Malcolm - BPM Research Proposal - CMalcolm

Business Performance Management BUSINESS PERFORMANCE MANAGEMENT: HOW BPM CAN ASSIST MANAGEMENT IN MAINTAINING AND IMPROVING BUSINESS
PERFORMANCE LEVELS IN THE CURRENT FINANCIAL CLIMATE.
BUSINESS P ERFORMANCE M ANAGEMENT : HOW BPM CAN ASSIST MANAGEMENT IN MAINTAINING AND IMPROVING BUSINESS P ERFORMANCE LEVELS IN THE CURRENT FINANCIAL CLIMATE. Cora N Malcolm Strayer University
Business Performance Management
CERTIFICATION AND APPROVAL This Directed Research Project Entitled Business Performance Management: How BPM can assist Management in maintaining and improving business, performance levels in the current financial climate. By Cora N Malcolm Is submitted as my own research for approval by the Graduate School of Strayer University in candidacy for the degree of Masters of Science in Management Information Systems.
Approvals
________________________________________________ ________________________________________________
DRP Supervisor
__________________________________________
ii
Abstract In todays world of high stake deals, advanced technology, world recession, collapsing banking industry, and account scandals, companies must understand and manage their funds and accounts to maintain successful business performance. The existing financial climate has pushed Business Performance Management to the forefront of Strategic Management and Decision Making in companies. In the past nine years, we have seen numerous accounting and banking scandals. Scandals such as ENRON and WorldComm in the USA and Parmalat in Italy have resulted in worldwide revision of accounting standards and legislature. The impact of the recent banking industry collapse, has seen the worlds economy plunge deeply into recession. The cleat cut culprit of the banking scandals, unscrupulous office practices by executives. The researcher seeks to understand how BPM, using BI or DSS can assist management in maintaining and improving business performance levels in the current financial climate. A minor question asked by the researcher is how, in this period of recovery and restructuring, does BPM play a role in the Strategic Management and Decision making processes. Research conducted into scholarly journals, articles, textbooks, and corporate websites, has provided key insight into the existing practices of some companies, and steps taken, or soon to be take to correct the position in some companies. The research studies the relationships between DSS, BI, and BPM addresses and how BPM can be utilized to achieve the strategic targets of the business. Research into the history, concepts, and methodologies, of DSS, BI, BPM and SM has shown that in recent times BPM has become the most successful tool for the achievement of strategic management objective. The research has proven that BPM is much more popular in most companies, and is primarily implemented with BI rather than DSS. BI is a more extensive level of the Data management process. In achieving the strategic management goals, BPM has proven much more useful with a BI foundation, than one with DSS foundation. Researchers are finding that BPM is easily adaptable to the Strategic Management cycle.
iii
Table of Contents
B USINESS PERFORMANCE MANAGEMENT : HOW BPM CAN ASSIST MANAGEMENT IN MAINTAINING AND IMPROVING B USINESS PERFORMANCE LEVELS IN THE CURRENT FINANCIAL CLIMATE. ................................................................. i CERTIFICATION AND APPROVAL ................................................................................................................... ii Abstract ........................................................................................................................................................ iii Table of Contents ........................................................................................................................................ iv TABLE OF FIGURES ....................................................................................................................................... vi Chapter 1: Introduction ................................................................................................................................ 1 Context of the Problem............................................................................................................................. 1 The Statement of the Problem ................................................................................................................. 2 Significance of the Study ........................................................................................................................... 3 Research Design and Methodology .......................................................................................................... 3 Organization of the Study ......................................................................................................................... 4 Tentative Reference List ........................................................................................................................... 4 Chapter 2: Literature Review ........................................................................................................................ 7 Business Performance Management ........................................................................................................ 7 Business Intelligence ............................................................................................................................... 14 Decision Support Systems ....................................................................................................................... 16 Strategic Management ........................................................................................................................... 21 Chapter 3: BPM, BI, and or DSS in Strategic Management ......................................................................... 23 Introduction ............................................................................................................................................ 23 Business Performance Management: Its History, Concepts and Methodologies. ................................. 23 BI Architecture & DSS: Concepts, Methodologies and Technologies ..................................................... 30 BPM in Strategic Management ............................................................................................................... 38 Chapter 4: Summary and Conclusion .......................................................................................................... 43 Summary ................................................................................................................................................. 43 Conclusion ............................................................................................................................................... 46 References .................................................................................................................................................. 48 Appendix A .................................................................................................................................................. 52
iv

Appendix B .................................................................................................................................................. 54 Figure Captions ............................................................................................................................................. 2
TABLE OF FIGURES Figure 1: BPM Closed-Loop Processes ...................................................................................... 998 Figure 2: The Performance Management Cycle ..................................................................... 10109 Figure 3: Balanced Scorecard Perspectives .......................................................................... 121210 Figure 4: Key Performance Metrics ...................................................................................... 131312 Figure 5: Evolution of BI ...................................................................................................... 141413 Figure 6: Decision Support System - Conceptual Model ..................................................... 171716 Figure 7: The Evolution of Managing Performance ............................................................. 252524 Figure 8: Typical Key Performance Indicators ............................................................................. 28 Figure 9: Six Sigma Methodologies ............................................................................................. 29 Figure 10: BPM in Computer Software ................................................................................ 303029 Figure 11: Components of Business Intelligence Architecture .................................................... 31
vi
Business Performance Management Chapter 1: Introduction Context of the Problem
In todays world of high stakes deals, advanced technology, world recession, collapsing banking industry, and accounting scandals, companies small and large are obliged to understand and manage their funds/accounts to maintain successful business performance. There have been a number of financial scandals over the past three decades; the new decade has brought with it some more notable scandals. Between 2000 and 2009, there were 35 notable accounting scandals. Some of the more notorious accounting scandals include ENRON, WorldCom, and AIG in the United States; and from Italy, Parmalat. These incidents have had far-reaching ripple effects on the business community at large, as well as, more directly on the accounting industry. The recent banking scandals have resulted in a collapse of the banking industry, and increased the pace of the world recession, as they occurred some of the major world financial centers. The collapse of the banking industry has pointed out that many unscrupulous practices were being conducted in the business community by executives with little care for the common investor, and the continuity and success of the business or corporation. As a result of these scandals, the world has seen business reactions such as, declaration of bankruptcy, wind-up of business, and large governmental bailouts. There have also been criminal prosecution of executives and management officers of businesses, some resulting in jail time and or financial fines. On an industry basis a total overhaul and reform of legislation regulating Corporate Governance, Accounting Standards and Procedures, and the US Securities Exchange Commission procedures have come into effect. An
Business Performance Management article on computing giant Dell showed that executive had manipulated the accruals and account balances, in order to meet Wall Street projections in the years prior to 2007 (Moltzen, 2007). The U.S. Securities and Exchange Commission and the U.S. Attorney General for the Southern District of New York, conducted their own investigations into the financial accounting and reporting practices of Dell. As a result of these investigations, and their resultant announcements, Dell had to restate its earnings, thereby restating its share value. The result of this, was the firing of a number of executives at Dell (Moltzen, 2007). The question that must now be ask is this, how, in this period of recovery and restructuring for business will Business Performance Management (BPM) play a role in the Strategic Management and Decision Making processes in business.
The Statement of the Problem
This study will research and discuss the relationship between Business Intelligence, Decision Support Systems, Strategic Management, and Business Performance Management, and make recommendations on the best BPM solutions to achieve corporate Strategic Management objectives. A definitive statement of the problem would be; How BPM, through the use of BI architecture or DSS, can assist management in maintaining and improving business performance levels in the current financial climate. This study will also examine and discuss the ethos of BPM, encompassing the advantages and disadvantages of BI and DSS to BPM; As a result of reviewing BI and DSS concepts, methodologies and technologies, the researcher will make recommendations on BPM systems to be used by companies to achieve their SM objectives.
Business Performance Management The Sub-problems
1. The first sub-problem. The first sub-problem is to examine and discuss BPM its history, concepts and methodologies. 2. The second sub-problem. The second sub-problem is to examine and discuss BI architecture and DSS concepts, methodologies, and technologies. 3. The third sub-problem. The third sub-problem is to analyze and discuss the ethos of BPM to SM examining the advantages and disadvantages of BI and DSS to BPM.
Significance of the Study
The recent collapse of the banking and real estate industries, and the world economys steep plunge into recession, businesses must adjust and find effective solutions that will allow them to survive the recession and continue to be profitable. As such, the study could become an essentiality to many industries and businesses, across many geographical borders and regions. This study will help corporate management by identifying BPM solutions and available options for continued profitability and success through Strategic Management.
Research Design and Methodology
Research for this study will be conducted via the internet; reviewing articles from various journals, newspaper and organizational websites. Through reviewing relevant journals, white papers and available texts aid in understand BPM and its impact on Strategic Management in business. Once the qualitative information has been compiled and interpreted from the various
Business Performance Management sources, recommendations will be made regarding the best technological components for BPM, to promote continued successful business performance.
Organization of the Study
Chapter one provides and introduction the research topic; discussing the context and making the statement of the problem, it also identifies additional sub-problems to be discussed in later chapters. Chapter two provides a literature review of BPM, its application under Strategic Management, and its relationships to Business Intelligence and Decision Support Systems. Chapters three through five discuss the three sub-problems. Chapter three addresses sub-problem one, which discusses Business Performance Management highlighting the history, definition and concept, and methodologies of BPM. Chapter four addresses sub-problem two, it discusses the components of Business Intelligence architecture and Decision Support Systems concepts, methodology, and technologies. Chapter five addresses sub-problem three, it analyzes and discusses BPM and Strategic Management and how BI architecture and DSS are used in both. Chapter six will tie the discussions together in the Summary and Conclusion.
Tentative Reference List
1. Owens, Ian, Wilson, T.D. and Abell, Angela (1995) "Information and business performance: a study of information systems and services in high-performing companies" Information Research, 1(1) Available at: http://informationr.net/ir/12/paper5.html

