Business performance management (BPM) is a key business initiative that enables companies to align strategic and operational objectives with business activities in order to fully manage performance through better informed decision making and action. EffecBusiness Performance Management (BPM), Business Intelligence (BI), business processes, strategy, integration

Albescu Felicia

Babeanu Delia

Pugna Irina Bogdana

English

Research Papers in Economics

1025 
THE ROLE OF BUSINESS INTELLIGENCE IN BUSINESS PERFORMANCE MANAGEMENT 
 
Pugna Irina Bogdana  
Academia  de  Studii  Economice  Facultatea  de  Contabilitate  si  Informatica  de  gestiune  Piata  Romana  nr  6 
Bucuresti, irina_bogdana@yahoo.com , tel : 0742483841 
Albescu Felicia  
Academia  de  Studii  Economice  Facultatea  de  Contabilitate  si  Informatica  de  gestiune  Piata  Romana  nr  6 
Bucuresti albescu@inde.ro tel: 0723581942 
Babeanu Delia  
Academia  de  Studii  Economice  Facultatea  de  Contabilitate  si  Informatica  de  gestiune  Piata  Romana  nr  6 
Bucuresti delia.del@gmail.com tel:0726175137 
 
Business performance management (BPM) is a key business initiative that enables companies to align strategic and 
operational  objectives  with  business  activities  in  order  to  fully  manage  performance  through  better  informed 
decision making and action. Effective business performance requires an organization to model and monitor not 
only its tactics but also its strategies and the assumption on which these strategies are built.   
The aim of this paper is to examine the processes, methodologies and technologies underlying BPM, the relation 
between  BPM  and  business  intelligence,  and  to  propose  a  framework  for  integrating  corporate  performance 
management and business intelligence in a holistic approach of managing business performance. 
 
Keywords: Business Performance Management (BPM), Business Intelligence (BI), business processes, strategy, 
integration 
Code JEL:M21 
 
Introduction 
During the last years, companies have understood the importance of enforcing achievement of the goals defined by 
their strategy through metrics-driven management.  
Finance  organizations  have  vast  technology  assets  to  assist  them  with  day-to-day  operations,  regulatory 
compliance, and financial reporting. Such systems record transactions and manage operational processes, automate 
compliance and controls, and roll up financial performance data. To varying degrees, these systems populate data 
warehouses (DW) that are exploited by advanced business intelligence (BI) systems. The DW process, though 
supporting bottom-up extraction of information from data, fails in top-down enforcing the company strategy.  The 
missing element — one that finance and IT teams are now pursuing — is the integration of these systems into a 
unified source of performance information and analysis capability. 
Early adopters of business performance management have focused on making the finance function more strategic – 
mainly because people have tended to trust data coming out of a financial system  more than other corporate 
systems, such as ERP or CRM. Almost every major business function has a performance management element that 
can be realized. To enable this requires organizations to put in place the right data platform and source data and 
ensure that strategic thinking is driven by the wider needs of the business. Nowadays, organizations of all shapes, 
sizes and markets are under pressure to conform to increased regulatory compliance pressures and have a need to 
link corporate performance to the decision-making process. BPM can be the right answer – leveraging what you 
already have and aligning the various aspects to move in the same direction.  It helps organizations translate their 
strategies and objectives into plans, monitor performance against those plans, analyze variations between actual 
results and planned results, and adjust their objectives and actions in response to this analysis.  
In  the  business  literature,  performance  management  has  a  number  of  names,  including  BPM,  corporate 
performance  management  (CPM),  enterprise  performance  management  (EPM),  and  strategic  enterprise 
management  (SEM).  Although  different  terms  are  used,  they  all  mean  essentially  the  same  thing.  The  BPM 
Standards Group (2005) has defined BPM 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”.  
 
1. Business information technologies  
Business Information Technologies are seen as cutting edge Information Technologies made on purpose to support 
business information engineering. Management methods, techniques and support tools could be seamless integrated 
with Business Intelligence components in special tailored or customized Performances Management systems. The 
main functions of these systems are: 
-To gather and store different measures of the business on a regular basis (current state indicators of the business 
performances). 1026 
-To gather and store benchmarks and targets (threshold values) and business rules (interpretations of comparison 
results between current performance’s indicators and etalon values). 
-To facilitate roll-ups and drill-downs of analyzed indicators along hierarchical aggregation criteria (structured 
Performance Measurements). 
-To keep the ongoing analysis alert - allowing decision makers to quickly evaluate which business processes are 
successful, and which need their attention. 
To summarize, an effective Business Performance Information System is built and maintained by business users to 
support the decision-making process especially at strategic level, making use of various indicators – quantitative 
and qualitative, lagging and leading – balanced against targeted objectives and/or industry benchmarks. Lately, 
with  performance  measurement  periods  becoming  shorter,  management  must  have  the  capability  to  more 
proactively influence the outcome. That requires monitoring and tracking capabilities that can generate current, 
complete and accurate information upon which they can act in real time. Business information technologies must 
respond to that need of proactively managing business performance.  
 
