BPM's Lifeline for Capital Spending

Business performance management software can guide companies to the most lucrative capital investments. But data integration problems hold up progress.

If you ever owned a Swiss Army knife, you probably discovered more uses for it than you first imagined. Some tools are more versatile than initially meets the eye. Business performance management (BPM) software is just such an instrument. Most companies use it for budgeting and forecasting, but other applications -- such as its assistance in evaluating the consequences of prospective capital investments -- are worth equal consideration.

"The immediate usages for BPM are financial
consolidation, reporting and budgeting, as ways to respond to the Sarbanes-Oxley Act," says Lee Geishecker, research vice president at Gartner Inc. in Sandwich, Mass. "BPM for capital spending is a sort of phase two. The ability to apply BPM capabilities to capital spending is just now coming up on corporate radar screens."

Geishecker calls capital expenditures a "blow hole" in the balance sheet, since so many questions surrounding those decisions seem to be up in the air. "Finance managers tend to question if their depreciation methods are appropriate (particularly in areas such as software depreciation), whether or not they're allocating costs correctly, and how well their capital spending decisions are lining up with the company's strategic vision," she says. "BPM offers help on those fronts, enabling more in-depth analysis."