Leveraging BPI applications to drive value.

• Author: Sorensen, Dean
• Position: Business Intelligence - Business performance intelligence

Realizing the value potential of BPI applications can involve some profound, but not necessarily obvious shifts in the ways companies are organized and operate.

Much has been written about the management process in the past decade, including what's wrong with it and how to fix it. Economic profit, balanced scorecard, activity-based costing and planning and budgeting have comprised a significant portion of these writings. But many organizations have yet to realize the potential value of the "leading practices" described therein. The problem, simply stated, is a lack of tools to apply them practically.

However, all of this is changing. As Web, database connectivity and work flow technologies have evolved, the transmission, circulation and processing of high volumes of data has become spectacularly fast, accurate and cheap. Data collection, analysis time and costs have been decimated. These logistical advances have coincided with breakthrough developments in business performace intelligence (BPI) software to overcome traditional obstacles that have prevented more widespread use of these leading practices.

How the BPI Market Is Changing

The BPI software landscape has changed significantly in recent years. New applications and vendors are emerging, which provide the basis for organizations to continuously collect, interpret and drive action based on a collective understanding of ever-changing market conditions and financial objectives. While most vendors provide applications in a single BPI category, there are signs of convergence as more vendors are offering (or plan to offer) applications in multiple BPI categories. In addition, business intelligence (BI) vendors are entering this market as a means to leverage their analytical and reporting tools. (For more on vendors in this area, see "Resources," page 51.)

Recently, much of the focus in this market has been on planning, budgeting and forecasting applications, as new technologies have enabled significant improvements to the accuracy and timeliness of the process. However, equally impressive changes are occurring in applications supporting other parts of the management process. The same collaborative tools that are transforming planning and budgeting are also having a similar impact on strategic analysis and profitability management, as well as strategy development and execution.

Determining how these tools will be applied is one of the key issues facing organizations (and CFOs in particular) today. While there are many tools to choose from, navigating through the...