Earlier this week I got together with a group of entrepreneurs I know and I was surprised to learn that one of them is starting to instrument his online application to provide Business Activity Monitoring (BAM) capabilities. Granted, he didn’t realize that what he was doing was BAM, but that just shows that as a business person he intuitively knew he needed to instrument and monitor his business.

This is a very smart move on his part. Early on in a startup’s life cycle all the focus can be on the business of the end users and forget about the business of running the business. With limited engineering resources, where do you invest them? Most startups will invest all of those resources into their product offering. Only later, when the product complexity has grown and they are out talking to investors do they realize the mistake they made.

This particular entrepreneur is the founder of Amahi, which offers a linux home server. You sign up for the Amahi service, which is currently free, and then download the Linux based software needed to run your home server. Amahi has highly automated the process of getting everything installed and up and running, in the end you have your old PC re-provisioned as a home server for your “family intranet”. You can then monitor your home server from the Amahi website.

With their new instrumentation, Amahi can now monitor how many people have signed up and where each one is in the installation process. If a customer stalls out somewhere in the installation, Amahi now knows about it and can proactively reach out to provide assistance. Beyond that, as the person running the Amahi business, the Founder now knows what his conversion rates and time frames are for customers for each stage of their installation. If Amahi ever needs to go talk to investors for funding, this information is invaluable as it shows how their business works and provides the investors a sense of comfort that the business is being professionally managed.

As a long time statistics hound, I worked in the early day of the web providing application instrumentation for running explosive web businesses. We were always focused on the technical instrumentation of the servers, but I also got interested in the business possibilities instrumentation provided. BAM has been a decade long initiative to move that instrumentation up to the business level, an initiative which was highly successful. However, BAM typically focuses on larger companies. The principals of BAM can just as easily be applied to Startups with just as much value. The startups just need to invest the time to build it into their system from the start.