Ever try to drive at night without the headlights on? Hopefully not. That would be a reckless thing to do. Your vehicle is moving, but you can’t see where you’re going, you can’t tell if you’re getting where you want to go, you don’t know if you have enough gas to get there, you can’t see which way the road curves, and you’re blind to any hazards that might be right in front of you.
Sounds risky, right? But thankfully your car does have headlights. And when it comes to your growing business, you have tools available to you that also help you see the road ahead, measure your progress, and avoid potential pitfalls. These are called business performance management, or BPM, tools.
What Are Business Performance Tools?
In short, business performance management tools give your business insights into everything from planning and budgeting to employee performance against KPIs to feedback on the productivity of teams and resources. It’s exactly the kind of visibility you need to monitor progress toward goals and objectives and make smarter, faster, more informed business decisions.
Business performance isn’t just the CEO’s problem. No one in any organization can accurately claim it isn’t part of their job or doesn’t apply to them. Proper planning and goal setting, employee and processes evaluation, and business success from both a revenue and market perspective all directly affect every single department, as well as every employee’s job and livelihood.
But how do you determine overall business performance? What metrics should you monitor? How often should you evaluate business performance? Who should be in charge of pulling the information together? How should it be presented to company leadership so that it’s quickly understandable and usable?
As you can tell, things can get complicated. But as with many other aspects of running a growing business, crafting a coherent strategy around business performance management can pay big dividends. Anything else means you’re either “winging it,” guessing, or hoping you get lucky. It’s hard for any business leader to achieve confidence or peace of mind when that’s going on.
Strategy means determining the people, tools, and processes required to execute successfully on an objective. For the purposes of this article, we’re going to focus on the business performance management tools that today are making it easier than ever to track the health and efficiencies of an operation. The reason these tools have come onto the market is that there are so many different business elements that can and should be monitored.
Some BPM tools focus on just one operational function of the business or department, some may handle more than one, and other tools are built out as a robust and comprehensive platform, an integrated suite of products sharing data for a 360-degree view of the organization and its many arms. But whether they’re separate or combined, business performance management tools aim to:
- Acquire information
- Analyze information
- Package and present information for business leadership consumption
- Make that information understandable and actionable
- Help leadership make faster, better decisions backed by data
- Help spot ways to improve and maximize resources, and improve products and services
- Help quickly identify risks, defects, or inefficiencies
- Improve business performance and increase revenue
It’s not that the definitions for success have changed. They haven’t. What has changed are the technologies available to bring what used to be hidden out into the open, and with the speed of modernity that makes sure information gets into leadership’s hands while there’s still time to pivot and make agile corrections if necessary.
These BPM tools are true workhorses. Always running, always working, never tiring, the tech tools are perpetually on the lookout across your systems for on-demand business metrics you can use to keep the organization growing in the right way and in the right direction. Think of it as having a mechanic right under the hood, always fine-tuning the business machine you’ve set up.
You can probably see that business performance management tools make spotting, analyzing, prioritizing, and optimizing processes a much more realistic endeavor for leaders as they seek to keep the business operating at maximum capacity, while also staying nimble enough to outflank competitors. But which areas of the operation are most important to monitor in such a way?
- BPM tools give you real time insight into what’s going on across your growing organization, presented in easily understandable ways, with powerful templates, filters, customization, and dashboard visualizations.
- This kind of information keeps the business agile and allows for confident and timely data-driven decisions.
- The five key components of a business performance management system are:
- Planning and budgeting
- Reporting & analytics dashboards
- Customer interaction tracking (CRM)
- Workforce performance (HCM)
- Integrated financial monitoring (ERP)
- Additional selling points for a BPM tool include things such as User Interface (UI), customer support and education, integrations, automations, and value gained for the investment.
5 Business Performance Tools Every Business Needs
While business performance management tools have a wide range of features and capabilities, there are certain aspects of the business every company leader needs to get and keep their arms around. These are the must-dos. Without insight into what’s happening in these 5 key areas, information gaps exist that could lead to inaccurate assumptions and create risk.
1. Planning and Budgeting
All businesses traditionally plan for the year ahead. This is where, based on the current state of the business, new goals are set, old goals are revised, tactics and strategies are adjusted, priorities are placed in order, and projects for the coming year are funded.
Planning and budgeting are the foundations of any business performance management effort. If there’s no plan to track progress against, and if resources, both financial and human, aren’t committed so that some degree of ROI can be determined, it’s virtually impossible to meaningfully measure a business’ performance.
