What is business performance management?

It includes processes and systems that enable companies to plan, budget, forecast and analyze their business operations, with the goal of improving decision-making and achieving expected outcomes.

Sometimes referred to as corporate performance management (CPM) or enterprise performance management (EPM), BPM assesses multiple data points and dimensions to determine a business’ level of organizational performance and overall health. By continuously monitoring data points and aligning them with long-term goals, business leaders can streamline operations and keep every company unit aligned toward success.

Historically, business planning and business performance management were reactive processes in siloed systems—for example, a company might manually enter data to track and analyze major pain points. Today, enterprises increasingly use data-driven technology frameworks to proactively track multiple business objectives and compare them with results in real time. For example, CFOs might use BPM solutions in financial planning, while HR, sales or marketing might apply BPM processes to operational planning, budgeting and reporting. Monitoring company performance across different departments facilitates unity and ensures multidimensional consensus on business goals.

BPM involves establishing clear strategic objectives, each aligned with an organization’s mission and company goals. In the strategic planning process, leaders define specific, measurable goals across various departments and timelines, aligning them with broader business goals.

Effective BPM relies on identifying and tracking key performance indicators (KPIs) that provide meaningful insights into a business’ success. Common KPIs include financial metrics like revenue growth and return on investment (ROI), as well as non-financial indicators such as customer satisfaction, employee engagement, employee performance or market share. By selecting metrics aligned with their strategic goals, organizations ensure consistency and focus. 

Financial planning, a key component of business performance management, involves creating detailed budgets and forecasts to guide resource allocation. This strategy includes annual budgeting cycles and scenario planning, among other financial planning models. 

Many BPM systems generate regular reports and dashboards to provide stakeholders with visibility into current performance trends. The most sophisticated BPM systems include real-time data monitoring capabilities, as well as analytical tools. Sharing company performance reports across departments reduces silos and supports a comprehensive basis for more informed decision-making. 

BPM can play a pivotal role in organizational transformation initiatives, serving as both a catalyst for change and a framework for managing transformation outcomes. Integrating BPM with transformation efforts enables the systematic planning, execution and sustainability of organizational change while maintaining performance visibility throughout.

Creating robust performance management systems in the digital age allows business leaders to accurately analyze performance across channels, from employee retention to cash flow. Deploying these systems not only allows an enterprise to maintain an accurate, 360-degree view of change, it supports swift course-correction should performance decline. 

Several traditional business performance management frameworks have emerged over the last three decades, each representing guidelines for developing performance management systems. Over the years, hybrid variations have also developed; some businesses might opt to combine aspects of a handful of processes. Common BPM methodologies include:

Developed in 1992 by Robert Kaplan and David Norton, the balanced scorecard framework organizes performance across four perspectives: financial, customer, internal business process and learning and growth. It helps organizations balance short-term results and long-term growth. 

OKRs provide a framework for defining and tracking objectives and their measurable outcomes. Typically, each objective is supported by 2–5 key results—specific, time-bound and quantifiable metrics. 

TQM is a comprehensive approach integrating quality improvement principles throughout all organizational functions and levels. It emphasizes customer focus, continuous improvement, employee involvement and fact-based decision-making. TQM frameworks typically include quality planning, quality control and quality improvement processes. 

Six Sigma is a data-driven methodology focused on eliminating defects and reducing variation in business processes. It uses statistical analysis and a structured, data-driven approach to improve existing systems. Originally used in the manufacturing world, it has increasingly been applied to broader business processes.

A more recent approach, beyond budgeting advocates for more flexible, adaptive planning processes that replace traditional annual budgeting with rolling forecasts, relative targets and decentralized decision-making. For instance, one Swedish bank aims to deliver return only on equity higher than its average competitor, without setting fixed annual targets.

While methodologies guide the performance management approach, technology platforms enable organizations to execute these strategies effectively. The technology landscape for business planning management encompasses a diverse ecosystem of specialized platforms, integrated suites and emerging technologies. Together, they allow organizations to optimize their performance across multiple dimensions. 

EPM suites increasingly form the backbone of an organization’s business performance management system. Leading software provides comprehensive capabilities for financial planning, budgeting, forecasting and consolidation. Platforms typically offer integrated modules—for example, for strategic and operational planning and financial reporting. Modern EPM systems emphasize user-friendly interfaces, along with support for collaborative planning workflows. 

Several analytics tools on the market allow users to easily analyze business data. These platforms create custom dashboards and generate insights without extensive technical support. Typically, they excel at data visualization and exploratory analysis, making performance data accessible to a broader range of organizational stakeholders. 

Software-as-a-service (SaaS) BPM solutions have transformed the market by offering rapid deployments and automatic updates. These platforms also allow for enhanced collaboration for distributed teams and flexible scaling abilities—as well as real-time performance monitoring. The shift to cloud-based or hybrid solutions has democratized access to sophisticated planning tools. This shift enables smaller companies to implement enterprise-grade solutions that might have previously only been accessible to large organizations with substantial IT resources.

Modern enterprise resource planning (ERP) systems include embedded planning and performance management capabilities. These integrated approaches provide seamless data flow between operational processes and performance reporting, ensuring consistency in operational execution.

Customer relationship management (CRM) platforms contribute critical customer sales performance data that feeds into broader business planning processes. Advanced CRM with analytics capabilities enable organizations to align sales planning with overall business objectives. 

Artificial intelligence (AI) and machine learning (ML) capabilities are increasingly integrated into BPM platforms. Typically, they provide automated insights and predictive forecasting. Natural language processing (NLP) technologies enable conversational analytics interfaces that allow users to ask questions about performance data by using everyday language.

Similarly, robotic process automation (RPA) tools automate routine performance managements tasks such as data collection and report generations. These tools free up human resources for higher-value activities. 

Organizations implementing effective BPM typically see more effective resource allocation, along with more data-driven decision-making. A systematic approach enables companies to optimize capital and identify areas where efficiency improvements might impact profitability. 

BPM provides comprehensive visibility into business operations, enabling faster identification and resolution of performance issues. Real-time dashboards allow management teams to spot problems early and take corrective action before minor issues escalate. 

Performance management systems improve strategic alignment, ensuring organizational activities are closely linked to stated objectives. Clear performance metrics and regular review processes help keep teams focused on priorities that drive overall business value. 

BPM supports proactive risk management by providing early warning indicators of potential problems and enabling scenario planning for different market conditions. 

Access to timely, accurate performance information significantly improves decision-making quality across all organizational levels. Managers can make more informed decisions about resource allocation and other initiatives when they have comprehensive performance data and accurate benchmarks at their disposal.

BPM creates clear accountability structures where individual employees and teams have specific performance expectations and receive regular feedback on progress. 

The discipline of regular performance review and analysis fostered by BPM creates a culture where organizations systematically identify opportunities for optimization and innovation. 

Organizations with mature BPM capabilities often develop sustainable competitive advantages through their ability to respond quickly to market changes, optimize operations continuously and make strategic decisions based on performance insights.