Does BPM Build Shareholder Value?

CFOs have long suspected a link between a successful BPM initiative and increased profitability. New research connects the dots.

The stock market has been moving in a flat, narrow range for what seems like forever. Investor confidence has been in the doldrums almost as long. The past few years have been a tough slog for companies trying to keep their shareholders from jumping ship. What can leaders do to convince investors that their organization's prospects are bright and to separate their company from the herd?

One answer might be: Launch a business performance management (BPM) technology initiative. Savvy CFOs have long known that the dynamic, real-time data these systems deliver enhances visibility into future performance and provides critical support for effective decision-making.

At the same time, most finance executives might hesitate to claim that BPM tools have a direct, positive impact on shareholder value. Yet such an assertion is by no means far-fetched. For example, BPM software is key to creating and monitoring nonfinancial metrics -- including elements of the Balanced Scorecard, such as customer satisfaction, process quality, innovation and employee retention -- that can transform an organization's performance. Failure to consider these indicators leaves companies in the dark about how they're likely to perform in the future. That makes them susceptible to unpleasant earnings surprises that can seriously erode shareholder confidence.

BPM-enabled companies have a better chance of spotting a potential earnings shortfall while it's still on the horizon, and that forward visibility gives them time to correct the deficiency or at least dilute negative results before the end of the reporting period. But the benefits of BPM technology go beyond increased agility. These tools deliver an array of gains that are deeply attractive to shareholders, including greater transparency; enhanced compliance capabilities; and faster, more accurate reporting.