The Two BPMs: Process Management Vs. Performance Management

OK, pop quiz. What does “BPM” stand for: a) beats per minute; b) Banca Popolare di Milano; c) business process management; or d) business performance management?

The answer, of course, is all of the above. But the confusion of the latter two has given BPM software vendors – whatever they’re vending – an awful headache. While the confusion hasn’t had a noticeable impact on sales – Meta Group estimates that the business performance software market grew 10% to 15% in 2003 to reach $1.1 billion, while the older business process software market, according to Gartner Group, grew 15% to 20% in 2003 to exceed $518 million – it has had some side effects.

Among those effects are bitter feelings between the two camps. “Part of it is that the performance management space is heating up, while the process management market is a bit stagnant,” said John Colbert, vice president of BPM Partners, a Stamford, Conn.-based firm that advises enterprises on the pros and cons of more than 60 performance management software tools. “[Process management vendors] see an opportunity to foster that confusion and take advantage of it.”

The confusion has also led to the formation late in March of the BPM Standards Group, of which BPM Partners is a founding member, along with IBM, SAP, Applix, Hyperion Solutions, Meta Group, International Data Corp., and the Data Warehousing Institute. The group has tentatively defined business performance management software as those applications that combine planning and data analysis to develop a company's strategic goals and track progress toward meeting those goals using financial and operational metrics. BPM Standards expects to release final guidelines by late June, said Colbert.

So, just what is the difference between the two BPMs? “My impression of business process management is that it is focused on monitoring and managing a transaction, while business performance management involves setting up metrics and taking information to track against those metrics,” said David Menninger, vice president of worldwide marketing for Applix, which sells performance management software. In other words, process management deals with setting up workflows; performance management deals with goal-setting for the business as a whole.

Part of the confusion comes from an overlap in purposes of the two BPMs. For example, a toy manufacturer may use business process management software to create a method of routing defect claims. However, the efficiency with which those claims are handled falls into a gray area that is covered by both sets of software.

The same is true for software used to meet Sarbanes-Oxley Act compliance requirements. Business process management software is used by many companies to ensure they are meeting the Section 404 requirements of Sarbanes-Oxley, which govern which company officials need to sign off on financial transactions. Business performance management software then takes things a step further by improving visibility and planning. To make matters worse, different types of BPM software exist within each group. That is, there are different types of process management software – such as those that control order taking, billing, shipping, and human resources – and different types of performance management software – such as planning, budgeting, forecasting, and financial consolidation.

Still, the process and performance aspects largely remain mutually exclusive in most BPM applications suites. The notable exceptions are Hyperion and Cognos, which offer comprehensive applications that include both performance and process management.

That bifurcation is leading some performance management software vendors to strike joint marketing and technology sharing deals with their process management counterparts, and vice-versa. “We’re currently in discussions with a number of performance management software companies,” said Neal Novotny, director of product marketing at San Mateo, Calif.-based Intalio, a developer of business process management software. It only makes sense because process management is only a means to an end, and that is, to improve performance.” Applix’s Menninger agreed. “We’re actively pursuing a number of business process management vendors to do partnerships,” said Applix’s Menninger.

And what would a bundled business process-performance management application be called? “We were thinking BPM-squared,” said Menninger.

That should clear up the confusion.