Quantifying business benefit of Business Performance Management is not trivial. As far back as ’92, Debone & Mclean established a framework for measuring Information System benefit. Their framework saw System Quality (performance, flexibility, ease of use, reliability, response time etc) and Information Quality (timeliness, relevance, usefulness etc) as determinants for System Use and User Satisfaction (see fig below).
How do these drive business benefit?
Well, satisfied users easily finding the quality information they want in a BPM system can make great Individual Impact. Large groups of individuals working together create Organisational Impact.
Let’s take a common BPM application - a retail planning and forecasting system.
In this case it’s been implemented well to user needs with high-uptime that provides flexible what-if analysis from store planning to integrated corporate reports, delivered through an easy-to-use web portal with real-time updates. The system provides timely information from production systems and the flexibility allows the end user to slice and dice from perspectives relevant to them. Bill, a store manager, uses this system on a daily basis for reporting and analysis, while Sue, a regional manager, forecasts the profit impact by substituting one brand with a cheaper version sourced through the company’s own supply chain.
Useful stuff, but how do we measure the organisation impact of this BPM system?
One approach, adapted from academic work on ERP system benefit, is to use a Balance Scorecard. Originally developed by Kaplan & Norton, Balance Scorecards are used to measure organisational effectiveness from the activities the organisation engages in - rather than simple financial metrics. The Scorecard framework is useful as it allows us to take a quixotic ideal like organisational benefit and break this into impacts across financial, customer, internal and learning perspectives. By reviewing the impact across various organisational areas and processes, you start to see some cause and effect on the bottom line.
In our retail planning example - from an internal business perspective - the faster (and more automated) information flows between Bill and Sue, the greater the collaboration and the more informed decision making can be. Transparent planning using numerically-based scenario analysis (rather than aerial extraction) with all historical forecasts instantly available improves learning as sales forecasts can be more accurately tracked. Ultimately, the customer receives benefit from lower priced goods – made possible through the accurate and useful information generated in what-if analysis by Sue.
Hard numbers from soft concepts:
The nice thing about Balance Scorecard is that from when it is first implemented and ultimately used well by the organisation, the system itself creates a ready before and after Polaroid (measurement of success). Of course you should have a fair idea of the type of benefits you expect before you start implementing even if you don’t have a comprehensive measurement tool in place to benchmark against.
A well implemented BPM system will have a range of predicted benefits, but also holds great potential for unforeseen benefits as enhanced collaboration, flexibility and other soft benefits are explored by bright and motivated individuals throughout the organisation.
Business Intelligence and Performance Management home.