Business Performance Management (BPM)
Business performance management (BPM) is a set of processes that helps organizations optimize their business performance. It is a framework for organizing, automating and analyzing business methodologies, metrics, processes and systems that drive business performance. BPM is seen as the next generation of business intelligence. It helps businesses make efficient use of their financial, human, material and other resources.BPM involves consolidation of data from various sources, querying, and analysis of the data, and putting the results into practice. It enables businesses to enhance 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 (KPIs) that help companies monitor efficiency of projects and employees against operational targets.
For business data analysis to become a useful tool, however, it is essential that an enterprise understand its goals and objectives, essentially, that they know the direction in which they want the enterprise to progress. To help with this analysis key performance indicators (KPIs) are laid down to assess the present state of the business and to prescribe a course of action.
More and more organizations have started to speed up the availability of data. In the past, data only became available after a month or two, which did not help managers react swiftly enough. Recently, banks have tried to make data available at shorter intervals and have reduced delays. For example, for businesses which have higher operational/credit risk loading. A large multi-national bank makes KPI-related data available weekly, and sometimes offers a daily analysis of numbers.
This means data usually becomes available within 24 hours, necessitating automation and the use of IT systems. Most of the time, BPM simply means use of several financial/nonfinancial metrics/key performance indicators to assess the present state of the business and to prescribe a course of action.