Piyush Verma

Business Performance Management: BPM

It is an integrated set of processes, methodologies, metrics, and applications designed to
drive the overall financial and operational performance of an enterprise. It helps
enterprises translate their strategies and objectives into plans, monitor performance
against those plans, analyse variations between actual results and planned results, and
adjust their objectives and actions in response to this analysis.
The term Business Performance Management (BPM) refers to the business processes,
methodologies, metrics and technologies used by enterprises to measure, monitor and
manage business performance. It encompasses three key components:
1. A set of integrated, closed loop management and analytic processes, supported by
technology that addresses financial as well as operational activities.
2. Tools for businesses to define strategic goals and then measure and manage
performance against those goals.
3. A core set of processes including financial and operational planning, consolidation
and reporting, modelling, analysis and monitoring of key performance indications
(KPIs) linked to organizational strategy.
BPM and BI Compared
BPM is an outgrowth of BI.
BI describes the technology used to access, analyse and report on data relevant to an
enterprise. It encompasses a wide spectrum of software, including ad hoc querying,
reporting, OLAP, dashboards, scoreboards, search, visualization, and more. These
software products started as stand-alone tools but BI software vendors have
incorporated them into their BI suites.
BPM has been characterized as “BI + Planning” that means BPM is the convergence of BI
and planning on a unified platform – the cycle of plan, monitor and analyse. The processes
that BPM encompasses are not new. Virtually every medium and large organization has
processes in place (budgets, detailed plans, execution and measurement) that feedback
to the overall strategic plan as well as the operational plans.
 Piyush Verma

The major processes to achieve the optimum performance are:

1. Strategize: Setting goals and objective. (Where do we want to go?)
2. Plan: Establish initiatives and plans to achieve those goals. (How do we get there?)
3. Monitor: Monitoring actual performance against the goals and objectives. (How
are we doing?)
4. Act and Adjust: Taking corrective actions. (What do we need to do differently?)
BPM Methodologies
An effective performance measurement system should help do the following:

 Align top-level strategic objective and bottom-level initiatives

 Identify opportunities and problems in a timely fashion
 Determine priorities and allocate resources based on those priorities
 Change measurements when the underlying processes and strategies change
 Delineate responsibilities, understand actual performance relative to
responsibilities and reward and recognize accomplishments
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 Take action to improve processes and procedures when the data warrant it
 Plan and forecast in a more reliable and timely fashion
There are two widely used approaches that support the basic processes of BPM. They are:
1. Balanced Scorecard (BSC) : Translating Strategy into Action for performance
management system
2. Six Sigma: It is a performance management methodology aimed at reducing the
number of defects in a business process to as close to zero defects per million
opportunities (DPMO) as possible.
BPM Applications
 Strategy Management
 Budgeting, planning and forecasting
 Financial Consolidation
 Profitability modelling and optimization
 Financial, statutory and management reporting
 And so on….

Neural Networks
Neural network have emerged as advanced data mining tools in cases where other
techniques may not produce satisfactory solutions. As the term implies, neural networks
have a biologically inspired modelling capability (brain) for information processing.
Neural networks have been shown to be very promising computational systems in many
forecasting and business classification applications due to their ability to learn from the
data, their nonparametric nature (i.e. no rigid assumptions) and their ability to
generalize. Neural computing refers to a pattern recognition methodology for machine
learning. The resulting model from neural computing is often called as artificial neural
network (ANN) or a neural network. Neural network computing is a key component of
any data mining tool kit. Application of neural networks abound in finance, marketing,
manufacturing, operations management, information systems, social behaviour analysis
and so on.
Customer Relation Management (CRM)
It is the new and emerging extension of traditional marketing. The goal of CRM is to create
one to one relationships with customers by developing an intimate understanding of their
needs and wants. As business build relationships with their customers over time through
a variety of transactions (product, inquiries, sales service requests, warranty), they
accumulate tremendous amount of data. When combined with others terms, this
information rich data can be used to:
1. Identify most likely responders/buyers of new product/services (i.e. customer
profiling)
2. Understand the root causes of customer attrition in order to improve customer
retention (i.e. churn analysis)
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3. Discover time variant associations between products and services to maximize

sales and customer value
4. Identify the most profitable customers and their preferential needs to strengthen
relationships and to maximize sales.