Be Careful What You Wish For

What enterprise software market is growing 15%/year and is expected, if anything, to accelerate in the next few years?  If you answered, "Sarbox compliance app's," guess again:  They grew far more than 15% in the last couple of years but must, by nature, slow down.  "No such software?"  Cute, and yes it has been painful since the bubble, but the real answer is "Business Performance Management" software.

At least since I was in MBA school, when it was called "executive information" or "decision support," what it's supposed to do is display in one place, usually through a dashboard or scorecard interface, a wide array of financial and strategic information, all tied to real-time operational performance, summarized so as to enhance trend-spotting, exception analysis, and strategic decision-making in general.  Sounds great, but as with so many IT initiatives that are predicated on the assumption that one can seamlessly tie together information from different databases on different systems installed at different times for different purposes, well, you get the idea. 

What's new this time?

• The Web in general, and XML standards in particular, provide new tools for integrating data across legacy platforms.
• Sarbanes-Oxley (yes, it is ubiquitous—it's not your imagination) has mandated unitary and uniform financial reporting.
• BPM software is getting cheaper ($50,000—$150,000 for a company today vs. $250,000 and up previously).

Typically (human nature being what it is), corporations undertake a BPM implementation to deal with an exogenous shock.  The California-based chain "Smart & Final" adopted it when a state-wide grocery workers' strike threw their business a happy curve (as a non-union shop, customers reluctant to cross picket lines favored them instead).  Universal Pictures bit the bullet after 9/11 when its theme-park traffic tanked.  Viasys, a healthcare roll-up combining over a dozen companies with the resultant tower of financial Babel, had little alternative if they wanted to stay on the SEC's good side.  PMI Mortgage Insurance discovered the recent tidal wave of refinancings left it with no handle on its portfolio risk.  And so on.

An effective BPM implementation can provide solid numbers on things you need to know about (the cost of associate turnover, for example, or the profitability of a far-flung office), but also can produce informational kryptonite that must be zealously safeguarded until ready to see the light of day.  For example?  Not just the profitability of a particular partner or a particular client relationship, but trends over time, and enough background to enable you to form a view as to whether the positive trends can be sustained and the negative trends reversed.  As one of the CFO's who's been through it says:

"Everyone who goes down this path needs to realize that this is not an IT project."

Knowledge remains, however, power.