Business Performance Management through BI


The terms business intelligence (BI) and business performance management (BPM) are heard time and again, but what do they really mean for businesses?
Getting back to basics, both terms refer to the concept of using technology to Identify sales trends to develop sales strategies and to manage future sale . It manage employee performance and Identify quality issues on the shop floor .Also both of it optimize business processes through the use of technology ,forecast, budget, and plan within a process-centric environment and allow C-level executives the ability to monitor the organization’s performance regularly and centrally throughout the day. The common theme within these technologies is that organizations use them to optimize their performance and stay competitive within the market. Business performance management should not be confused with business process management, also known as BPM

The increase in the competition on the markets changed in the last ten years the approach to business management. Today companies are more process-oriented than in the past; in fact, in order to reduce the costs and keep pace with the market, they are adopting an end-to-end strategy that involves both customers and suppliers to synchronize all the business activities. At the same time, companies have understood the importance of enforcing achievement

of the goals defined by their strategy through metrics driven management [28]. Thus, the new requirement of managers is to ensure that all processes are effective by continuously measuring their performance through Key Performance Indicators (KPIs) and score cards . Communication and enforcement of the strategy is obtained by sharing goals and measurements at all the company levels, thus promoting the so-called information democracy. Translating the company strategy into a

detailed set of indicators that are closer to the operational tasks allows employees to better understand the desiderata of managers. As stated before the neologism often used to refer to this

new picture in BI is exactly BPM. Describing BPM requires to understand how management is carried out within a process-oriented enterprise where, beside the classical organizational structure, a set of inter-division processes are present. The organizational structure is a hierarchy of divisions, aimed at defining their duties and responsibilities, and is usually organized on three different levels. At the strategic level, the global strategy of the enterprise is decided. The tactical level is usually composed by multiple divisions, each controlling a set of functions; the decisions taken here are related to the corresponding functions and must comply with the strategy defined at the upper level.

Finally, at the operational level, the core activities are carried out; the decision power is limited to optimizing the specific production activities in accordance with the main strategy. On the other hand, a process identifies a set of logically related tasks performed to accomplish a defined goal. Processes are orthogonal to organizational structure, in fact they usually include tasks carried out by different divisions and require decisions at different levels. The key point of processes is that the focus is on the global business goals rather than on the single tasks. Of course, employees involved in processes must share the business strategy in order to synchronize their behavior.

This result can be achieved by translating the top-level strategy into multiple goals at the lower levels, each defined by a target value for a given indicator; each indicator measures a specific task and should be easily understood by the employer who is in charge. This approach, is based on a closed-loop where:

1. the strategy and the corresponding targets on indicators are influenced by the enterprise performance as inferred from the information system;

2. the actions/decisions taken at the tactical and operational levels are aimed at matching current and target values for indicators;

3. the actions/decisions fulfill the company strategy and determine its performance.

Note that, while a business strategy is with no doubt more than a simple set of target values, the attempts made until now to share strategy policies and directives among other levels failed owing to how every single employee perceives the company. At least KPIs allow managers to get results without misunderstandings and personal definitions, while it resulted that implementing behavioral business rules or application code limits the autonomy of the employees with potential loss of flexibility.

The term BPM defines this new approach to management and requires indicators to be constantly fed and made available at the on time, at the proper decision level in the best form. The peculiar features that distinguish BPM from classical DW-based BI are:

· Users: the users of BPM systems are still decisionmakers, but at the tactical and operational levels. These users have limited view of the company strategy, and only have to deal with the subset of indicators related to their specific tasks.

· Delivery time: Decisions at the lower levels must be faster then the strategic ones, thus the freshness of information must be set accordingly. BPM systems are not supposed to operate in real-time, but rather in

right-time, meaning that it is crucial for information to be fresh enough to be useful for decision making .

· Information coarseness and lifetime: information circulated in BPM systems is usually more detailed than in DW systems, since it concerns single events related to specific tasks. Besides, lifetime of information required by BPM is limited, since users are interested in the current performance of their tasks. Such characteristic leads to considering data streams as potential sources. The state of an automated assembling line or the performance of the stock exchange may be definitely part of the input for a BPM system. Finally, the high dynamicity of information encourages to resort to rule engines and mining techniques for identifying outliers and remarkable business situations.

· User interface: tactical and operational decision makers will not probably have time and skills to run OLAP sessions, hence, information will be mainly accessed in the form of reports and dashboards carrying the relevant indicators, as well as through automated alerts activated by business rules.

References

# D. Sonnen and H. Morris. BusinessFactor: Event-Driven Business Performance Manager. TIBCO White Paper, 2004.

# Y. Zhu. High Performance Data Mining in Time Series:Techniques and Case Studies. PhD Thesis, New York University, 2004

# R.S. Kaplan and D.P. Norton. The Balanced Scorecard –Measures that Drive Performance. Harvard Business Review70:1, 1992.

# R. Kimball The data warehouse lifecycle toolkit. Wiley & Sons,

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