Better Information, More Shareholder Value

By improving the quality and dissemination speed of information, business performance management systems increase the potential for achieving improvements in financial results.

In this troubled economy, the investor is king. Never before have companies been so committed to building shareholder value -- or shareholders so hard to please. CFOs searching for ways to gain favor with investors and Wall Street analysts are discovering a powerful ally in business performance management (BPM) software. The positive effects of a successful BPM implementation enhance every area of the organization. While there's no guarantee that those benefits will trickle down to the bottom line, finance executives can take steps to maximize a BPM initiative's chances of achieving results that will put a smile on shareholders' faces.

"If you have BPM up and running for a while, you can position your company in ways that can produce positive financial results, such as an uptick in revenues and earnings," says Alex Veytsel, research analyst with the Aberdeen Group in Boston. "With BPM, you apply the same kind of efficiencies to your business that a free market would apply, weeding out problems before they can linger and grow. As a result, a company can't be challenged as easily by competitors. You also gain the ability to evaluate your company as a whole much more precisely, which can help you see more clearly where you stand versus the competition."

Henry Morris, group vice president, applications and information access research, with IT and telecommunications marketing advisory firm IDC in Framingham, Mass., identifies two ways in which BPM can help a company improve its financial results. "First, BPM can increase efficiency in the way information is gathered. And second, it can enhance business processes by building in better feedback loops. BPM cuts across the performance of the enterprise, showing how the company is doing in terms of leading indicators such as customer satisfaction and inventory. Assuming better financial and nonfinancial information can lead to increases in stock price, BPM can indeed potentially help improve the bottom line."

A BPM system can help businesses keep profitable projects going, and it can help them decide when to pull the plug on the losers. "You can use the information BPM gives you to steer customers toward those products that are most profitable for you," Morris notes. "In addition, you can use BPM-based information to determine which customers are the most profitable."

In addition, BPM software can help companies manage their intellectual capital -- an asset that businesses frequently overlook, yet one that powerfully influences shareholder value. Finance executives can capture best practices within the organization and, in essence, bottle that expertise. "Even if some of your top employees decide to leave the company, with BPM you can capture what they've done, including their ideas for better processes and products," says Morris.