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What is Business Activity Monitoring?

Article Details
  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 04 November 2016
  • Copyright Protected:
    2003-2016
    Conjecture Corporation
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Also known as business activity management (BAM), business activity monitoring is a strategy that is involves using technology to manage or monitor business processes. By employing BAM, a company can measure the effectiveness of various internal and external factors in terms of allowing the business to function at optimum efficiency and generate the best possible returns from those activities. Business software designed for this purpose is often integral in the monitoring process, pulling and compiling data from the various information systems used within the company structure. This organization of data makes it easier to identify areas where improvement can be made as well as recognize which aspects of the operation are already functioning at peak efficiency.

While the specifics of business activity monitoring may vary slightly from one setting to the next, just about any attempt as this type of management will require three basic steps. To begin, all data relevant to the operation of the company must be collected in order to provide the basis for the assessment. Once the data is collected, it is then organized into defined categories that make it easier to extract the responses to queries regarding specific areas of the operation. As the third step of the business activity monitoring process, those responses are formulated based on the assimilated data and presented to users in a format that makes it easy to understand. This empowers the user to take the appropriate actions to improve the overall efficiency of the business enterprise.

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The idea of business activity monitoring can focus on a single aspect of the operation, a specified group of related functions, or on the business as a whole. For example, if a company desires to get an idea of how well its current risk management policies and procedures are working, the business activity software could be used to extract the relevant data, organize it into a usable format and provide a clear perspective on which processes and procedures are helping to minimize theft and fraud, and which processes need to be enhanced or replaced with a process that has a higher degree of success.

Depending on the limitations of the software used for the business activity monitoring, this approach can also be helpful in projecting different types of business costs. From this perspective, BAM aids in projecting the amount of taxes due for an upcoming period, the impact of the outcome of political elections and activities on the business itself, and even the impact that fluctuations in interest rates or stock prices will have on the overall profitability of the company. The software can even allow for shifts in the costs of raw materials, projecting how this would impact both the efficiency and the bottom line of the business in both the short and long term.

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