Business Process Performance Measurement
Background
Since organizations endeavor to measure what they manage, performance measurement is a central issue in both the literature and in practice. Performance measurement is a multidisciplinary topic that is highly studied by both the management and information systems domains (business process management or BPM in particular). Different performance measurement models, systems and frameworks have been developed by academia and practitioners. While measurement models were initially limited to financial performance (e.g., traditional controlling models), a more balanced and integrated approach was needed beginning in the 1990s due to the challenges of the rapidly changing society and technology; this approach resulted in multi-dimensional models. Perhaps the best known multi-dimensional performance measurement model is the Balanced Scorecard (BSC) developed by Kaplan and Norton, which takes a four-dimensional approach to organizational performance: (1) financial perspective, (2) customer perspective, (3) internal business process perspective, and (4) "learning and growth" perspective. The BSC helps translate an organization’s strategy into operational performance indicators (also called performance measures or metrics) and objectives with targets for each of these performance perspectives. Even today, the BSC is by far the most used performance measurement approach in the business world.
Equally important for measuring an organization’s performance is process-oriented management or business process management (BPM), which is "about managing entire chains of events, activities and decisions that ultimately add value to the organization and its customers. These ‘chains of events, activities and decisions’ are called processes". In particular, an organization can do more with its current resources by boosting the effectiveness and efficiency of its way of working (i.e., its business processes). In this regard, academic research also suggests a strong link between business process performance and organizational performance, either in the sense of a causal relationship or as distinctive indicators that co-exist, as in the BSC.
Nonetheless, performance measurement models tend to give little guidance on how business (process) performance indicators can be chosen and operationalized. They are limited to mainly defining performance perspectives, possibly with some examples or steps to derive performance indicators, but without offering concrete indicators. Whereas fairly large bodies of research exist for both performance models and business processes, no structured literature review of (process) performance measurement has been carried out thus far. To the best of our knowledge, existing reviews cover one or another aspect of performance measurement; for instance, reviews on measurement models or evaluation criteria for performance indicators. Despite the considerable importance of a comprehensive and holistic approach to business (process) performance measurement, little is known regarding the state of the research on alternative performance indicators and their operationalization with respect to evaluating the performance of an organization’s work routines. To some extent, this lack of guidance can be explained by the fact that performance indicators are considered organization-dependent, given that strategic alignment is claimed by many measurement models such as the BSC. Although the selection of appropriate performance indicators is challenging for practitioners due to the lack of best practices, it is also highly relevant for performance measurement.
The gap that we are studying is the identification and, in particular, the concretization/operationalization of process-related performance indicators. This study enhances the information systems literature, which focuses on the design and development of measurement systems without paying much attention to essential indicators. To fill this gap, our study presents a structured literature review in order to describe the current state of business process performance measurement and related performance indicators. The choice to focus on the business process management (BPM) discipline is motivated by the close link between organizational performance and business process performance, as well as to ensure a clear scope (specifically targeting an organization’s way of working). Accordingly, the study addresses the following research questions.
- RQ1. What is the current state of the research on business process performance measurement?
- RQ2. Which indicators, measures and metrics are used or mentioned in the current literature related to business process performance?
The objective of RQ1 is to identify patterns in the current body of knowledge and to note weaknesses, whereas RQ2 mainly intends to develop an extended list of measurable process performance indicators, categorized into recognized performance perspectives, which can be tailored to diverse purposes. This list could, for instance, serve as a supplement to existing performance measurement models. Practitioners can use the list as a source for best practice indicators from academic research to find and select a subset of performance indicators that fit their strategy. The study will thus not address the development of specific measurement systems but rather the indicators to be used within such systems. To make our intended list system-independent, we will begin with the BSC approach and extend its performance perspectives. Given this generic approach, the research findings can also be used by scholars when building and testing theoretical models in which process performance is one of the factors that must be concretized.
The remainder of this article is structured as follows. "Theoretical background" section describes the theoretical background of performance measurement models and performance indicators. Next, the methodology for our structured literature review is detailed in "Methods" section. The subsequent sections present the results for RQ1 ("Results for RQ1" section) and RQ2 ("Results for RQ2" section). The discussion of the results in provided in "Discussion" section, followed by concluding comments ("Conclusion" section).