Taking Performance Management Outside the Four Walls

For that reason, Armbruster also believes that senior-level participation and a willingness to be flexible are vital to driving this type of project to completion. Top executive buy-in and support can be particularly helpful in bringing trading partners on board with an initiative, he says. "That has actually helped us to change the way that some of our big customers have thought, and it's provided the right motivation for our trading partners to participate," Armbruster says. And finally, because every supply chain is unique, and every trading partner relationship is unique, effective business performance management requires that all parties be flexible in how they build the processes and mechanisms for collaboration. Concludes Armbruster: "Your IT needs to be flexible, the people in your business need to be flexible, and unless you're a heavyweight who can demand that everything has to get done a certain way you'll need an element of customization in your processes and in your human capital to make it work."

Sidebar: Defining Business Performance Management

Wayne Eckerson, director of research with The Data Warehouse Institute (TDWI), in his informative March 2004 report "Best Practices in Business Performance Management: Business and Technical Strategies," defines BPM as "a series of processes and applications designed to optimize the execution of business strategy." The TDWI report focuses on managing performance within a single enterprise, but in thinking about how business performance management can be extended out into the supply and demand chain, it is worth bearing in mind Eckerson's observations that "BPM processes and tools enable good management by making it easier for executives at all levels to identify, communicate and monitor key drivers of business value," and that BPM "bridges the gap" between strategy and execution by improving communication, collaboration, control and coordination throughout an organization. By focusing on BPM, Eckerson concludes, "organizations are better able to exploit market opportunities as they arise and catch operational problems before they escalate out of control."

Eckerson distinguishes between business intelligence (BI) and BPM, writing, "BI is enabling technology, whereas BPM is a business process which leverages BI," and he suggests that BPM describes various applications that companies may already have deployed, such as BI, budgeting, data integration, forecasting, key performance indicator (KPI) reports or scorecards, and planning solutions. For more information on the components that make up the BPM "technology stack," see the article " The Reality of Real-time Performance Management ," in the October/November 2003 issue of Supply & Demand Chain Executive.