2.
Alenchery, Joseph J. (2005) Corporate Performance Management (CPM) based on best principles Infosys Technologies Limited, Available at: www.scribd.com/doc/7291794/Corporate-Performance-Management-Based-on-BestPrinciples
3. Decisioneering Staff, "SunTrust "Banks" on Crystal Ball for assessing the risk of commercial loans", Decisioneering, November 1998, at URL DSSResources.COM.Pasted from <http://www.dssresources.com/cases/suntrust.html> 4. McCall, D. and J. Young, "Bringing Strategic Planning Online: Eliminating Static from Collaborative Strategic Planning," DSSResources.COM, 06/16/2006 Pasted from <http://www.dssresources.com/cases/mccall&young/index.html> 5. Patsuris, Penelope (2002) The Corporate Scandal Sheet. 08/26/02 Forbes Magazine. http://www.forbes.com/2002/07/25/accountingtracker.html 6. Moltzen, Edward F (2007) Dell Accounting Story Not A Happy Story CFO 08/16,07. Channel Web. http://www.crn.com/itchannel/201800702;jsessionid=Q1F1COKLRMQS2QSNDLRSKH0CJUNN2JVN 7. Thompson, Larry D (2004), The Corporate Scandals, Why They Happened And Why They Happen Again. 07/13/04. Bookings Edu. http://www.brookings.edu/speeches/2004/0713business_thompson.aspx 8. Power, D.J. A Brief History of Decision Support Systems. DSSResources.COM, World Wide Web, http://DSSResources.COM/history/dsshistory.html, version 4.0, March 10, 2007.
Business Performance Management 9. PricewaterhouseCoopers, Performance Improvements. April 2009 available at http://www.scribd.com/doc/14563961/01371-Final-Corporate-PerformanceImprovement-Advisory-April09 10.
Comment [RAM1]: Does not belong here anymore Move to reference page
Chapter 2: Literature Review This chapter is an examination of the research literature on Business Performance Management (BPM), Business Intelligence (BI), Decision Support Systems (DSS), and Strategic Management (SM). This examination or review will be split into four sections; the first discussion will focus on BPM; the second discussion focuses on BI; the third discussion on DSS; and, the fourth on SM.

