What’s in a name?

While certainly not based on the scientific method, I think it’s safe to say that the phrase “performance management” has become mainstream. I base this conclusion on the fact that a Yahoo! search for the phrase returns over 14 million results 

By comparison, a search for the phrase “customer relationship management” – a market that is at least a decade more mature – returns about 15 million results; only a few hundred thousand more.  To put this in context, “business process management” yields less than 7 million while “business intelligences” comes in over 42 million.   

But with widespread adoption of the phrase performance management comes inevitable confusion.  A quick look at the sponsored ads surrounding the search reinforces this point.  One vendor touting enterprise performance management is a purveyor of HR solutions that “automate performance appraisals”.  Another vendor using the term corporate performance management focuses on software for “budgeting, forecasting, and consolidation”.  Still another helps “manage and optimize the performance of complex IT infrastructures”.  Clearly each is using the same term to mean very different things. 

Wikipedia tried to clear up the confusion by providing definitions for several related terms.  I used a similar approach in an article I wrote about a year ago entitled “Performance Management Demystified”.  Both are useful references but neither goes far enough in recommending how to handle the confusion. 

So, how can we make sense of it all?  The most common use of the term performance management refers to employee-related HR functions such as annual performance appraisals, hire-to-fire processes, and compensation management.  To disambiguate, some call this workforce performance management but increasingly the term “human capital management” is being used.   

Another popular use of the term performance management revolves around CFO issues such as compliance, budgeting, and financial projections.  Aficionados of this flavor have conducted a long-standing debate as to whether the category should be called business performance management (BPM), corporate performance management (CPM), or enterprise performance management (EPM).  In my opinion, each acronym has its merits but misses the fact the focus is on financial processes, not overall organizational performance.  Therefore we ought to call this category financial performance management. 

There are other specialties practiced by different vendors and consultants, including IT performance management, operational performance management, and supply chain performance management, to name but a few.  Rather than deconstructing each one, the point is that the market is currently fragmented and is not likely to consolidate any time soon.   I would draw an analogy to the CRM market of the early 90’s.  There were few, if any, broad-based CRM vendors; instead people focused on salesforce automation, marketing automation, or service automation.  Even now, 15 years later in the age of suites, specialty vendors proliferate. 

Which brings us to the final question.  What do we call the overall market for these products and services?  I’m sure some will trot out BPM, CPM, and EPM as reasonable candidates but I have a simpler suggestion.  Why not just call it performance management?  Do we really need another TLA (three letter acronym)? 

In the end, the real goal is to increase performance through better management.  While there is no one right way to do this, having better financial controls, more streamlined operations, and increased alignment between IT and business are all useful ways of getting people on the same page.  Getting them aligned.  We could even try walking around.

5 Responses to What’s in a name?

  1. Stephen August 24, 2006 at 1:42 am #

    Yeah so it makes sense that what you call financial performance management is different than workforce stuff. But what’s IT performance management or operational performance management? I went to your company’s website and couldn’t figure it out. Is it because you sell to people in operations but not people in finance? Is the product actually any different?

  2. Jonathan August 26, 2006 at 1:49 am #

    Financial performance management covers compliance, risk and other financial management issues that ultimately help CFOs improve budgeting and financial planning. IT performance management, on the other hand, helps the CIO reduce costs and manage existing portfolios so that the organization can better maximize value from technology investments, reduce risk from IT, decrease architectural complexity, and optimize overall technology expenditures. Operational performance management addresses the growing pressure to increase revenue and manage costs, while meeting ever-evolving and expanding customer demands. I’ll expound on this in a separate post.

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