How BPM Bolsters Compliance

When companies buy a business performance management (BPM)system, most of them aren't thinking about how it can help them fill their compliance needs. They should be, according to experts on both of these topics. John McMahan, finance advisory practice leader at The Hackett Group in Atlanta, says that a typical company maintains six planning systems on average, compared with a BPM best-practices company's three. "If you have to pull information for compliance from six systems vs. three systems, you have more chances for errors and more complexity, and you increase the odds of more compliance problems," he says. "In addition, BPM best-practices companies have 48 percent fewer reports than their peer group, so they have less mining to do to get to the important data, which translates into a better focus on what's material to their business. And BPM best-practices companies are 32 percent more likely to use nonfinancial performance indicators, a practice that serves as a better foundation for forecasting, enables them to be more externally focused and acts as an early-warning system for reporting of material events."

Meeting Sarbanes-Oxley requirements can become a relatively simple process if a company operates a BPM system with capabilities for data cleansing and standardization, consistency of data definitions and controls over data access. "If you have a successful BPM system in place, much of the compliance work is already done," says Brian McCarthy, executive partner in finance and performance management at Accenture in Atlanta. "We're finding BPM best-practices companies have a center of gravity for centralized performance reporting, data, metrics, security and control." For some organizations, this streamlining may result in reduced compliance expenses. Sean D. Kracklauer, Sarbanes-Oxley compliance practice leader at The Hackett Group, believes a link can be made between BPM capabilities and compliance efficiencies. "Particularly when it comes to Section 404 of SOX, we can say that companies with better performance management have less-complex systems and fewer line items, which translates into easier compliance and lower compliance costs," Kracklauer says.