Planning and budgeting are not without their challenges. For one thing, since the final goal is to determine what the most important opportunities and initiatives should be for the business in the coming year, with funding going to those initiatives, there can be quite a bit of debate, with stakeholders protecting their particular areas of interest. Some efforts that have grown outdated or should no longer be a priority will be fiercely defended.
The answer to those challenges is to base decisions on data.
The right business performance management tool will yield planning and budgeting benefits that keep the organization running at maximum efficiency and positioned to outdo competitors, increase revenue, and speed growth:
- More frequent planning cycles times thanks to easer gathering of inputs and assumptions.
- More accurate financial and operational data.
- A more aligned organization, with everyone connected in a single connected platform.
- Better transparency since data from multiple areas are being added consistently via the same processes.
- More accurate forecasting with faster analysis of actual vs. projections.
- Increase collaboration with business stakeholders and drive better decision-making.
- Quickly drill across budget, forecast and actuals to see the impact on business performance.
- Improve forecast accuracy with predictive planning, allowing users to run multiple scenarios on the fly for management and board meetings.
A quality financial planning solution should give your business the ability to collect and apply data to aid in operational and financial planning across some key areas:
Budgeting and Forecasting
If you’ve ever gone through the budgeting process, you know it can be a tedious affair. And that process has to occur in every department across the business. Today’s tools can remove much of the heavy lifting using dynamically populated templates and automation. Prebuilt workflows apply best practices so progress on tasks can be closely tracked, and real-time forecasts can now be run in minutes for faster decision-making that can drive growth.
Scenario Planning and Modeling
A great planning and budgeting tool has no problem answering any “what if” question you throw at it. Running scenarios and building models is all about the variables. Plug data into the program like dimensions, location, product, customer, expense, headcount, sales, cash flow, etc., and the resulting rapid complex calculations can be used asap in your planning and model scenarios to quickly adjust to changing market conditions.
This is a special area of forecasting in which sales plans and the revenue expected to result from those plans line up with objectives. Finance, sales, and service teams can participate in and benefit from these types of driver-based revenue and sales forecasts. Once this forecasting has been done and revenue planning complete, only then can actual performance be monitored against plans and projections.
Operational Expense Planning (OpEx)
How much is it going to cost in the coming year to operate your business? Are there areas in which resources are being wasted or misallocated? Are operations being funded that don’t contribute to the year’s key business objectives? Your business planning and budgeting tool compares and contrasts operational assumptions to financial metrics and outcomes.
Here again, a major part of projecting and optimizing operational expense is considering the cost and allocation of your workforce. The right planning tool can simplify strategizing around headcount, salary, incentives, satisfaction/retention, etc. It’s the only way to strike a balance between the needs of the workers and what business objectives need from those workers.
Trended Financial Statements
There can be numerous financial statements across the business organization, but that does leadership very little good without insight into how those income, balance sheet, and cash flow (direct and indirect) statements mesh to tell the complete fiscal story. Integrated statements using GAAP (Generally Accepted Accounting Principles) logic should give you seamless actual-to-budget trending.
2. Performance Dashboards
One of the most common problems today in businesses both large and small is ineffective gathering and use of data. Some organizations are still lagging in knowing what data to pull or how to get it. Others have a firehose of data coming in that remains unorganized and unanalyzed, making it impossible for that valuable data to help maximize the performance of the business. In short, it’s wasted.
Dashboards serve as a sort of interpreter between business data and the leaders of that business who need it organized and presented in ways that make it actionable. Parsing, sorting, filtering, and analyzing the data, then presenting what’s needed in the form of understandable dashboards, visualizations, and reports unlocks the power of data for business leaders and gives the business a huge, ongoing advantage.
Insights drive smarter, faster business decisions. And customizable, feature-rich dashboards can present the answers to numerous specific business performance questions. Any business can check every aspect of its “health” at any moment.
The right business performance management dashboard will yield benefits that allow for easy and understandable visibility into the data coming into your organization so the appropriate actions can be taken:
- Easy, real-time insight into data across the entire business.
- Customizations that present only the data you want to see.
- No more treasure hunting for the relevant data or waiting for reports to be compiled.
- Visualizations that make the information easily understandable.
- Faster decision-making resulting from faster understanding of the data.
A quality business planning and budgeting tool should have dashboard functionality that ideally includes:
Data, charts, and graphs will always be at your fingertips, with displays that have been personalized for specific roles and use cases.
