BOSTON -- Companies can improve their internal operations and slash costs through the use of business performance management (BPM) tools, according to attendees at a conference on the technology. But there are considerable challenges to be surmounted, they warned.
BPM projects involve the use of business intelligence software, such as balanced scorecard or analytic applications, to help executives prepare plans and analyze corporate performance via a dashboard-style user interface.
The need for CEOs and chief financial officers to comply with the accounting and reporting mandates of the Sarbanes-Oxley Act has given the BPM market a boost, said Craig Schiff, CEO of BPM Partners Inc. The Stamford, Conn-based consulting firm co-sponsored last week's Performance Management Conference with the Digital Consulting Institute in Andover, Mass.
A BPM system can deliver a holistic view of business performance, allowing executives to identify revenue and cost savings opportunities, Schiff said. But software costs can range from $75,000 to more than $500,000, he added.
And setting up BPM processes can be difficult, according to a half-dozen users.
"The biggest challenge, and I don't care what kind of consultant you get or what you do, [is that] you truly have to understand what drives your business," said Celia Spitz, vice president of planning and analysis at Miami-based Vitas Healthcare Corp., which provides hospice services.
IT and business managers who are implementing BPM systems must decide "what the critical bits of information are that make a difference in a business," Spitz noted. "If you don't, it's just regurgitating data for 'analysis paralysis' and doesn't tell you anything."
Vitas Healthcare uses a homegrown executive dashboard that's connected to online analytical processing software developed by Applix Inc. in Westboro, Mass. Spitz said the BPM system has helped the company reduce its auto-mileage and overtime costs.
RSA Security Inc. uses software that was developed by Comshare Inc., which is now part of Markham, Ontario-based Geac Computer Corp., to measure whether financial targets are met. The software has paid for itself, said David Stack, manager of corporate financial planning and analysis at RSA, a security software vendor in Bedford, Mass.
But Stack added that measuring how much of a return on investment RSA is getting is hard because many of the performance improvements made possible by the BPM system are qualitative.
For Viasys Healthcare Inc., the toughest part of its BPM rollout was ensuring that end users employed the system, because its blueprint validates the accuracy and consistency of data, said Matt Gualtieri, finance project manager at the medical products maker in Conshohocken, Pa.
But the hard work has paid off, Gualtieri added. "I think the pain and effort of going through implementing a system like this is worth it, because it forces you to do things better."