by Dean Sorensen

BPI Goes Mainstream

Feb 15, 20033 mins
Business Intelligence

CIOs are becoming increasingly involved in business performance intelligence (BPI), a rapidly growing subset of the business intelligence market. BPI involves planning and budgeting, Balanced Scorecard performance management, and activity based costing. And to be effective, CIOs must understand three things: 1. how BPI apps are changing; 2. the potential value of those changes; and 3. how organizations can best use emerging BPI capabilities.

BPI applications are undergoing three key changes. The first should come as no surprise. Web technology has enhanced these tools’ capabilities to quickly collect and disseminate information. The other two changes are not as obvious. They include both broader capabilities beyond traditional BPI, including strategy development, process and knowledge management, and more integrated solutions that include applications from multiple BPI categories.

These trends are significant because they will help organizations move beyond traditional budgeting and functionally based performance management by continuously planning, measuring costs and managing performance around processes and outputs. In turn, stretching the BPI boundaries provides one capability that these applications can’t provide individually: the chance to manage trade-offs?the conflicting cost and service objectives that affect virtually every aspect of organization performance.

That all becomes important for CIOs because it lets them more effectively manage several key issues:

  • Expectations of senior executives and internal customers, by encouraging informed conversations about planned and actual service levels, in light of budgetary constraints and work volume.
  • Business value of IT, by expressing it in terms of contributions to lower process costs, higher service levels and revenue.
  • Activities and decisions external to IT that affect IT spending and performance.

BPI tools let CIOs achieve those objectives by expanding the scope of IT management beyond the IT function to the entire organization. That enables them to manage IT from the customer’s perspective.

The BPI capabilities that will help CIOs address the aforementioned management issues are the same ones that will let organizations address broader management challenges by continuously translating what customers are demanding and willing to pay for into cost and service objectives for specific processes and activities. Flexibility and innovation should increase as people focus on optimizing the cost, cycle time and quality of overall processes, rather than those of individual functions and activities. Companies will also be able to better execute strategy, by turning strategic objectives and budgetary constraints into specific, realistic and executable targets.

Larger and more complex organizations will likely benefit the most from these capabilities. In fact, these organizations are often the same ones struggling to achieve the objectives of ERP and CRM initiatives. In such cases, the value of BPI goes well beyond tactical sources by enabling organizations to fully exploit the information contained in those systems.

Essentially, what BPI applications do is present information in a way that enables clear communication. People can “speak the same language” because there is an explicit linkage between strategic, financial and operational information. Enabling this form of communication will increasingly become an important role for IT to play when creating the competitive advantages organizations seek.

What does all this mean to the CIO? It presents an opportunity to not only confront issues that are important to the IT function, but in the process, help the organization address management challenges critical to strategy execution and profitable growth. Helping an organization establish the right BPI application plays an important role in entrenching the CIO as a business leader.