Comprehensive Real-Time Visibility
Not just visibility, but visibility into performance across every area of the business, with no waiting. This kind of visibility also typically improves communication between decision makers.
Reduced Need to Call IT for Help
Since embedded analytics surface answers quickly, that hotline to your IT department can cool off.
Access, But With Higher Security
Granular permissions and role-based security make data accessible to the people who need to see it, but only the people who need to see it.
An Enjoyable User Experience
No more getting lost in the numbers. Today modern BPM tool dashboards present multiple insights in immediately usable visualizations. And dashboard customizations are as easy as dragging and dropping.
Fast and Flexible Reporting
Using prebuilt, easily customizable reports can get you consistently formatted business intelligence so that you immediate know what you’re looking at. Drill-down functionality also gives you the option of looking at a higher summary or dive into the fine details.
Performance against your select Key Performance Indicators should be visible at a glance, which saves time and allows for agile decision-making based on progress against those KPIs at that moment.
Workbooks created and customized from prebuilt templates can be set up for every business need, saved, and shared as needed.
Run private or shared searches based on whatever filters or criterial you like, then save them for future repeated use, maybe even as shortcuts right there on the dashboard.
If you need to send large amounts of data from your system to others, be it for archiving or deeper analysis, you should have the drivers that allow you to connect to other applications.
3. Customer Relationship Management (CRM)
Your business isn’t going to perform well unless it resonates well with customers.
How you’re interacting with, communicating to, and conducting transactions with customers (and how you’re attempting to court prospects) is a key business performance management measurement. A high-quality customer relationship management (CRM) tool is the kind of technology that can give any business ongoing visibility into successes, opportunities, and shortcomings where customers are concerned.
The insights and benefits from a CRM can allow your business to build and drive sales funnels that:
- Turn the unaware into the aware.
- Turn the aware into prospects.
- Turn prospects into customers.
- Turn customers into repeat customers.
- Turn repeat customers into brand ambassadors.
All of this happens through deliberate and strategic customer interactions, whether that’s part of the sales process mentioned above or super-serving customers with standout customer service and support. The CRM manages every one of these engagements, then delivers performance data that helps you track conversions, sales, upsells, complaints, and other customer-oriented metrics.
The right CRM will bring benefits to the business that, using a wealth of data about customers and prospects, allows that business to deepen customer relationships by leveraging knowledge of what each customer finds most relevant and valuable:
- One view of each customer, aggregating data from their activity across multiple channels.
- More sales resulting from a streamlined sales process powered by pipeline and forecast data.
- A unified and streamlined quote-to-order, cash, and fulfillment solution.
- Smooth and effective omnichannel campaign executions.
- Happier customers who feel like the brand knows them and their needs.
A quality CRM should capably cope with multiple sources of data and offer insights that help leadership assess and adjust processes in several focus areas:
Creating Engaging Experiences
You can know each customer’s preferences, see what transactions they’ve conducted in the past, and check the results of customer service interactions so that every part of your organization can give that known customer the kind of experiences that are sure to please.
Boosting Sales Performance
When your sales team has real-time access to the customer and all the relevant information about that customer or prospect, every part of the sales process is optimized for better performance; forecasting, prospecting, quote management, selling, upselling, cross-selling, order management, fulfillment, and commission. Much of this can be additionally powered with automation.
Attention-Getting Customer and Partner Service
We’ve all reached out to a customer service rep only to find out just how little they know about us, the product we bought, or the problem we’re having with it. It never makes us feel any better about the brand. A properly used CRM accessible to everyone who interacts with customers and partners offers up the most up-to-date and thorough information available.
Make the handoff from marketing to sales seamless by using automation to target, create, launch, and track marketing campaigns. The CRM will know when a lead becomes ready to buy so the baton can be passed on to sales.
Reporting and Analytics
Most professional CRMs offer built-in reporting with real-time analytics. You should also see role-based dashboards for continuous business performance monitoring against goals, quotas, and satisfaction scores.
4. Performance Appraisals (HCM)
There can be no business performance management without understanding the role of each employee, employee associated costs, tasks assigned to and expectations for employees, and how those employees are contributing at any one time to the meeting of established business goals. This area of monitoring business performance is called human capital management or HCM.
The assessing and appraising of the performance of human workers is delicate territory. While business performance management tools excel in leveraging unemotional, impartial, unbiased data to score value and progress, human elements understandably enter the picture in HCM.
Do you enjoy being assessed every year by a line manager? You might see the value in it, but it’s usually an awkward exercise not void of anxiety. But done correctly, backing up these human assessments with facts, this form of business performance management can make sure all employee communications are on point and the goals of the business are being met, even as workers make progress on their own individual career goals.