Formatted: Indent: First line: 0"
According to a definition for BPM in the textbook, Decision Support and Business Intelligence Systems, business performance management has a number of names including BPM, corporate performance management (CPM), enterprise performance management (EPM), and strategic enterprise management (SEM), all defined as the management techniques, metrics, and related tools designed to assist companies in making high-level strategic decisions. (Turban, Aronson, Liang, & Sharda, 2007) Alenchery defines CPM as an approach to bring in systematic and integrated improvements across the performance management cycle (Alenchery, 2005). The BPM Standards Group defines it as a framework for organizing, automating, and analyzing business methodologies, metrics, processes, and systems to drive the overall performance of the enterprise. IT helps organizations translate a unified set of objectives into plans, monitor execution, and deliver critical insight to improve financial and operational performance. In a discussion of the history of BPM, Decision Support and Business Intelligence Systems (Turban, Aronson, Liang, & Sharda, 2007) state that, BPM is an outgrowth of BI. An article on Ezine Articles by Josh Riverside, states, corporate performance management was 7
Business Performance Management introduced in 2001 as a result of technological improvements to BI and advanced management techniques (Riverside). This article also tells us the process through which DSS, BI and finally BPM emerged as a solution for real-time management reporting issues. An article from IBM on corporate performance management, purports that business or corporate performance management is an area of business intelligence. The area concerned with monitoring and managing the performance of the enterprise - with enterprise planning, consolidation and modeling capabilities in accordance with Key Performance Indicators (KPI) (Search Data Management, 2008). The BPM Standards Group released a framework for the installation of BPM in business enterprises in 2004. According to the article BPM Standard Group Releases Framework, on the Eweek.com website, the framework recommends a technology architecture that supports information flow from operational systems to planning systems and between functions within the organization. It must also support action being taken based on the metrics generated, such as, revisions to plans, targets and operational activity. That is the last step of the recommended process. The first step is to set goals and metrics, then to set planning and budgeting processes, both financial and operational. Then monitor and analyze data and compare it with the plan. The textbook, Decision Support and Business Intelligence Systems (Turban, Aronson, Liang, & Sharda, 2007), summarizes the BPM process as encompassing a closed-loop set of processes that link strategy to execution in order to optimize business performance, as per figure 1 belowi.
Figure 1: BPM Closed-Loop Processes
The discussion by Turban, et al goes on to say that the loop implies that optimum performance is achieved by setting goals and objectives, establishing initiatives and plans to achieve those goals, monitoring actual performance against the goals and objectives, and taking corrective action. Alenchery discusses and defines the closed-loop process as a performance management cycle. He goes on to say that the performance management cycle refers to the whole set of management processes that starts with strategy formulation and is followed by alignment of corporate objectives and measures across levels. Robust performance analysis is the next step. Finally, disciplined review and strategy refinement based on business insights complete the cycle (Alenchery, 2005). Figure 2, below is a view of the corporate management cycle (Alenchery, 2005).
Figure 2: The Performance Management Cycleii
Figure 2 evidences the involvement of strategic management and planning in the performance management cycle. Turban, et al states, there is more to performance measurement than simply keeping score. An effective performance measure system should help do the following: 1. Align top-level strategic objectives and bottom-level initiatives. 2. Identify opportunities and problems in a timely fashion. 3. Determine priorities and allocate resources based on those priorities. 4. Change measurements when the underlying processes and strategies change. 5. Delineate responsibilities, understand actual performance relative to responsibilities, and reward and recognize accomplishments. 6. Take action to improve processes and procedures when the data warrant it. 7. Plan and forecast in a more reliable and timely fashion. (Turban, Aronson, Liang, & Sharda, 2007) 10
Business Performance Management The discussion goes on to say, a holistic or systematic performance measurement framework is required to accomplish these aims, as well as others. (Turban, Aronson, Liang, & Sharda, 2007) Over time various systems have been proposed, probably the best-known and most widely used performance management system is the Balanced Scorecard (BSC) (Turban, Aronson, Liang, & Sharda, 2007). BSC is defined by Balanced Scorecard Institute as a strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals (Balanced Scorecard Institute, 1998-2009). The BSC concept was proposed by Robert Kaplan (Harvard Business School) and David Norton in 1996, as a performance measurement system (Balanced Scorecard Institute, 1998-2009). Turban, et al, tells us that BSC does this by translating an organizations vision and strategy into a set of interrelated financial and nonfinancial objectives, measures, targets, and initiatives. The relationships among the financial and nonfinancial objectives of the Balanced Scorecard are shown figure 3, below.
11
Figure 3: Balanced Scorecard Perspectivesiii
Tuban, et al go on to identify the three nonfinancial perspectives as: 1. Customer. These objectives define how the organization should appear to its customers if it is to accomplish its vision. 2. Internal business process. These objectives specify the processes the organization must excel at in order to satisfy its shareholders and customers. 3. Learning and growth. These objectives indicate how an organization can improve its ability to change and improve in order to achieve its vision. (Turban, Aronson, Liang, & Sharda, 2007) They go on to say, the term balance arises because the combined set of measures are supposed to encompass indicators that are, financial and nonfinancial; leading and lagging; internal and external; quantitative and qualitative; and short term and long term. Turban, et al also point out that as a strategic management methodology, BSC enables and organization to align its actions with its overall strategies (Turban, Aronson, Liang, & Sharda, 2007). Jan Aertsen tells us, once a strategy map and strategic objectives have been identified, key 12
Business Performance Management performance indicators (KPI) can be used to track performance. The specific measures should be derived from and organizations strategy (Aertsen, 2007). Figure 3 below, identifies some typical performance measures; In addition to the table presented in Appendix B of Typical Key Performance Measures
Figure 4: Key Performance Metricsiv
Another method of implementation for BPM is known as Six Sigma. According to the General Electric website, Six Sigma is a highly disciplined process that helps management and employees focus on developing and delivering near perfect products and services (General Electric). Six Sigma was initially implemented by Motorola that today enjoys widespread application in many sectors of industry. Six Sigma seeks to improve the quality of process outputs by identifying and removing the causes of defects (errors) and variation in manufacturing and business processes (Six Sigma). It uses a set of quality management methods, including statistical methods, and creates a special infrastructure of people within the organization (such as "Black Belts") who are experts in these methods. Each Six Sigma project carried out within an organization follows a defined sequence of steps and has quantified financial targets (cost reduction or profit increase) (Six Sigma).
13
Business Performance Management Business Intelligence
Turban et al, defines BI as an umbrella term that combines architectures, tools, databases, analytical tools, applications, and methodologies (Turban, Aronson, Liang, & Sharda, 2007). BI has a number of tools that aid organizations with improving their overall performance through assistance with planning, tracking, monitoring, analyzing and reporting on the business activities. Currently a shift exists in the BI sector today, because businesses are moving towards achieving real time BI, This change is partly due to advances in technology and the constant state of flux of business conditions and environments (Azvine, Cui, & Nauck, 2005). The term was coined by the Gartner Group in the mid-1990s however, the concept is much older; it has its roots in the MIS reporting systems of the 1970s. (Turban, Aronson, Liang, & Sharda, 2007) Below is a figure showing the evolution business intelligence:
Figure 5: Evolution of BIv
14
Business Performance Management A discussion in the article Create an intelligent and flexible solution with BPM, Business Rules and Business Intelligence: Data warehouse visibility states that BI evolved from the traditional model. A model where transaction data is captured and propagated to a staging server through a batch process normally scheduled to run daily or weekly; through to the most advanced closed-loop BI model, where transaction data is automatically captured and integrated into the data warehouse which feeds the business intelligence tools, such as OLAP or mining tools (Medicke, Mago, & Chen, 2003). Turban, et al discuss the benefits of BI, which they have identified through research of a survey, to be 1. Faster, more accurate reporting (81 percent) 2. Improved decision making (78 percent) 3. Improved customer service (56 percent) 4. Increased revenue (49 percent) They also pointed out that many of the benefits of BI are intangible (Turban, Aronson, Liang, & Sharda, 2007). In their research Turban, et al noted, the most common application areas of BI are general reporting, sales and marketing analysis, planning and forecasting, financial consolidation, statutory reporting, budgeting, and profitability analysis. According to Turban et al, the architecture of BI depends on its applications; MicroStrategy Corp. distinguishes five styles of BI and offers special tools for each (Turban, Aronson, Liang, & Sharda, 2007). The tools are categorized as follows: 1. Spreadsheets 2. Reporting and querying software 3. OLAP
15
Business Performance Management 4. Digital Dashboards 5. Data mining 6. Process mining 7. Business performance management (Turban, Aronson, Liang, & Sharda, 2007). With the exception of spreadsheets, these tools are sold as standalone tools, suites of tools, components of ERP systems, or as components of software targeted to a specific industry. The tools are sometimes packaged into data warehouse appliances.
Decision Support Systems
Decision Support System Resources defines a DSS as an interactive computer-based or subsystem intended to help decision makers use communications technologies, data, documents, knowledge and or models to identify and solve problems, complete decision process tasks, and make decisions (Decision Support System Resources). The DSS assists management by retrieving, summarizing and analyzing decision relevant data (Power, What is a Decision Support System?, 1997). Typical information that a decision support application might gather and present would be: 1. an inventory of all current information assets (including legacy and relational data sources, cubes, data warehouses, and data marts), 2. comparative sales figures between one week and the next, 3. projected revenue figures based on new product sales assumptions; 4. the consequences of different decision alternatives, given past experience in a context that is described. (Decision Support Systems, 2006)
16
Business Performance Management The text goes on to discuss the components of a DSS; it states a DSS requires three primary components: 1. Model management to apply the appropriate model; 2. Data management to select and handle the appropriate data; and 3. Dialog management to facilitate the user interface to the DSS. (Pearson Prentice Hall, 2006) Figure 5 below gives a conceptual chart of a Decision Support System.
Figure 6: Decision Support System - Conceptual Modelvi
A brief discussion of the components of the DSS, as put forward by Worldwide Excellence in Business Outsourcing website, state that the components of a DSS include: 1. Model Management Subsystem 2. Specialized databases 3. User interface 17
Business Performance Management 4. May include Knowledge-based Subsystem 5. May include External Models 6. May include Mail/Collaboration Subsystem. (Worldwide Excellence in Business Outsourcing, 2004) The history of DSS as discussed by DJ Power in A Brief History of Decision Support Systems, tells us that in 1960s, researchers began systematically studying the use of computerized quantitative models to assist in decision making and planning (Power, A Brief History of Decision Support Systems, 2007). The article goes on to discuss the research and results of leading researchers in the field of computerized decision-making support systems. In 1970 business journals started publishing articles on management decision systems, strategic planning systems, and decision support systems. The first use of the term DSS was in a Sloan Management Review article by Gorry and Scott Morton, in 1971. They argued that Management Information Systems primarily focused on structured decisions and suggested that the supporting information systems for semi-structured and unstructured decisions should be termed Decision Support Systems (Power, A Brief History of Decision Support Systems, 2007). The article goes on to discuss other milestones of the history of DSS, as listed in Appendix A: DSS Timeline. It continued the discussion of DSS theoretical development by pointing out that in the mid-to late 1970s, both the practice and theory related issues of DSS were being debated at academic conferences, in US and around the world. At the same time, around 1978 Morton and Keens DSS textbook, provided the first broad behavioral orientation to decision support system analysis, design, implementation, evaluation and development; it became an influential textbook, that provided a framework for teaching DSS in business schools.
18
Business Performance Management However, McCosh and Mortons textbook (1978) was more influential in Europe (Power, A Brief History of Decision Support Systems, 2007). Power goes on to say that sin 1980 Steven Alter published his MIT doctoral dissertation, in which he stated that decision support systems could be categorized in terms of the generic operations that can be performed by such systems. Alter categorized the DSS into seven distinct types, 1. File drawer systems 2. Data analysis systems 3. Analysis information systems 4. Accounting and Financial models 5. Representational models 6. Optimization models 7. Suggestion models From the list above we can see that the generic operations extended from extremely data-oriented to extremely model-oriented (Power, A Brief History of Decision Support Systems, 2007). Turban, et al, in Decision Support and Business Intelligence Systems, discusses further detail the different components of the Decision Support System. Turban et al, hold that a DSS application can be composed of four subsystems. They describe each subsystem as follows: 1. The Data Management Subsystem includes a database that contains relevant data for the situation and is managed by software called the database management system (DBMS). The data management subsystem can be interconnected with the corporate data warehouse, a repository for corporate relevant decision-making data. Usually the data restored or accessed via a database Web server.
19
Business Performance Management 2. The Model Management Subsystem is a software package that includes financial, statistical, management science, or other quantitative models that provide the systems analytical capabilities and appropriate software management. Modeling languages for building custom models are also included. This software is often a model base management system (MBMS). This component can be connected to corporate or external storage of models. Model solution methods and management systems are implemented in Web development systems (such as Java) to run on application servers. 3. The User Interface Subsystem the user communicates with and commands the DSS through the user interface subsystem. The user is considered part of the system. Researchers assert that some of the unique contributions of DSS are derived from the intensive interaction between the computer and the decision maker. The Web browser provides a familiar, consistent graphical user interface (GUI) structure for most DSS. 4. The Knowledge-based Management Subsystem can support any of the other subsystems or act as an independent component. It provides intelligence to augment the decision makers own. It can be interconnected with the organizations knowledge repository (part of a knowledge management system [KMS]), which is sometimes called the organizational knowledge base. Knowledge may be provided via Web servers. Many artificial intelligence methods have been implemented in Web development systems such as Java and are easy to integrate into the other DSS components. (Turban, Aronson, Liang, & Sharda, 2007)
20
Business Performance Management Turban et al, go on discuss the integration of the DSS components. They state that they can be connected to a corporate intranet, to an extranet, or to the Internet. Typically the components communicate via Internet technology; Web browsers typically provide the user interface (Turban, Aronson, Liang, & Sharda, 2007). The benefits of a DSS are identified as follows: 1. Improves personal efficiency 2. Expedites problem solving 3. Facilitates interpersonal communication 4. Promotes learning or training 5. Increases organizational control 6. Generates new evidence in support of a decision 7. Creates a competitive advantage over competition 8. Encourages exploration and discovery on the part of the decision maker 9. Reveals new approaches to thinking about the problem space.
Strategic Management
The definition for Strategic Management, as provided by the Virtual University of Pakistan, states Strategic Management can be defined as the art and science of formulating , implementing and evaluating cross-functional decisions that enable an organization to achieve its objective (Virtual University of Pakistan). The article from the University of Pakistan identifies the benefits of SM as follows; the major benefits of SM are, proactive in shaping the firms future, initiate and influence action, and formulate better strategies (systematic, logical, rational approach). Financial benefits are, improved productivity, improved sales, and improved 21
Business Performance Management profitability; non-financial benefits are, increased employee productivity, improved understanding of competitors strategies, greater awareness of external threats, understanding of performance reward relationships, better problem-avoidance, and lesser resistance to change (Virtual University of Pakistan).
Comment [RAM2]: Your literature review is not conclusive
22
Chapter 3: BPM, BI, and or DSS in Strategic Management Introduction
This chapter will be a discussion of the concept and methodologies of BPM, BI, DSS, and SM. This discussion will encompass the histories, and advantages and disadvantages of each section. Business Performance Management has become a powerful management tool in recent years and decades. Many would say that it has provided executive management with real-time access to a little too much information. We have seen evidence of this statement recently; however, it can be said that the information access could have been used to the benefit of both the company and its stakeholders, rather than to their detriment. In todays world of high stakes deals, advanced technology, world recession, collapsing banking industry, and accounting scandals companies must understand and manage their funds and accounts to maintain successful business performance. The question must now be asked, how, in this period of recovery and restructuring for business will Business Performance Management (BPM) play a role in the Strategic Management and Decision Making processes in business.
Comment [RAM3]: The word we
Business Performance Management: Its History, Concepts and Methodologies.
The discussion in this section commences with BPM its history, concepts and methodologies. A review of many sources provided a consensus on the definition of BPM in general terms, for the purposes of this directed research project we will utilized the definition provided by the BPM Standard Group. BPM is defined as a framework for organizing,
23
Business Performance Management automating, and analyzing business methodologies, metrics, processes, and systems to drive the overall performance of the enterprise (Riverside). What BPM does is, assists management/decision-makers in transmuting the organizations strategic plan objectives, into key performance indicators and plans, monitors implementation, and provides critical feedback to improve the financial and operational performance of the organization. BPM was and is considered, by many researchers and practitioners, as an offshoot of Business Intelligence (Turban, Aronson, Liang, & Sharda, 2007) and was introduced to the business community under the designation of corporate performance management (CPM), in 2001 (Riverside). However, the earliest form of CPM emerged in the 1970s with the introduction of Decision Support Systems to the business environment (Riverside). Due to the limitations of DSSs, the business community was introduced to Executive Information Systems (EIS) in 1980 (Riverside). The alias Business Intelligence (BI) replaced EIS in 1990, when it was improved by the introduction of computer technologies (Riverside). As technology is continuously improving on itself, management was able to improve and introduce advanced management techniques. As a result of integrating the two, the methodology of CPM or BPM was introduced in 2001 (Riverside). Figure 6 below demonstrates the evolution of managing performance from 1970 to present day (Coveney, 2003). Figure 6 shows that as technology improves the pace of business accelerates; with the improved technology came specialized solutions, such as customer relationship management (CRM) systems. Management quickly realized that whilst the new technology was good and much needed, businesses required a means the effectively managing and employing the increased levels of information being provided.
24
Figure 7: The Evolution of Managing Performance vii
Thus in the 1990s many articles were published identifying new management methodologies that focused on how better to implement the organizations strategic plans. One of the more popular methodologies introduced was the Balanced Scorecard (BSC). BSC reiterated the need for organizational strategic planning and monitoring all aspects of the business (Coveney, 2003). Management soon realized that these methodologies were not complete on their own; Through combining the different methodologies with other management processes and technology, management were able to effectively influence the implementation of corporate strategy, thereby heralding the entrance of Corporate/Business Performance Management (Coveney, 2003). In 2004, the BPM Standard Group released a framework for the installation of BPM in business enterprises (Callaghan, 2004). The framework provided by the BPM Standards Group recommends a technology architecture that supports information flow from operational systems 25
Business Performance Management to planning systems and between function within the organization. It must also support action being taken based on the metrics generated, such as, revisions to plans, targets and operational activity. That is the last step of the recommended process. The first step is to set goals and metric, then to set planning and budgeting processes, both financial and operational. Then monitor and analyze data and compare it with the plan (Callaghan, 2004). Figure 1: BPM Closed-Loop ProcessesFigure 1: BPM Closed-Loop ProcessesFigure 1: BPM Closed-Loop Processes shows the process for BPM as being a closed-loop set of process that link strategy to execution in order to optimize business performance (Turban, Aronson, Liang, & Sharda, 2007). In order to optimize performance the business must set goals and objectives, establish initiatives and plans to realize those goals, monitor actual performance against those goals and objectives, and through feedback loops take corrective action as required (Turban, Aronson, Liang, & Sharda, 2007). The data employed by the recommended framework comes from various sources (Callaghan, 2004). Research has shown that performance management encompasses more than simply keeping score (Turban, Aronson, Liang, & Sharda, 2007). Turban et al, tells us that to be effective a holistic or systematic performance management framework or system should assist with achieving the following aims, as well as others: 1. Align top-level strategic objectives and bottom-level initiatives. 2. Identify opportunities and problems in a timely fashion. 3. Determine priorities and allocate resources based on those priorities. 4. Change measurements when the underlying processes and strategies change.
26
Business Performance Management 5. Delineate responsibilities, understand actual performance relative to responsibilities, and reward and recognize accomplishments. 6. Take action to improve processes and procedures when the data warrant it. 7. Plan and forecast in a more reliable and timely fashion (Turban, Aronson, Liang, & Sharda, 2007). As previously stated many methodologies exist for the implementation of the BPM framework. Some of these include Six Sigma, Balanced Scorecard, Activity-Based Costing (ABC), Total Quality Management, Economic Value-add, and Integrated Strategic Measurement. Many researchers and businesses have identified the Balanced Scorecard (BSC) method as the most widely adapted for the implementation of BPM in an organization (Turban, Aronson, Liang, & Sharda, 2007). The BSC method, as Bill Hickman tells us, came about in 1990 as a direct response to the rather narrow focus that shareholders had of deciding a companys performance strictly on financials. David Norton and Robert Kaplan, at the time conducted a multi-company study to identify new ways to measure corporate performance (Hickman, 2003). The BSC transmutes an organizations vision and strategy into a set of interconnected financial and nonfinancial objectives, measures, targets and initiatives (Turban, Aronson, Liang, & Sharda, 2007). Figure 3: Balanced Scorecard PerspectivesFigure 3: Balanced Scorecard PerspectivesFigure 2: Balanced Scorecard Perspectives, is a graphical representation of the financial and non-financial objectives relationships of the BSC. Hence, the Vision and Strategy of the organization is interrelated and integrated in all four objectives. Typically, the non-financial objectives or perspectives are identified by Turban et al, as:
27
Business Performance Management 1. Customer. These objectives define how the organization should appear to its customers if it is to accomplish its vision. 2. Internal business process. These objectives specify the processes the organization must excel at in order to satisfy the shareholders and customers. 3. Learning and growth. These objectives indicate how an organization can improve its ability to change and improve in order to achieve its vision (Turban, Aronson, Liang, & Sharda, 2007). The combined set of measures should comprise of markers that are, financial and nonfinancial, leading and lagging; internal and external; quantitative and qualitative; and shortterm and long-term (Turban, Aronson, Liang, & Sharda, 2007). In satisfaction of its function as a strategic management methodology, BSC facilitates an organization in aligning its actions with its overall strategies (Turban, Aronson, Liang, & Sharda, 2007). Under BSC and by extension BI, key performance indicators (KPIs) should be derived from the organizations strategic plan and used to track performance in an organization, once the strategy map and strategic objectives of said plan, have been identified (Aertsen, 2007); Some typical performance measures or KPIs are identified by and presented in Figure 7, below:
Table of Typical KPIs Financial