2. Business intelligence and business performance management  
Business performance management (BPM) can be considered as being the final component of business intelligence 
–  the  next  phase  in  the  evolution  of  decision  support  systems,  enterprise  information  systems  and  business 
intelligence. If BPM is an outgrowth of BI and incorporates many of its technologies, applications and techniques, 
than why BI itself can’t deliver the insight needed to improve overall business performance? From a theoretical 
viewpoint, it can. From a practical standpoint, it hasn’t (table 1). 
Like decision support, BPM is more than a technology. It involves the processes, methodologies, metrics and 
technology used to monitor, measure sand manage a business. Once selected the business process that has to be 
improved,  and  the  business  methodology  to  be  implemented,  there  are  the  metrics  (to  monitor,  measure  and 
change) to be established. These metrics (key performance indicators) are defined and selected by the business and 
not by the IT. The final step is to choose the business performance measurement technology. We can say that 
business intelligence it is just business measurement and not business performance management.  
BPM is not a single technology, but rather a combination of elements – BI, scorecarding, profiling.  BI looks at and 
analyses the past and what has happened up until today – this is useful, as planning requires knowledge and you 
can set planning goals based on the past. Scorecarding  enables you measure how you are performing against those 
planned goals.  Every organization has processes in place that feed back to the overall plan. What’s new with BPM 
is the integration of these processes, methodologies, metrics and systems – an enterprise wide strategy that seeks to 
prevent organizations from optimizing local business at the expense of overall corporate performance.  
 
Factor  Traditional BI  BI for BPM 
Scale   Departmental   Enterprise-wide 
Focus   Historical   Timely  
Decisions   Strategic and tactical  Strategic, tactical and operational 
Users   Analysts   Everyone  
Orientation   Reactive   Proactive  
Process   Open-ended   Closed-loop 
Measures   Metrics   Key performance indicators 
Views   Generic   Personalized  
Visuals   Tables / charts  Dashboards / scorecards 
Collaboration   Informal   Built-in 
Interaction   Pull (ad hoc queries)  Push (alerts) 
Analysis   Trends   Exceptions  
Data   Numeric only   Numeric, text, etc. 
 
Table1. Differences between traditional BI and BI for BPM 
Source:Ballard, C, Business performance management meets Business Intelligence (2006), http:/www.ibm.com/redbooks 
 
Any BI implementation is aimed at turning available data into information and delivering it to the decision makers. 
BPM is focused on a subset of the information delivered by a BI system – the information that shows business 
performance and indicates business success or failure and enables organizations to focus on optimizing business 
performance. BPM involves a closed-loop set of processes that link strategy to execution in order to respond to that 
task. Optimum performance is achieved by: 
-Setting goals and objectives – strategize 
-Establishing initiatives and plans to achieve these goals – plan 
-Monitoring actual performance against the goals and objectives – monitor 
-Taking corrective action – act and adjust 1027 
 
 
STRATEGY 
EXECUTION 
 
Integrated 
data 
 
1.Strategize 
 
Strategic plans 
Strategic maps 
2.Plan 
 
Plans, budgets, 
scenarios 
Projects/initiatives 
3.Monitor 
Scorecards 
Reports/analysis 
Alerts  
4.Act and 
Adjust 
 
Forecasts and 
models 
Agents offers and 
 
Figure 1. BPM processes 
Source: Turban,E & Aronson, J.E. & Liang, T.P. & Sharda, R. (2007), Decision Support and Business Intelligence 
Systems, New Jersey, Pearson Prentice Hall 
 
The key to effective BPM is tying performance metrics to business strategy, and that means a melding of two areas 
of technological functionality: strategic management systems and performance metrics. The first are systems that 
manage  the  key  business  processes  that  affect  strategy  execution,  including  objective  management,  initiative 
management,  resource  management,  risk  management  and  incentive  management. The  second is  essentially  a 
business intelligence platform for automated data exchange, reporting and analysis. 
BPM should produce three core deliverables: 
-Information delivery to enable managers to understand the business. 
-Performance oversight to enable them to manage the business. 
-Performance effectiveness to enable them to improve the business. 
Business performance management must be an enterprise-wide strategy that seeks to prevent organizations from 
optimizing local business at the expense of overall corporate performance 
 