The right business performance management tool for HCM should give your business a more engaging and effective way to manage the workforce and see how workforce performance is impacting financial performance. This can be especially accurate and insightful if HR and payroll is connected to financial, project planning and budgeting and procurement data.
An effective HCM system will bring your organization benefits like:
- Surfacing training gaps.
- Employee performance aligned to company strategy.
- An ongoing track record of progress through automation.
- More accurate reports.
- Improved engagement, motivation, and productivity.
- Lower HR administrative costs.
The reason you should seek out a best-in-class HCM business performance management tool is that it will cover a broad range of your HR business functions:
If you’ve never had access to automation tools for HR, you’re in for a treat. Many HR activities can be automated so that time wasted on common, manual tasks is a thing of the past, with all the cost savings that result from that. Dashboards keep employee KPIs right in front of you and help you easily handle updating, information access, and information delivery.
You’ll want end-to-end payroll processing and management. Some systems go as far as calculating payroll changes and filing payroll taxes. But on the business performance management side, the benefit is instant posting to the general ledger so financial reports remain accurate.
The performance review process can be easily administered in one place. That means efficiencies in the HR process but also a review and development process that works better for employees.
You should have full and constant visibility into the activities and compensation of your workers, including compensation and benefits tracking, time-off management, and workforce planning that’s integrated with your planning and budgeting system(s) so you can forecast workforce needs using real data, not estimates. This tool function is often referred to as a human resource management system (HRMS).
With appropriate access to the HCM system, employees and managers can easily and efficiently change personal information like addresses and bank accounts, request and approve time off, check progress against goals, view paychecks, and many other convenient activities.
Role-based dashboards serve up HR reports for your company’s leadership that offers an in-the-moment assessment of things like headcount, turnover, demographics, revenue & expense per active employee. Plus, reports can be filtered by department, employee level, location, or other variables.
5. Bringing It all Together
As you’ve seen, there are quite a few critical components of business performance management. If your goals as a leader in a growing business are to…
- Gain the most actionable insight into the business available.
- Be able to make quick decisions you’re confident are the right ones.
- Streamline business operations for workforce and financial efficiencies.
- Free up resources that can be more accurately allocated to current goals.
- Be as adaptable to change as possible.
- Facilitate innovation.
- Increase revenue.
…piecemealing business performance management tools isn’t going to give you the results you’re looking for. It’s time to consider a more comprehensive Enterprise Resource Planning (ERP) system.
ERPs are all-in-one (usually cloud platform) business management solutions. With numerous operational aspects of the business housed within one solution, you can see how that level of cross-functional integration can increase the ease and accuracy of business performance monitoring.
With a robust ERP, you’re simplifying your ability to assess the business, and interconnected real-time data across areas like accounting, order processing, inventory, production, supply chain, etc. gives you visibility like you’ve never had before…the kind of intel that leads to smarter decisions and adjustments to the business.
Choosing the right ERP system is going to make life easier for you in several ways:
- Financial processes are automated
- Inventory and the supply chain is optimized
- Human resources are at maximum productivity
- Orders are managed flawlessly, and customer experiences are at their peak
- Accurate data is constantly being gathered across functions for use in assessing, planning, and budgeting.
When you look at the parts and features of an ERP system, you quickly start to see how this kind of 360-degree management and approach can result in faster, easier business performance assessments:
Having automation and optimization in your general ledger helps lead to a more complete view of your business’ cash flow and financial performance.
To operate at today’s speed of business, you’ll want faster financial transactions, closings, and compliance. You should be able to check finances at any level, from high level summaries to individual transactions, and in real time.
Global Business Management
Are you worldwide? A quality ERP helps manage global operations, dealing with several different currencies, different tax laws, and different reporting requirements. And all that financial data is being tracked and made visible to leadership every step of the way.
Inventory costs go down with effective automated management, and deliveries are being made and customers kept happy. You’ll be able to literally “take stock” of inventory in multiple locations to make sure reorders and replenishments are most efficient.
Bottlenecks, errors, poor communication, these are all things that can happen between quote and order fulfillment that threatens the customer experience. It’s all streamlined within an ERP, which means faster invoicing and payments.
Supply Chain Management
We’ve been hearing a lot about supply chain problems lately. This makes it more important than ever to have a system in place that helps forecast and ensure the smooth transfer of needed goods or materials.
