1. Performance management technology
Business Performance Management Software Defies Recession with 4% Revenue
Growth, But is it a Wise Investment?
4% growth in business performance management (BPM) software during a downturn is
attention grabbing, but it is made more impressive when you consider that, according to
Gartner; IT budgets fell by an average of 4.7% during the same period. So why is BPM
and business intelligence (BI) such a high priority investment?
The obvious explanation for the increased demand for BPM software is the desire to
reduce overall costs. Quality BPM software allows decision makers to closely monitor all
aspects of performance in an attempt to reduce wastage and improve efficiency; quickly
highlighting problem areas and excess capacity.
Another possible explanation is the rise in business reorganisation that accompanies any
economic downturn; as companies seek to centralise their efforts in an attempt to reap
economies of scale. In order to fully capitalise on the benefits of centralisation, decision
makers recognise the need to invest in business performance management systems that
enable them to monitor and manage organisations as single entities, rather than multiple
disparate units.
Although worthy BPM software will deliver the above benefits, and more, it must be
asked whether there is any real return on investment at the rates charged by some
vendors. In the past year there have been numerous, well documented cases of
organisations offering consultants blank cheques to consolidate and implement an
organisation wide business performance management system. The vastly improved
efficiency BPM solutions provide mean that even at these very high rates there is usually
still a return of investment in the long term; but they certainly do not offer the quick wins
that resource stretched companies need in order to survive and thrive in the current
downturn.
The long term return on investment of such solutions is also hampered by their rigidity.
Most organisation wide systems require all relevant data to be collected and collated in a
single system, in a specified manner, this is obviously extremely costly. The rigidity of
such systems also means that they are prone to requiring substantial extra investments if
there are any changes to the business' configuration. If the business acquires another
division, or data source, it will all have to be migrated, causing more upheaval and
substantially reducing any returns.
So do the limited and uncertain returns of many large BPM solutions justify the
substantial outlay at a time when businesses are so cash poor? Many would argue that
they do not, however that is not to say that the lucrative benefits cannot be obtained in
2. other, more cost effective ways. Smaller BPM software vendors appear to have provided
very effective, but often overlooked, solutions which deliver all the benefits of
organisation wide business performance management solutions without the rigidity and
extra costs that come from forcing data into a single format or location. Other vendors
achieve this by creating Business intelligence solutions that work with multiple data
sources such as ODBC, OLEBD, OLAP and CUBE, allowing automatic collation of all
historic and current data without the need to manually transfer. This not only reduces
time and inefficiencies, it also reduces future costs as any new divisions or data systems
can simply be connected to the system in their current form and instantly collated and
compared with other company data. The relatively low purchase and implementation
costs of these kinds of solutions means they do provide a substantial return on investment
in time to justify purchase in today's climate.
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