Business performance management (BPM) refers to the business processes, methodologies, metrics, and technologies used by enterprises to measure, monitor, and manage business performance
Each step of Business Performance Management is described below.
1.Strategize: Where do we want to go?
This is a very important stage of the Business Performance Management Cycle. It is the process of identifying and deciding organization’s mission, vision, goals and objectives and developing strategies to achieve these objectives. Strategy is an art and science of decision making and help businesses to achieve their objectives. Business strategies are planned and created by a board of directors, CEO and top level executives. Business strategy provides an overall direction to the enterprise and is the first and foremost important process in the BPM methodology.
2.Plan: How do we get there?
This is a second step of Business performance Management which includes planning for achieving business Goal decided in the first step. Which include operational plans, financial plans, Marketing plans and others. Operational and financial plans to answer two questions: What tactics and initiatives will be pursued to meet the performance targets established by the strategic plan? What are the expected financial results of executing the tactics?
An operational plan translates an organization’s strategic objectives and goals into a set of well-defined tactics and initiatives, resource requirements, and expected results for any future time period, usually, but not always, a year. Strategy drives tactics, and tactics drive results. Financial planning includes budgeting, sources from which company can generate revenue, Source of capital, Cost of the capital required and other. So, basically second step includes tactics and planning to achieve the objectives and goals decided in the first step.
3.Monitor/Analyze: How are we doing?
This step of a BPM process includes monitors and analyzes the performance against settled goals and objectives. For monitoring performance two things are important, what to monitor and how to monitor. The organization should monitor specific issues because it is impossible for the company to look at everything. For a company it is very important to decide Key performance indicators means on which parameters company wants to measure a performance.
4.Act and Adjust: What do we need to do differently?
The final stage in most performance management cycles is the act and adjusts. This is designed to allow both parties to the process to consider how achievements have met the goals set during the planning stage. A review looks at results, both tangible and intangible, and provides the springboard for determining where to concentrate efforts as the cycle returns to the planning stage.
Dr. Preyal Sanghavi