1. 2. 3. 4. 5. Cash flow Return on Investment Financial Result Return on Capital Employed Return on Equity 9.
Internal Business Processes

6. 7. 8. Number of Activities Opportunity success rate Accident ratios & Environment compatibility Overall equipment effectiveness
Learning and Growth

10. Investment Rate 11. Illness rate 12. Internal Promotions % 13. Employee Turnover 14. Gender Ratios
Figure 8: Typical Key Performance Indicators
28
Business Performance Management One other fairly popular method of implementation for BPM is known as Six Sigma. The I Six Sigma website defines Six Sigma as a disciplined, data-driven approach and methodology for eliminating defects (driving towards six standard deviations between the mean and the nearest specification limit) in any process from manufacturing to transactional and from product of service (Six Sigma). Initially Six Sigma was implemented by Motorola and today enjoys widespread application in many sectors of industry Six Sigma, strives for the improvement of the quality of process outputs, by identifying and removing the causes of imperfections and deviations in manufacturing and business processes employing a measurement-based strategy (Six Sigma). Every Six Sigma project initiated within an organization follows a defined sequence of steps, and has quantified and easily measurable financial targets. There a two fundamental Six Sigma methods, as defined in Figure 8 below (Six Sigma).
Figure 9: Six Sigma Methodologiesviii
For the purposes of this research project, we will look at the two methodologies mentioned above, in more detail as the discussion continues. However, Figure 9 below provides 29
Business Performance Management an idea of what BPM looks like in computer software. We can see that all areas of the BPM framework can be encompassed in computer software. This software can be represented in either BI and DSS.
Figure 10: BPM in Computer Softwareix
BI Architecture & DSS: Concepts, Methodologies and Technologies
The history of BPM has evidenced that BI is, in actuality, a primary level of BPM. Many definitions for BI exist out in the ether, review of a sample aided in providing the definition that bears merit for this research project. Turban et al, defines BI as an umbrella term that combines architectures, tools, databases, analytical tools, applications, and methodologies (Turban, Aronson, Liang, & Sharda, 2007). BI has a number of tools that aid organizations with improving their overall performance through assistance with planning, tracking, monitoring, analyzing and reporting on the business activities.. Figure 10 below, shows the components of BI architecture inclusive of the end users.
30
Figure 11: Components of Business Intelligence Architecturex
Figure 4 shows the evolutionary models of Business Intelligence; BI began with a traditional model, basically a batch process model that would normally be run on a daily or weekly basis a model that was more commonly used in payroll processing. Once processed the information is transferred to the data warehouse where reconciled and stored for access by end users of reporting systems. (Medicke, Mago, & Chen, 2003). The evolutionary process of BI continued until a closed-loop process was achieved; in the closed-loop, process of BI 31
Business Performance Management transactional data is automatically captured and integrated into the data warehouse. The data is then fed to BI tools such as OLAP or mining tools; the information produced is then fed to the decision makers in the form of recommended actions (Medicke, Mago, & Chen, 2003). This process forms a closed-loop, which affords an organization the opportunity to achieve a zero latency environment. In a zero latency environ management of organizations are able to introduce the analytics into day-to-day business operations, and reduce the time between business decision and business action (Medicke, Mago, & Chen, 2003). Figure 10 demonstrates the four major components to BI Architecture: 1. Data Warehouse where raw or source data is stored, catalogued and processed to produce reports and other end user documents. In the data warehouse environ we find many of the BI tools, such as OLAP (Turban, Aronson, Liang, & Sharda, 2007); 2. Business Analytics where end users enter the process for the second time, the data is used by management to produce reports which aid in the decision making process, employing tools such as spreadsheets, reporting and querying software, digital dashboards, data mining, and process mining (Aertsen, 2007); 3. Performance and Strategy the reporting results of business analytics brings executives and managers to BPM. This is where programs such as Balanced Scorecard, Performance Dashboards, and Six Sigma. Information from these programs aid management in the strategic management process by reporting the case of the scorecards or dashboards against Key Performance Indicators (Turban, Aronson, Liang, & Sharda, 2007).
32
Business Performance Management The fourth component, User Interface can be incorporated into either of the other three components, without the end user the BI system is just that a system without a clear purpose, if people do not use it. Turban et al, reminds us that BI Architecture is dependent on its applications which are special tools for the five styles of BI; BI styles are identified as 1. Report Delivery and Alerting; 2. Enterprise Reporting; 3. Cube Analysis; 4. .Adhoc Queries; and 5. Statistics and Data Mining. The common application areas for BI tools are general reporting, sales and marketing analysis, planning and forecasting, financial consolidation, statutory reporting, budgeting, and profitability analysis (Turban, Aronson, Liang, & Sharda, 2007). Research shows four major benefits to BI, and they are considered, intangible benefits, these are: 1. Faster, more accurate reporting, 2. Improved decision making, 3. Improved customer service, and 4. Increased revenue. (Turban, Aronson, Liang, & Sharda, 2007) BI is not the only technological method that can be employed in the implementation of BPM, Decision Support Systems (DSS) can be used as well. Decision Support System Resources defines a DSS as an interactive computer-based or subsystem intended to help decision makers use communications technologies, data, documents, knowledge and or models to identify and solve problems, complete decision process tasks, and make decisions (Decision Support System Resources). Turban et al points out that DSS can be, either an umbrella term to describe any
33
Business Performance Management computerized system that supports decision making in an organization; or, a specific application. For the purposes of this study, the former reference applies. DSS aids users/managers in compiling useful information from raw data, documents, personal knowledge, and or business models. Some examples of this information are, an
inventory of current information assets, comparative weekly sales figures, and projected revenue figures based on product sales assumptions (Pearson Prentice Hall, 2006). The scholarly text CIS 500: Information Systems for Decision Making identifies three primary components of a DSS, they are 1. Model management a software package that includes financial, statistical, management science, or other quantitative models that provide the systems analytical capabilities and appropriate software management, it can be connected to corporate or external storage of models; 2. Data management -- a database that contains relevant data for the situation and is managed by the DBMS software; and 3. Dialog management to facilitate the user interface to the DSS. (Pearson Prentice Hall, 2006) (Turban, Aronson, Liang, & Sharda, 2007) In integrating the DSS components, they can be connected to a corporate intranet, an extranet, of the internet; typically, they communicate via internet technology, and web browsers provide the user interface. Figure 5 shows us that in addition to the three primary components mentioned above, the DSS may also include: 1. Knowledge-based subsystem, 2. External Models
34
Business Performance Management 3. Mail/Collaboration Subsystem (Worldwide Excellence in Business Outsourcing, 2004). Historical research of DSS denotes that in the 1960 researchers began focusing on computerized quantitative models to assist in decision-making and planning (Power, A Brief History of Decision Support Systems, 2007). In the 1970s, articles were being published in business journals, on management decision systems, strategic planning systems, and decision support systems (Power, A Brief History of Decision Support Systems, 2007). For historical information on DSS, see Appendix A, a table on the historical timeline of DSS. Powers articles shows that in 1980 Steven Alter published his MIT doctoral dissertation , in which he stated that DSS generic operations could be categorized into seven distinct types: 1. File drawer systems, 2. Data analysis systems, 3. Analysis information systems, 4. Accounting and Financial models, 5. Representational models, 6. Optimization models, and 7. Suggestion models. The list above shows that those categories ranged from extremely data-oriented to extremely model oriented (Power, A Brief History of Decision Support Systems, 2007). In the 1980s, researchers and practitioners of DSS began developing DSS applications; these theories of DSS applications are: 1. Model-Driven DSS emphasizes access to and manipulation of financial, optimization and/or simulation models. They are simple quantitative models that
35
Business Performance Management provide the most elementary level of functionality (Power, A Brief History of Decision Support Systems, 2007). 2. Data-Driven DSS emphasizes access to and manipulation of a time-series of internal company data and sometimes external and real-time data. They are typically simple file systems accessed by query and retrieval tools that provide the most elementary level of functionality (Power, A Brief History of Decision Support Systems, 2007). 3. Communications-Driven DSS utilizes network and communications technologies to facilitate decision-relevant collaboration and communication. Communication technologies are the dominant architectural component. Tools include groupware, video conferencing and computer-based bulletin boards (Power, A Brief History of Decision Support Systems, 2007). 4. Document-Driven DSS utilizes computer storage and processing technologies to provide document retrieval and analysis. Large document databases may include scanned documents, hypertext documents, images, sounds and video. A search engine is a primary decision-aiding tool associated with a document-driven DSS (Power, A Brief History of Decision Support Systems, 2007). 5. Knowledge-Driven DSS can suggest or recommend actions to managers. These are person-computer systems with specialized problem-solving expertise, that consists of knowledge about a particular domain, understanding of problems within that domain, and skill at solving some of these problems (Power, A Brief History of Decision Support Systems, 2007).
36
Business Performance Management 6. Web-based DSS World-wide Web and global Internet provided a technology platform for further extending the capabilities and deployment of computerized decision support. A comparison of BI and DSS shows that they have very similar architecture, with one fundamental difference; BI requires a data warehouse in its structure, whereas it may be optional in a DSS architecture. This is evidenced by figures 5 and 9. On this point, alone it can be said that BI is more suitable to large organizations, however, DSS can be suitable for any type of organization (Turban, Aronson, Liang, & Sharda, 2007). The DSS structure more actively supports specific decision-making and BI systems support the decision support process indirectly by providing timely and accurate information (Turban, Aronson, Liang, & Sharda, 2007). This situation will continue to change as more decision support tools are added to BI software packages (Turban, Aronson, Liang, & Sharda, 2007). BI systems consist of commercially available tools and components that are fitted to an organizations needs (Turban, Aronson, Liang, & Sharda, 2007). In producing DSS the organization may be interested in constructing solutions to very unstructured problems; this means that the user may have to do additional programming to provide or customize solutions (Turban, Aronson, Liang, & Sharda, 2007). Most of DSS methodologies and some of its tools were produced in academia, whereas the software companies developed and marketed BI technologies and tools (Turban, Aronson, Liang, & Sharda, 2007). The biggest similarity between DSS and BI is that, many BI tools can also be considered DSS tools. An initial review shows that both DSS and BI can be employed with BPM.
37
Business Performance Management BPM in Strategic Management
All discussions of BPM tells us that in order to be effective it must begin with the organizations strategy. This brings Strategic Management into play. Strategic Management is defined as the art and science of formulating, implementing and evaluating cross-functional decisions that enable an organization to achieve its objectives (Virtual University of Pakistan). The article goes on to discuss the benefits of SM to business, the major benefits include proactively shaping the firms future, initiating and influencing action, and formulating better systematic, logical, and rational strategies (Virtual University of Pakistan). The SM process and ongoing process requires that executive management develops and revises the organizations strategy, The following are the steps to be taken in the development of an organizations strategy and or strategic plan; the steps are: 1. Develop the strategic mission and vision of the organization, 2. Set the objectives of the organization, 3. Craft a strategy to achieve the objectives set, 4. Implementing and executing the strategy set, 5. Evaluating and correcting the strategic plan and strategies where and when required. (Irwin, 1995) SM process goes through three stages, strategy formulation, strategy implementation and strategy evaluation. Once the organizations strategic plan has been developed, management must construct performance indicators to provide measurement of the SM plan for an organization. Generally, the strategy measures are knows as Key Performance Indicators (KPI).
38
Business Performance Management Once the measures or KPIs have been selected the organizations management must decide on targets for the organization, and the processes that would be help the organization to achieve its strategic goals. The organization should ensure that the human resources assets are properly trained and have received a copy of the KPIs and strategic plans of the organization. The final stage in this is the technology (Coveney, 2003). Once the organization has its business strategy and measures in place, the tools purchased should be selected to assist in achieving the strategic aims and goals of the organization (Coveney, 2003). In order to implement an effective BPM the following rules should be adhered to: 1. The BPM system should be multi-dimension, and should describe each option alone. 2. BPM should have a common set of dimensions, dimension members, business rules and data. 3. BPM systems should have built-in financial intelligence, that automatically understands the different types of measures when processing data; 4. Business rules can be assigned to measures that are able to access values in any other measure and in any other dimension and dimension member combination. This capability allows the setting up of allocation rules that based on the volume of product that was budgeted by each. 5. CPM systems understand the concept of time. First, they support financial accounting cycles of any length Next, a CPM model can hold data for any length of time both in the past and in future years, to enable historical comparisons and trend analysis