3. Integrating performance management and business intelligence 
Most organizations already have a mix of packages and custom built business intelligence applications, including: 
strategic performance management (on top of front office), enterprise analytics for tactical analysis, operational 
reports and analytics used to support operational decisions. The problem is that these three decision levels are 
separated (in terms of applications, users, data sources) when what is really needed is for them to be integrated. 
Strategic  planning  is  based  on  stand-alone  scorecard,  budgeting  and  planning  applications  that  use  scorecard 
databases that hold only summarized data. There is no detail to allow executives to drill down and find out why a 
problem occurred in a key performance indicator.  Tactical analysis is based on analytic applications, reporting and 
OLAP tools delivering analytics based on summary and detailed data stored in data marts and data warehouses. 
Operational reports that support operational decisions are based on detailed databases.  
What is needed to manage a business is the combination of strategic and near real time operational analytics- the 
integration of objectives driven business management using scorecards and dashboards at the strategic level with 
the  business  intelligence  tools  and  analytic  applications  that  support  business  measurement  at  tactical  and 
operational levels (figure 2).  
 1028 
 
Detailed data 
Domain analytics  Domain analytics 
KPIs 
Scorecards 
KPIs 
Formal / informal methodology 
Business objectives 
operational 
decisions 
tactical 
analysis 
strategic 
planning 
 
Figure 2. BI integration 
 
Business intelligence projects must be related to strategic, tactical and operational business objectives and BPM, 
enterprise analytics and operational BI  must be integrated into an overall BI framework in order to effective 
manage business performance.  
 
4. BPM framework 
The integration of business and IT process management and BI is a key enabler for BPM. It provides the ability to 
effectively manage the business and achieving business goals. The BPM framework presented below is based on 
the integration of business and IT processes at all decision levels (strategic, tactical and operational).  
 
Business 
process view 
Business 
Performance 
Management 
 
IT 
process 
view 
Understand the status of business processes across business and IT, in 
context against goals and trends, and enable fast action to improve 
execution 
Visualize IT 
process 
operations in 
business 
terms, and 
manage 
service levels 
to business 
objectives 
Understand 
the state of 
key 
business 
process in 
real time 
 
Figure 3. BPM framework 
 
Business  flexibility  and  agility  require  continuous  monitoring  of  the  business  processes  and  support  of  an 
appropriate BI environment. An environment that provides information sufficiently current (near real time) to 
support the requirements for both operational and strategic decision making. BI technologies and products are 
evolving in order to provide such an environment, and we can list only some of the new trends: 
- linking business process data to operational activity data for a complete for a complete view of the enterprise; 
-    implementation  of business rules and Key  Performance  Indicators  to enable  consistent  management  of  the 
business activities; 
- automatic alert generation for proactive problem avoidance rather than reactive problem impact minimization; 
- real time data flow to enable monitoring and proactive management of business processes. 
A BI environment that include these capabilities enables companies to proactively manage their businesses, rather 
than just react and adjust to business situations as they arise. 
The main objective of BPM is to help companies improve and optimize their operations across all aspects of their 
business. But implementing BPM is much more than just about choosing new technology – it suppose a constant 
analyze  of  business  environment  to  determine  if  changes  are  required  to  existing  business  processes.  To  be 
successful with BPM, a company must fully understand it’s own business processes and activities that support each 
area of business. 1029 
CONCLUSIONS 
Managing  and  optimizing  business  performance  is  a  critical  requirement  not  only  for  maximizing  business 
profitability  but  even  for  remaining  in  viable  in  today’s  fast  moving  and  competitive  business  environment. 
Effective business performance management will blend business intelligence with elements of planning, budgeting 
and real time monitoring as well as providing a window on performance. The integration of business and IT 
process management and Business Intelligence is the first step in managing business performance.  Finally, BPM is 
all  about  taking  a  holistic  approach  for  managing  business  performance.  The  holistic  approach  enables  the 
integration  and  use  of  business  intelligence,  process  management,  business  service  management,  activity 
monitoring and corporate performance management to achieve a single and complete view of the enterprise.  
 
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Business Intelligence for strategic and performance measurement

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Business performance management meets Business Intelligence available on line at http:/www.ibm.com/redbooks

CRM and Knowledge Turnover Blue Wolf available on line at http://www.bluewolf.com

Decision Support and Business Intelligence Systems,

Ekerson W.W.(2007) “Best practices in operational BI – Converging analytical and operational processes”available on line at www.tdwi.org/

Faster must go faster”available on line at www.paraccel.com

Look beyond the numbers available on line at http:/www.cbronline.com

The Strategy-Focused Organization.

THE ROLE OF BUSINESS INTELLIGENCE IN BUSINESS PERFORMANCE MANAGEMENT

http://steconomice.uoradea.ro/anale/volume/2009/v4-management-and-marketing/210.pdf

THE ROLE OF BUSINESS INTELLIGENCE IN BUSINESS PERFORMANCE MANAGEMENT

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