Seeing the big picture: new data tools are enabling CEOs to get a better handle on performance across their organizations.

Author:Banham, Russ
Position:Technology - Business performance management

For much of its existence, Harrah's Entertainment was a loose compilation of casinos operated autonomously by well-intentioned general managers, each of whom had his own ideas of how to separate customers from their wallets. The managers knew their local customers and built marketing campaigns around this knowledge.

But when Gary Loveman took over as Harrah's chief executive officer in January 2003 and tried to start running the company as a unified enterprise, he was obstructed by what were, in effect, several different companies, each with different information technology systems, business processes and ways of measuring performance.

So Loveman decided to implement a new management discipline--Business Performance Management, or BPM. A former marketing professor at Harvard Business School, Loveman had the academic know-how to guide the strategy. He also had consulted to Harrah's over the years and later served as its chief operating officer and president, His goal was to rebuild Harrah's organizational and IT structure to give him to tools to measure key indicators for the whole company. "My ability to manage our performance was undermined by my inability to measure it," Loveman says. The Las Vegas-based company had $4.1 billion in 2002 revenues.

BPM is touted as the next hot management discipline. Ironically, despite its emphasis on a common language and common definitions to describe performance, BPM also is known as Enterprise Performance Management, or EPM, and Corporate Performance Management, or CPM. Blame the alphabet soup on consultants and technology analysts who put different spins on the same concept.

International Data Corp., for example, prefers the term BPM, while Gartner coined CPM. Suffice it to say that BPM is EPM is CPM.

The simple definition of BPM (let's agree to use that acronym) is that it's a methodology for understanding what an organization is, where it wants to go, how it will arrive there and, most importantly, how it can measure its progress along the way (see table, below). While CEOs always have sought to understand their companies' performance, what's new are the analytics tools to collect, collate, measure and report performance statistics. Among the leading providers of these tools ate Hyperion Solutions, Cognos. BusinessObjects and Informatica. Moreover, large enterprise resource planning software vendors, such as SAP and PeopleSoft, have added analytics functions to their offerings.

Leading-edge companies such as Cisco Systems, Dell and General Electric have long used reporting systems...

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