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Dollars and Sense
The cost of a BPM package can become a roadblock for budget-conscious midmarket CIOs. So, many vendors are trying to minimize the high price tag by offering BPM as an on-demand service. One such company -- Mountain View, Calif.-based Adaptive Planning Inc. -- reportedly claimed that a hosted BPM solution could cost a tenth of a $250,000 in-house BPM solution. Another estimate, by Hyperion partner K2Analytics.com, a division of hosting company Pinnacle Group International of New York, says companies can save between 40% and 60% under the Software as a Service (SaaS) model.
K2Analytics.com signed up eight midmarket companies in the first year of its agreement to offer Hyperion. Other BPM providers are making SaaS-related moves. Earlier this year, Cognos acquired Celequest Corp., a developer of an on-premise appliance that lets users monitor their BPM numbers that are delivered via a SaaS provider.
But not everyone is convinced that BPM works in a SaaS environment. Brown thinks SaaS is fine for companies to try out BPM but that on-demand isn't practical in the long run. BPM, he says, has a lot of different systems feeding into it. "Is that appropriate for SaaS? I don't think so," he says. "SaaS is for things like human resources, sales automation and maybe some simple finance systems, which tend to be discrete systems that are activity/event driven, as opposed to continuous monitoring and measurement, which is the hallmark of CPM."
For midmarkets, another issue is identifying where BPM makes sense. Traditionally, BPM enters a company at the behest of its finance department, which is often mired in Excel spreadsheets and frustrated by the inefficiencies and lack of scalability of that approach. In the past, it was the CFO who brought in the system, often without even consulting the CIO. "We used to sell under the radar of IT," Hyperion's O'Rourke admits.
But now CIOs play a crucial role in the software evaluation process, ensuring that the tools meet the company's overall IT standards and fit with existing infrastructure.
While BPM continues to make its way through the company beginning with the finance department, the technology can spread quickly -- and CIOs should help guide its expansion. Brown has a three-point plan for CIOs who want to play a leading role in driving BPM across an organization:
- Top down. Link all chief executives and department heads into the finance department's BPM system. They have a right to know the latest numbers and should have enough business insight to work with the data relatively unaided. Over time, executives will want other members of their departments to have access to the data.
- Bottom up. Look for opportunities to introduce operational BPM. For instance, BPM can help retail store managers assess the effectiveness of merchandising and store promotions. In turn, this will improve store efficiencies and enable better local management of stock, margins and resource management.
- The trust factor. Guarantee the finance department that the integrity of its data and reporting systems will be preserved. Some BPM systems do so by preventing users from storing Excel spreadsheets locally, allowing them to be saved to only a central location; storing files and data in one place ensures that there is only "one version of the truth" for this information. In addition, build the trust of the CFO and his staff, which will encourage them to loosen their grip on mission-critical finance data.
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