39
Business Performance Management 6. CPM systems consist of functionality that manage and support the core CPM processes of strategy formulation, scenario analysis, tactical planning, budgeting, communication, monitoring, forecasting, and reporting. 7. The amount of data available today for making decisions is growing at an enormous rate. Left unassisted in this environment, users can waste time looking for exceptions that do not exist or that cannot be found because they are buried within a sea of data. 8. CPM systems are built around a central database to which everyone attaches. The technology used in these databases can be multidimensional, relational or a hybrid of both. Each has unique characteristics and needs to be carefully chosen to match the organization's requirements. 9. CPM systems employ a web architecture that allows simple, intuitive access that is independent of machine, location or the technology being used. A web architecture means more than just accessing the system via a web browser (Coveney, 2003). In addition to utilizing the 10 rules above, the organization can implement performance dashboards or scorecards to help with achieving the strategic goals of the organization (Vasiliu, 2006). Vasiliu defines dashboard as a style of interactive user interface designed to deliver userspecific information relating to the health of the business, typically represented by KPIs and links to relevant reports. Dashboards allow users to view and focus on the financial and operational information of the organization, which allows the user to answer the question Why did I miss my goal? (Vasiliu, 2006).
40
Business Performance Management With the introduction of scorecards represent the center point of a strategy management system (Vasiliu, 2006); users are now able to see KPIs in groupings relevant to individuals, departments, business units, or strategic objectives, focusing on future, strategic business goals (Vasiliu, 2006). Scorecards allow the user to view and measure the long-term and short-term goals, incorporating corporate and industry performance benchmarks and risk factors (Vasiliu, 2006). As part of the Strategy Management system, scorecards enable organizations to improve processes and reduce costs by: 1. Aligning strategy, plans, targets, and forecasts by creating a consolidated, strategic view of existing data 2. Communicating the strategy, improving the collaboration and management process in general, and creating a dynamic and effective environment that supports initiatives 3. Driving execution through accountability and performance measurement (Vasiliu, 2006). Both scorecards and dashboards are major components in the BI implementation, analysis and reporting processes of a BPM system. Current global economic pressures, of increase regulation and demanding investors, force businesses to demonstrate significant control of all aspects of corporate performance (Alenchery, 2005). Many of the pressures have materialized in the form of legislature and accounting standards, such as Sarbanes-Oxley Act in the USA and the new International Accounting Standards in Europe, both of which demand increased accountability at all levels of the organization (Alenchery, 2005). Technology and the globalization of business has resulted in increased competition, and more complex corporate structures, as such organizations have been forced to reexamine their
41
Business Performance Management management processes (Alenchery, 2005). Thus management must reexamine the Corporate Management Cycle. Figure 9 evidences, to achieve a competitive advantage management must: 1. Define and plan -- formulate corporate strategy and objectives, 2. Align and execute design a strategy to achieve the corporate objectives, 3. Measure and analyze evaluate performance against KPIs, and 4. Review and refine assess performance and provide feedback to the strategy formulation team, for refinement of the business strategies and objectives. (Alenchery, 2005)
Comment [RAM4]: More research is needed in this section.
42
Chapter 4: Summary and Conclusion Summary
In todays world of high stakes deals, advanced technology, world recession, collapsing banking industry, and accounting scandals, companies small and large are obliged to understand and manage their funds/accounts to maintain successful business performance. There have been a number of financial scandals over the past three decades; the new decade has brought with it some more notable scandals. Between 2000 and 2009 there were a total of 35 notable accounting scandals. Some of the more notorious accounting scandals include ENRON, WorldCom, and AIG in the United States; and from Italy, Parmalat. These incidents have had far-reaching ripple effects on the business community at large, as well as, more directly on the accounting industry. The recent banking scandals have resulted in a collapse of the banking industry, and increased the pace of the world recession, as they occurred some of the major world financial centers. The collapse of the banking industry has pointed out that many unscrupulous practices were being conducted in the business community by executives with little care for the common investor, and the continuity and success of the business or corporation. As a result of these scandals, the world has seen business reactions such as, declaration of bankruptcy, wind-up of business, and large governmental bailouts. There have also been criminal prosecution of executives and management officers of businesses, some resulting in jail time and or financial fines. On an industry basis a total overhaul and reform of legislation regulating Corporate Governance, Accounting Standards and Procedures, and the US Securities Exchange
43
Business Performance Management Commission procedures have come into effect. The question that must now be ask is this, how, in this period of recovery and restructuring for business will Business Performance Management (BPM) play a role in the Strategic Management and Decision Making processes in business. Review of the information presented in chapter 3, the researchers sees that both DSS and BI can be used along with BPM. However, not all organizations can use BI. BI is a costly investment and is better suited to large organizations. BI systems require a data-warehousing module, which can be costly to develop or purchase. Whereas DSS does not require a data warehouse module, even though it can be implemented and included this makes DSS accessible to all types of organizations. In establishing a BPM system in and organization, Balanced Scorecards and Performance Dashboards, have proven to be the most useful tools to and organization in helping the organization achieve its strategy. Both tools use KPIs for the measurement and analysis processes; both performance dashboards and balanced scorecards are employed in BI and DSS. In todays trying economic climate executives should be looking at or revisiting the organizations strategy. Once a new strategy has been determined, management should revise the KPIs to ensure that they are in-line with the current corporate or organizational strategy. One important and crucial advantage of BPM software, is its forging a collaboration between IT and business strategists to drive organizational success (Vernon, 2005). The BPM helps to align the goals of IT with those of the business strategists. For the banking industry, this could mean the rejuvenation of cooperation will reap greater benefits than simply successful BPM projects. BPM projects evidencing a BI foundation and strong data warehousing, have proven very successful (Eckerson, 2004). The benefits and reasons for organizations implementing BPM with a BI foundation, as identified by Eckerson, are:
44
Business Performance Management 1. Greater visibility into the business; 2. Better execution of strategy; 3. More efficient processes; 4. Faster reaction to events; 5. Better strategic planning; 6. Single version of the truth; 7. Better coordination among groups; 8. Revenue and customer growth; and 9. New regulations (Eckerson, 2004). Tools for BI are extensive, as well as vendors of these tools. Some vendors of BI tools include, IBM, Microsoft, A3 Solutions, Hyperion Systems, and Oracle, just to name a few. These vendors, and other produce software tools in both the financial and non-financial areas of BI, and by extension BPM.
Comment [RAM5]: This is much to brief of a summary for your document.
45
Conclusion The researcher has seen that BI has become synonymous with BPM. Even though DSS is a popular tool it does not incorporate the IT department to the same extent that BI does. The researcher has found that BI is an advanced level of BI. The more successful implementations of BPM, are heavily integrated with a strong data warehouse and BI background. The dashboards and scorecards, will allow businesses, in the current economic environment, to control the costs and performances. The following benefits are available to those organizations that implement BPM based on BI:
1. Strategy, accountability, and cause-and-effect maps that visualize the objectives and actions, and identify inefficiencies 2. Overview of enterprise-wide initiatives, prioritized and ranked based on current corporate strategy, tied into costing and timelines 3. Communication and collaboration tools to support flawless execution E-mail alerts on scorecards, initiatives, and measures Discussion threads, notes, annotations, attachments, and comments 4. Executive Views to summarize the status in a simple, easy-to-use interface. We must not forget that key to this is the IT department of the organization; without collaboration between Information Technology and business strategists, costs could get out of hand and the implementation could fail. Information Technology is critical to the implementation as it standardizes on a single BPM platform, interact with all systems in the organization, and provide managers with up-to-date information from all aspects of the organization. As more companies use BPM in achieving their strategic goals, the business community may have fewer 46
Business Performance Management scandals and the business can survive the recent economic downturn, and strengthen their performance.
Comment [RAM6]: This is not a complete conclusion. A conclusion is a recp of the body of your research this is brief and inconclusive.
47
References Aertsen, J. (2007, April 30). Translating business strategy to BI strategy. Retrieved June 7, 2009, from kJube Business Intelligence website: http://www.kjube.be/oldsite/bi_strategy.html Alenchery, J. J. (2005). Corporate Performance Management (CPM) based on best principles. Infosys Technologies Limited. Azvine, B., Cui, Z., & Nauck, D. D. (2005). Towards Real Time Business Intelligence. BT Technology Journal , Vol 23 (No. 3), 214-225. Balanced Scorecard Institute. (1998-2009). About the Balanced Scorecard. Retrieved June 14, 2009, from Balanced Scorecard Institute website: http://www.balancedscorecard.org/BSCResources/AbouttheBalancedScorecard/tabid/55/D efault.aspx Callaghan, D. (2004, September 30). BPM Standards Group Releases Framework. Retrieved May 16, 2009, from EWeek Ezine Website: http://www.eweek.com/c/a/EnterpriseApplications/BPM-Standards-Group-Releases-Framework/ Coveney, M. (2003, February 10). Corporate Performance Management (CPM): What it is and how it differs from traditional approaches? Retrieved June 7, 2009, from Business Forum Website: http://www.businessforum.com/Comshare01.html Decision Support System Resources. (n.d.). Decision Support System Resources. Retrieved June 14, 2009, from DSS Resources Website: http://dssresources.com/ (2006). Decision Support Systems. In CIS 500: Information Systems for Decision Making (p. 213=214). New Jersey: Prentice-Hall, Inc.
48
Business Performance Management Eckerson, W. (2004, May 17). Best Practices in Business Performance Management: Business and Technical Strategies. Retrieved May 26, 2009, from What Works - TDWI website: http://www.tdwi.org/research/display.aspx?ID=7105 General Electric. (n.d.). Our Company: What is Six Sigma? Retrieved June 7, 2009, from General Electric Corporation Website: http://www.ge.com/en/company/companyinfo/quality/whatis.htm Hickman, B. (2003). Bridging the IT Credibility Gap. Matrix Essentials , VII (2), 1-6. Irwin, R. D. (1995). Principle of Strategic Management. Retrieved June 7, 2009, from http://www.csuchico.edu/mgmt/strategy/module1/ Medicke, J., Mago, M., & Chen, F.-W. (2003, November 20). Create an intelligent and flexible solution with BPM, Business Rules, and Business Intelligence: Data warehouse visibility. Retrieved May 24, 2009, from IBM website: http://www.ibm.com/developerworks/db2/library/techarticle/dm-0311chen/index.html Pearson Prentice Hall. (2006). Managerial Support Systems. In P. P. Hall, CIS 500: Information Systems for Decision Making (pp. 213-288). Saddle River: Pearson Custom Publishing. Power, D. J. (2007, March 10). A Brief History of Decision Support Systems. Retrieved April 27, 2009, from DSSResources.com, World Wide Web: http://DSSResources.COM/history/dsshistory.html Power, D. J. (1997, October 21). What is a Decision Support System? Retrieved June 14, 2009, from Decision Support System Resources website: http://dssresources.com/papers/whatisadss/index.html
49
Business Performance Management Riverside, J. (n.d.). History of Corporate Performance Management. Retrieved May 5, 2009, from Ezine Articles Website: http://ezinearticles.com/?History-of-Corporate-PerformanceManagement&id=352957 Search Data Management. (2008, September 23). What is Corporate Performance Management. Retrieved June 7, 2009, from Searchdatamanagement.techtarget.com: http://searchdatamanagement.techtarget.com/sDefinition/0,,sid91_gci1218615,00.html Six Sigma. (n.d.). What is Six Sigma? Retrieved June 7, 2009, from ISixSigma.com: http://www.isixsigma.com/sixsigma/six_sigma.asp Turban, E., Aronson, J. E., Liang, T.-P., & Sharda, R. (2007). Decision Support and Business Intelligence Systems. Upper Saddle River: Pearson Prentice Hall. Vasiliu, A. (2006, April 30). Dashboards and Scorecards: Linking Management Reporting to Execution. Retrieved June 5, 2009, from DSSResources.com: http://www.dssresources.com/papers/features/vasiliu/vasiliu04302006.html Vernon, M. (2005, April 5). Business Performance Management (BPM): The missing link between IT projects and business strategy? Retrieved June 7, 2009, from BNet Business Network: TechRepublic.com: http://articles.techrepublic.com.com/5100-10878_115653733.html Virtual University of Pakistan. (n.d.). Strategic Management. Retrieved June 7, 2009, from Scribd.com: http://www.scribd.com/doc/2516371/Strategic-Management Worldwide Excellence in Business Outsourcing. (2004, January 30). Decision Support Systems' Components. Retrieved May 31, 2009, from Atwebo.com: http://www.atwebo.com/dss_components.htm
50
51
Business Performance Management Appendix A

