IT departments in today’s enterprises are being squeezed by three important pressures from the business:
Internet business activities have real-time requirements that are crucial factors in maintaining customer loyalty, in supporting business partners, and in managing key business processes.
The constant pressure exerted by globalization means that any competitor—whether local, domestic, or abroad—poses a threat. As a result, organizations must compete effectively on service and product quality, responsiveness, and price—often, all three at once.
Integration with partners adds additional pressure for business efficiency. Companies that are part of a supply chain no longer have the luxury of improving business processes at their own pace. Because of the integration with systems belonging to partners and customers, operations must be performed as quickly as the external systems require.
To compete, businesses must be more efficient than ever, and the focus on efficiency must remain an ongoing priority. All competitors will be constantly upgrading their own abilities to run processes optimally in the context of changing market conditions.
One of the principal solutions to the need for optimized business processes has been the use of business intelligence (BI) and business process management (BPM). BI helps companies identify key events and developments in different areas of operations, while BPM enables companies to streamline their business processes. Done right, BPM increases efficiency and effectiveness—including the appropriate handling of exceptional events.
BI and BPM are frequently combined with business rules management systems (BRMSs), which perform analysis and help coordinate processes. BRMSs also provide complex decision making—that is, the ability to automate decision making on the basis of extensive sets of rules and constraints.
Figure 1: The IBPP stack
Source: PricewaterhouseCoopers, 2008
Taken together, the three technologies of BI, BPM, and the BRMS must be integrated with each other by an intelligent business performance platform (IBPP) and atop the enterprise IT infrastructure, as shown in Figure 1. Often, however, enterprises implement only some of the technologies and grow organically toward the adoption of the others, as needs dictate.
As Figure 1 shows, the IT infrastructure is the foundation for intelligent business performance applications. The IT infrastructure provides access
to information about business processes and outcomes. Enterprise Web applications, for example, provide necessary information for business
intelligence applications.
Distinguishing characteristics of IBPP
IBPP technologies have a set of common characteristics that define their role in the enterprise. Most often, they help organizations achieve better business processes. These characteristics include:
Better use of real-time data from business processes. These technologies use monitoring tools that watch business activities, compare performance against established thresholds and targets, and identify exceptional events. Real-time data can result from the minimal monitoring of performance parameters or from highly complex analysis that looks for meaningful patterns in enterprise data.
Reporting of the real-time data in user-friendly presentations such as portals or, more frequently, executive dashboards. These tools are designed to have straightforward top-level interfaces, so that users can tell at a glance the general state of a
given process.
Managers review the real-time data and regular reports to further optimize a process and enhance responsiveness. Organizations strive to establish a cycle of process optimization followed by monitoring and a new round of optimization.
When successful, an organization’s ability to execute this optimization cycle on a consistent basis will be a defining competitive advantage.
Implementation of IBPP processes as a series of loosely coupled, highly configurable services using common semantics. Taken together, they form a complete and efficient business process.
To achieve the component modularity as well as the needed integration, the business activities are implemented as Web services.
Usually, the IBPP architecture is service oriented. This is not an absolute requirement; however, the IBPP design works best when rigid, proprietary, command-and-control workflows are migrated to flexible, open, standards-based Web services.
These changes represent a significant shift for many organizations. Fortunately, BPM and BI technologies can be implemented slowly. They are not rip-and-replace solutions but approaches that can be added incrementally to an IT infrastructure and serve as targets for the migration of existing business processes at a pace determined by the company’s need for business process efficiency.
The focus on business performance is fostering the creation of a new management position: chief performance officer (CPO). The CPO is in charge of consolidating, analyzing, and presenting analyses to senior management and to the board regarding the current state of companywide operations and identifying where performance deviates from expectations and from industry benchmarks. In addition, the CPO has responsibility for designing
and helping implement key performance indicators
for a given business within the context of a specific industry.
Whether companies go so far as to set up a corporate performance office and appoint a CPO, they will need professional managers trained in the use of performance metrics to analyze the data and to recognize how the data tracks to specific events in the business processes. To do this, companies will first need to have good IBPP tools in place.
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Whether companies go so far as to set up a corporate performance office and appoint a CPO, they will need professional managers trained in the use of performance metrics to analyze the data and to recognize how the data tracks to specific events in the business processes. To do this, companies will first need to have good IBPP tools in place.