You want keen insight into the what’s coming in and out of your business’ warehouses, and an ERP gives you that with RF-device-directed putaway and picking tasks, plus other capabilities like cartonization, shipping system integrations, and the above-mentioned real-time inventory updates.
Choosing the Right BPM Tools
We’ve already touched on the key benefits each type of business performance management tool, plus an enterprise resource planning (ERP) system, should offer you as the leader of a growing business. But in addition to those table stakes are some fundamental additional comparisons you’ll want to make as you explore the many options on the market.
- The User Interface (UI) should be intuitive, appealing, customizable, and streamlined so you can dive into the tool and start enjoying its power almost immediately.
- There should be plenty of support and learning opportunities, in whatever media format you prefer, as you get deeper into the tool and start really mastering everything it can do.
- There should be robust integration with other business performance management tools or ERPs and third-party systems available.
- The tool should be rich with templates and pre-built automated processes that get you going with time consuming design or programming work.
- The whole point of a BPM tool is it should provide every kind of analysis and report a business leader could possibly need, so they can get and understand all the immediate information needed to make timely decisions.
- It should deliver high value for the investment made in it, with pricing options that are up front and flexible to accommodate your specific needs.
What’s right for some other business might not be what’s right for you. Your organization and its goals are unique, and you should be sure that you invest in performance visibility that goes well beyond “nice to know,” and makes actual ongoing adjustments to the business possible.
Any business leader who goes day after day not knowing for sure what’s going on in their business should have trouble sleeping peacefully at night. Operating in the blind and trusting that everything will somehow work itself out to your benefit is a fool’s errand.
But with the right business performance management tools available today, no business leader has to be in that position. These are the ways in which your business can benefit by implementing a modern, technology-driven, approach to monitoring and managing business performance. Each one can bring enormous insight and value, but together, this kind of visibility can be transformative, possibly changing the arc of your growth and revenue.
Business Performance Management Tool FAQs
How do we set good KPIs?
First things first. Do you have a clear business strategy for each area/function of the business for which you’re setting KPIs? If you don’t, you can’t really know what you should be keeping an eye on or measuring. Second, don’t go “KPI crazy.” Keep it to a few, challenging yet achievable goals that will have meaningful impact if reached. Work with the team to set KPIs so there’s solid buy-in. KPIs should be specific, achievable, and objectively measurable. And always remember the intent of KPIs is to challenge and reward, not judge and punish.
How much do business performance management tools cost?
It varies according to the size of your organization, number of users, and specific needs. And that’s a good answer to hear because that means quality business performance management tools are available for every org from SMBs to enterprise, usually for an annual license fee that is then customizable based on what’s right for you. You’ll probably have a one-time implementation fee for setup.
What’s the most important thing to consider when shopping for business performance management tools?
What you want it to do. In fact, with business performance management tools being so comprehensive and capable of so much, you’ll probably want to get as specific as you can about what you want to get out of the tools, meaning what will have the biggest positive impact on your business.
How do you get executive buy-in for business performance management tools?
You’ll want a compelling proposal that takes every stakeholder into account. While BPM tools can bring good things to every department as well as the whole business, certain company leaders will care about specific things, so play to their key interests. Involve the CTO up front because they’ll have a lot to say about implementation capabilities. The CEO wants making decisions to be easy and well-informed, with every part of the business visible and optimized. And the CFO will want to know how all this will positively impact the bottom line.
What is a Balanced Scorecard (BSC)?
It’s a common term used to indicate that a business’ performance should be evaluated across financial, customer, internal processes, and learning & growth considerations. That way, the strategy of the business is aligned to what’s being measured and how the strategy is being executed.
What is Benchmarking?
Benchmarks are commonly used to compare an organization’s performance against that of others. Naturally, this makes the most sense when you’re comparing businesses that are in the same industry and are of the same size. Other times, a business will set benchmarks based on its own prior year performance and essentially compete against itself. Either way, benchmarking involves detailed analysis of performance as a measure of standing amongst peers or progress.
What is Enterprise Risk Management (ERM)?
Tools for spotting, checking, and managing risks to the business. Once you’ve mapped the biggest strategic risks your business could be facing, they can be ranked and measured against the risk tolerance. This is how you arrive at key risk indicators (think of them as alarm bells) as well as action plans to mitigate key risks.
Now that you have a better understanding of business performance management tools, you might want to take a look at several of them in action. Feel free to check out our NetSuite demos, or if you’re getting closer to seriously considering an Enterprise Resource Planning system for your business, you’ll find our ERP buying guide most helpful.