DSS Timeline
Year
1945 1947 1952 1955 1956 1960 1962 1963 1965 1966 1967
Major Milestones
Bush proposed Memex Simon book titled Administrative Behavior Dantzig joined RAND and continued research on linear programming Semiautomatic Ground Environment (SAGE) project at M.I.T. Lincoln Lab uses first light pen; SAGE completed 1962, first data-driven DSS Forrester started System Dynamics Group at the M.I.T. Sloan School Simon book The New Science of Management Decision; Licklider article on Man-Computer Symbiosis Licklider architect of Project MAC program at M.I.T.; Iversons book A Programming Language (APL); Engelbart's paper "Augmenting Human Intellect: A Conceptual Framework" Englebart established Augmentation Research Center at SRI Stanford team led by Feigenbaum created DENDRAL expert system; Problem Statement Language/Problem Statement Analyzer (PSL/PSA) developed at Case Institute of Technology UNIVAC 494 introduced; Tymshare founded and Raymond article on computer time-sharing for business planning and budgeting Scott Mortons dissertation completed on impact of computer-driven visual display devices on management decision-making process; Turban reports national survey on use of mathematical models in plant maintenance decision making Scott Morton and McCosh article; Scott Morton and Stephens article; Englebart demonstrated hypermediagroupware system NLS (oNLine System) at Fall Joint Computer Conference in San Francisco Ferguson and Jones article on lab study of a production scheduling computeraided decision system running on an IBM 7094; Little and Lodish MEDIAC, media planning model; Urban new product model-based system called SPRINTER Little article on decision calculus support system; Joyner and Tunstall article on Conference Coordinator computer software; IRI Express, a multidimensional analytic tool for time-sharing systems, becomes available; Turoff conferencing system Gorry and Scott Morton SMR article first published use of term Decision Support System; Scott Morton book Management Decision Systems; Gerrity article Man-Machine decision systems; Klein and Tixier article on SCARABEE PLATO Notes, written at the Computer-based Education Research Laboratory (CERL) at the University of Illinois by David R. Woolley Daviss book Management Information Systems; Meador and Ness article DSS application to corporate planning Alter completed M.I.T. Ph.D. dissertation "A Study of Computer Aided Decision Making in Organizations"; Keen SMR article on evaluating computer-based decision aids; Boulden book on computer-assisted planning systems Sprague and Watson article "A Decision Support System for Banks"; Grace paper on Geodata Analysis and Display System Alter article "A Taxonomy of Decision Support Systems", Klein article on Finsim; Carlson and Scott Morton chair ACM SIGBDP Conference DSS Conference
1968 1969
1970
1971
1973 1974 1975
1976 1977
52

