driving the business to a continuous monitoring of performance and alignment to the financial budget has focused attention on integrating business planning with an overall performance management strategy. The concept and principles are sound, now the next phase of evolution will be to drive planning to improve enterprise performance. Performance management is the strategy and process of managing the organization, customers, and suppliers and optimizing the human and capital assets to achieve a common set of goals and stakeholder objectives. Put simply, organizations need to understand, optimize, and align their business and processes to ensure they reach stated goals by leveraging information and analytics. This concept is not new. In fact, the roots of decision support systems (DSS) are establishing an approach for operationalizing the decision-making processes through a closed-loop of goal setting, planning, reporting, and analysis process. Who Cares?This concept has generated a lot of vendor's marketing campaigns and industry analyst and press coverage. But why so much hoopla about this business, corporate, or enterprise performance management — or as I prefer, simply performance management? The vendors are trying to provide a framework for their software products and a vision on what they will deliver over the next three years. This goal should not be discounted, but organizations should consider what is feasible or deliverable that will add value to the business over the next 12 months. The promise of future and direction can only hold so long before the trade-off must determine the value compared to risk assessment. Achieving performance management is now front and center for executives, as they realize that this area is a critical direction for their organization. The time has come to an end for purchasing upgrades and replacements to operational systems as focus turns to performance managements system that help drive efficiency. Stick to the basics: If your organization requires more attention to planning and aligning performance to targets, focus on this area, while ensuring it fits into your future direction. This will help align resources and budget allocations to ensure business actions will help individuals align their performance directly to business metrics. State of MarketThe market continues to converge, and many vendors seem to provide similar capabilities for business planning and performance management. The devil is in the details of the specific products, functionality, and architecture required to support business planning and integrate into a performance management framework. Vendors such as Adaytum Inc., Comshare Inc., and Hyperion Solutions Corp. always seem to be in the middle of competitive bake-offs, while ERP vendors such as Oracle, PeopleSoft, and SAP continue to complement their existing financial software implementations quietly. I expect that over the next year, we'll see much more activity from Cognos Inc. and SAS Institute Inc., which have been building out their suite offering, and we'll monitor vendors such as Armstrong Laing Group, Closedloop Solutions Inc., and SRC Software Inc. RecommendationsOrganizations now realize that gaining predictability is achievable through improving the efficiency of the organization and processes by having information that reflects its current and planned state. This goal is what performance management and business-planning systems are all about, but make sure you focus on aligning business requirements and objectives to software vendors. Don't let subjective analyst reports influence your ability to focus on the basics, and commit to driving success through strong vendor relationships. Stay vigil and ensure that the potential of what is possible today balanced with vendor risk is realized and not missed based on business, technology, or cultural challenges. |
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