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BPM Pulse 2010 Results and Analysis, Part 3

Originally published June 15, 2010

After reviewing the who, what, why, and how in Parts 1 and 2 of this series, we are now ready to delve into some of the details. Specifically, this month we will look at which business capabilities are most important to purchasers of business performance management (BPM) solutions.

Business Capabilities

Regardless of which components of BPM respondents were implementing, there were certain consistent business benefits they were all looking for. The Pulse survey had respondents rate a list of sixteen potential business capabilities on a 1-5 importance scale (1 = not important, 5 = very important). The top 3 choices, all with about 80% of respondents rating them a 4 or 5, were: profitability optimization and analysis, enhanced reporting, and continuous forecasting/scenario analysis.

It is clear that every company is looking for ways today to enhance their profitability. This is different than just cutting expenses or finding new revenue streams. They want to optimize what they have. This involves understanding the true cost of products and services (which often benefits from some form of activity-based costing) and the actual profits (not just revenues) generated by that deliverable. Companies can then surgically remove or attempt to fix under-performing areas of their business as opposed to making blanket cuts across the board. The desire for enhanced reporting highlights the continuing challenge of enabling users to easily see just the information they need to see when they need to see it. As the volume and types of data increase, this task becomes even more difficult. The need for continuous forecasting/scenario analysis underlines the uncertainty of today's economic environment. Companies don't know what tomorrow will bring, but they know they need to be prepared for it. They need to analyze and be prepared to manage to several different possible outcomes. In addition, they need to keep current the data they use to make ongoing business decisions. The days of managing to a budget that was locked in stone 12 months ago are long gone.

It is also interesting to note the least popular capabilities on the list of sixteen we provided. Having only 20-25% of respondents rating them as important, they were: income tax provisioning and planning, support for IFRS, and external benchmarking. I can understand why the general respondent population rated tax planning on the low end of the spectrum. While it is vitally important to the business, it is something that only a handful of people in the company focus on. I also understand why IFRS rated fairly low in importance at this point in time. As the U.S. government has delayed the adoption of IFRS several times and sent out mixed signals, companies have focused on more pressing matters. The one that troubles me on this list is external benchmarking. Yes, it is difficult to do. Beyond the technical hurdles, how do you actually find similar data from other companies that is publicly available so you can do an apples-to-apples comparison of your performance? It is a problem worth solving and one vendor, Cartesis, came close before that capability got lost during their acquisition and consolidation. It is one thing to evaluate your performance against your own targets. What if you aimed too low though? What if your competition has much better margins? I believe it would be very valuable to compare your performance against that of your industry peers.

Impact of the Economy

We were also curious as to what specific impact the economy was having on how companies were using business performance management. So we asked them to identify which areas of business performance management had grown in importance due to the current economic conditions. The answers that led the pack were, for the most part, fairly predictable: profitability optimization, scenario modeling, expense management, and cash flow analysis. The one that stood out to me though was strategic planning. It tied with profitability optimization as most important in a tough economy. This means that many companies are recognizing that the current economic environment may have more than just a short-term impact on their business. They need to optimize their performance today, but equally important they need to plan for a tomorrow that will likely not return to business as usual.

These findings reinforce our belief that business performance management is even more important when times are tough. We have certainly seen companies that clamp down on spending and cancel or delay their performance initiatives due to internal or external economic challenges. This appears to us to be short-sighted. A good BPM system can be your guide as you navigate the choppy waters of today as well as prepare you for a better tomorrow.

For the complete list of the sixteen business capability choices in the survey as well as the ten choices and ratings related to the economy, get your own copy of the 2010 Pulse results available now here.

Next month we will look at technology capabilities and hopefully have enough space left to wrap-up our survey analysis with an examination of spending plans.

  • Craig SchiffCraig Schiff

    Craig, President and CEO of BPM Partners, is a pioneer in business performance management (BPM). Craig helped create and define the field as it evolved from business intelligence and analytic applications into BPM. He has worked with BPM and related technologies for more than 20 years, first as a founding member at IMRS/Hyperion Software (now Hyperion Solutions) and later cofounded OutlookSoft where he was President and CEO.

    Craig is a frequent author on BPM topics and monthly columnist for the BeyeNETWORK. He has led several jointly produced webcasts with Business Finance Magazine including "Beyond the Hype: The Truth about BPM Vendors," the three-part vendor review entitled "BPM Xpo" and "BPM 101: Navigating the Treacherous Waters of Business Performance Management." He is a recipient of the prestigious Ernst & Young Entrepreneur of the Year award. BPM Partners is a vendor-independent professional services firm focused exclusively on BPM, providing expertise that helps companies successfully evaluate and deploy BPM systems. Craig can be reached at cschiff@bpmpartners.com.

    Editor's Note: More articles and resources are available ináCraig'sáBeyeNETWORK Expert Channel. Be sure to visit today!

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