1978 Development began on Management Information and Decision Support (MIDS) at Lockheed-Georgia; Keen and Scott Morton book; McCosh and Scott Morton book; Holsapple dissertation completed; Wagner founded Execucom to market IFPS; Bricklin and Frankston created Visicalc (Visible Calculator) microcomputer spreadsheet; Carlson from IBM, San Jose plenary speaker at HICSS-11; Swanson and Culnan article document-based systems for management planning Rockart HBR article on CEO data needs Sprague MISQ article on a DSS Framework; Alter book; Hackathorn founded MicroDecisionware First International Conference on DSS, Atlanta, Georgia; Bonczek, Holsapple, and Whinston book; Gray paper on SMU decision rooms and GDSS Computer named the Man of the Year by Time Magazine; Rockart and Treacy article The CEO Goes On-Line HBR; Sprague and Carlson book; Metaphor Computer Systems founded by Kimball and others from Xerox PARC; ESRI launched its first commercial GIS software called ARC/INFO; IFIP Working Group 8.3 on Decision Support Systems established Inmon Computerworld article on relational DBMS; IBM DB2 Decision Support database released; Student Guide to IFPS by Gray; Huntington established Exsys; Expert Choice software released PLEXSYS, Mindsight and SAMM GDSS; first Teradata computer with relational database management system shipped to customers Wells Fargo and AT&T; MYCIN expert system shell explained Procter & Gamble use first data mart from Metaphor to analyze data from checkout-counter scanners; Whinston founded Decision Support Systems journal; Kersten developed NEGO Houdeshel and Watson article on MIDS; DeSanctis and Gallupe article on GDSS; Frontline Systems founded by Fylstra, marketed solver add-in for Excel Turban DSS textbook; Pilot Software EIS for Balanced Scorecard deployed at Analog Devices Gartner analyst Dresner coins term business intelligence; release of Lotus Notes; International Society for Decision Support Systems (ISDSS) founded by Holsapple and Whinston Inmon book Using Oracle to Build Decision Support Systems; Eom and Lee co-citation analysis of DSS research 19711988 Inmon books Building the Data Warehouse and Database Machines and Decision Support Systems; Berners-Lees World Wide Web server and browser, become publicly available Codd et al. paper defines online analytical processing (OLAP) HTML 2.0 with form tags and tables; Pendses OLAP Report project began The Data Warehousing Institute (TDWI) established; DSS journal issue on Next Generation of Decision Support; Crossland, Wynne, and Perkins article on Spatial DSS; ISWorld DSS Research pages and DSS Research Resources InterNeg negotiation software renamed Inspire; OLAPReport.com established; Wal-Mart and Teradata created then worlds largest production data warehouse at 24 Terabytes (TB) ACM First International Workshop on Data Warehousing and OLAP DSSResources.com domain name registered First AIS Americas Conference mini-track on Decision Support Systems Association for Information Systems (AIS) Special Interest Group on Decision Support, Knowledge and Data Management Systems (SIG DSS) founded International Society for Decision Support Systems (ISDSS) merged with AIS SIG DSS
1979 1980 1981 1982
1983 1984 1985 1987 1988 1989 1990 1991 1993 1994 1995 1996 1997 1998 1999 2000 2001 2003
53
Business Performance Management Appendix B Typical Key Performance Measures Financial Cash flow Return of Investment Financial result Return on capital employed Return on equity Internal Business Processes Number of activities Opportunity success rate Accident ratios & Environment compatibility Overall equipment effectiveness Learning and Growth Investment Rate Illness rate Internal Promotions % Employee Turnover Gender Ratios
54
Business Performance Management Figure Captions Figure 1: Figure 2: Figure 3: Figure 4: Figure 5: Figure 6: Figure 7: Figure 8: Figure 9: Figure 10: Figure 11: BPM Closed-Loop Processes Balanced Scorecard Perspectives Key Performance Metrics Evolution of BI Decision Support System - Conceptual Model The Evolution of Managing Performance Typical Key Performance Indicators BPM in Computer Software Components of Business Intelligence Architecture BPM in Computer Software Components of Business Intelligence Architecture
Comment [RAM7]: You cannot list these twice You have already listed these figures in the body of your text Please omit this entire section.
Figure 1: BPM Closed-Loop ProcessesFigure 1: BPM Closed-Loop ProcessesFigure 1: BPM Closed-Loop Processes
Formatted: Font: Not Bold Formatted: Font: Times, Not Bold, Not Italic
Figure 2: The Performance Management CycleFigure 2: The Performance Management CycleFigure 2: The Performance Management Cycle
Figure 3: Balanced Scorecard PerspectivesFigure 3: Balanced Scorecard PerspectivesFigure 3: Balanced Scorecard Perspectives
Figure 4: Key Performance MetricsFigure 4: Key Performance MetricsFigure 4: Key Performance Metrics
Formatted: Font: Not Bold Formatted: Font: Not Bold, Not Italic
Figure 5: Evolution of BIFigure 5: Evolution of BIFigure 5: Evolution of BI
Figure 6: Decision Support System - Conceptual ModelFigure 6: Decision Support System Conceptual ModelFigure 6: Decision Support System - Conceptual Model 3
Figure 7: The Evolution of Managing PerformanceFigure 7: The Evolution of Managing PerformanceFigure 7: The Evolution of Managing Performance
Table of Typical KPIs Financial

15. Cash flow 16. Return on Investment 17. Financial Result 18. Return on Capital Employed 19. Return on Equity
Internal Business Processes

20. Number of Activities 21. Opportunity success rate 22. Accident ratios & Environment compatibility 23. Overall equipment effectiveness
Learning and Growth

24. Investment Rate 25. Illness rate 26. Internal Promotions % 27. Employee Turnover 28. Gender Ratios
Formatted: Font: Not Bold Formatted: Font: Not Bold, Not Italic
Figure 8: Typical Key Performance IndicatorsFigure 8: Typical Key Performance IndicatorsFigure 8: Typical Key Performance Indicators
Figure 9: Six Sigma MethodologiesFigure 9: Six Sigma MethodologiesFigure 9: Six Sigma Methodologies
Figure 10: BPM in Computer SoftwareFigure 10: BPM in Computer SoftwareFigure 10: BPM in Computer Software
Figure 11: Components of Business Intelligence ArchitectureFigure 11: Components of Business Intelligence ArchitectureFigure 11: Components of Business Intelligence Architecture
Figure 1Figure 1Figure 1: BPM Closed-Loop Process taken from http://www.tdwi.org/images/ww17/BPMframework.gif

ii
Formatted: Font: Not Bold Formatted: Font: Times New Roman, Not Bold Formatted: Font: Not Bold Formatted: Font: 10 pt, Not Bold
Figure 2Figure 2Figure 2: The Performance Management Cycle taken from Infosys Technologies Limited March 2005
iii
Figure 3Figure 3Figure 3: Balanced Scorecard Perspectives taken from http://www.learn.com/files/images/products/Balanced_Scorecard2.gif

iv
Figure 4Figure 4Figure 4: Key Performance Metrics taken from http://www.rlmagazine.com/img/metrics-chart.jpg
Figure 5Figure 5Figure 5: Evolution of BI taken from http://www.ibm.com/developerworks/db2/library/techarticle/dm-0311chen/index.html

vi
Figure 6Figure 6Figure 6: Decision Support Systems Conceptual Model taken from http://elearning.dmst.aueb.gr/mis/Cases/Nederlandse_Spoorwegen/Case/Training_Files/27_.jpg
vii
Figure 7Figure 7Figure 7: The Evolution of Managing Performance taken from http://www.businessforum.com/Comshare01.html
viii
Figure 8Figure 8Figure 9: Six Sigma Methodologies taken from http://qualityconsulting.wipro.com/images/sixsigma.jpg

ix
Figure 9Figure 9Figure 10: Components of Business Intelligence Architecture taken from http://www.kjube.be/oldsite/bi_architecture_pic.html
x
Formatted: Font: Not Bold Formatted: Font: 10 pt, Not Bold Formatted: Font: Times, 10 pt Formatted: Font: 10 pt
Figure 11: - Components of Business Intelligence ArchitectureComponents of Business Intelligence ArchitectureComponents of Business Intelligence Architecture taken from http://www.kjube.be/oldsite/bi_architecture_pic.html

Malcolm - BPM Research Proposal - CMalcolm

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Malcolm - BPM Research Proposal - CMalcolm

Uploaded by

Copyright:

Available Formats

Business Performance Management BUSINESS PERFORMANCE MANAGEMENT: HOW BPM CAN ASSIST MANAGEMENT IN MAINTAINING AND IMPROVING BUSINESS

PERFORMANCE LEVELS IN THE CURRENT FINANCIAL CLIMATE.

Business Performance Management

Business Performance Management

Business Performance Management

Business Performance Management

Business Performance Management

Business Performance Management Chapter 1: Introduction Context of the Problem

The Statement of the Problem

Business Performance Management The Sub-problems

Significance of the Study

Research Design and Methodology

Organization of the Study

Tentative Reference List

Business Performance Management

Business Performance Management

Business Performance Management

Business Performance Management

Figure 1: BPM Closed-Loop Processes

Business Performance Management

Figure 2: The Performance Management Cycleii

Business Performance Management

Figure 3: Balanced Scorecard Perspectivesiii

Figure 4: Key Performance Metricsiv

Business Performance Management Business Intelligence

Figure 5: Evolution of BIv

Decision Support Systems

Figure 6: Decision Support System - Conceptual Modelvi

Business Performance Management

Chapter 3: BPM, BI, and or DSS in Strategic Management Introduction

Business Performance Management: Its History, Concepts and Methodologies.

Business Performance Management

Figure 7: The Evolution of Managing Performance vii

Table of Typical KPIs Financial

Internal Business Processes

Learning and Growth

Figure 8: Typical Key Performance Indicators

Figure 9: Six Sigma Methodologiesviii

Figure 10: BPM in Computer Softwareix

BI Architecture & DSS: Concepts, Methodologies and Technologies

Business Performance Management

Figure 11: Components of Business Intelligence Architecturex

Business Performance Management BPM in Strategic Management

Business Performance Management

Chapter 4: Summary and Conclusion Summary

Business Performance Management

Business Performance Management

Business Performance Management

Business Performance Management Appendix A

1973 1974 1975

Business Performance Management

1979 1980 1981 1982

Figure 5: Evolution of BIFigure 5: Evolution of BIFigure 5: Evolution of BI

Table of Typical KPIs Financial

Internal Business Processes

Learning and Growth

Figure 1Figure 1Figure 1: BPM Closed-Loop Process taken from http://www.tdwi.org/images/ww17/BPMframework.gif

Figure 3Figure 3Figure 3: Balanced Scorecard Perspectives taken from http://www.learn.com/files/images/products/Balanced_Scorecard2.gif

Figure 4Figure 4Figure 4: Key Performance Metrics taken from http://www.rlmagazine.com/img/metrics-chart.jpg

Figure 5Figure 5Figure 5: Evolution of BI taken from http://www.ibm.com/developerworks/db2/library/techarticle/dm-0311chen/index.html

Figure 8Figure 8Figure 9: Six Sigma Methodologies taken from http://qualityconsulting.wipro.com/images/sixsigma.jpg

You might also like