Fast Company

Possible new SEC rules drive need for next-generation business planning software

The U.S. Securities and Exchange Commission (SEC) has proposed new corporate financial disclosure guidelines that, if implemented, are likely to accelerate the already rising demand for business performance management (BPM) applications.

Furthermore, these guidelines, should they take effect, could create "separation" for software vendors that provide better support for real-time, collaborative analysis and planning than their rivals.

In April 2002, the SEC formally called for new regulations that would narrow the reporting window for filing quarterly financial statements from 45 days to 30 days and reduce the time for filing of annual statements from 90 days to 60 days. In a press release earlier this year, the SEC noted that the current reporting periods had stood for more than 30 years, and that "significantly reduced time periods for the capture and analysis of information and significant technology advances" during that period require "new consideration" of disclosure timing.

In 2002, BPM has already become the rallying point for mainstream analytic software companies — Brio Software Inc., SAS Institute Inc., and Cognos Inc. are examples — that are eager to create a presence close to core customer business processes. In the meantime, software companies that have traditionally specialized in this area, such as Hyperion Solutions Corp., Comshare Inc., and Adaytum Inc., are working hard to ride the BPM wave as long as possible.

According to Hyperion chairman and CEO Jeffrey Rodek, the trend for finance departments has been moving in the direction of "getting more information faster and doing a better job of planning" since the current recession began in early 2000. In his view, the possibility of a tougher regulatory environment will simply make current needs that much more obvious. In fact, says Rodek, Hyperion is already seeing "greatly increased demand for BPM software that helps companies anticipate and plan for change. More companies are moving from annual budgeting to quarterly or monthly planning, which requires more modeling and collaboration."

Just as important, Rodek believes, is the fact that fallout from this year's litany of accounting scandals is leading to increasingly close board governance. "Boards are going to start requiring much clearer performance measurement from their companies," he says. "You're going to see even more pressure for deployment of this technology because of that than as a result of possible SEC regulations."

Management at Adaytum Inc., a Minnesota-based enterprise business planning software company that advocates a real-time, collaborative approach to that process, is also eager to capitalize on an upsurge in demand for predictive solutions that help financial managers continuously anticipate problems. According to CEO Guy Haddleton, the greater planning speed and accuracy now required by investors, analysts, and regulators has already forced traditional business planning approaches to the breaking point. New regulations will simply exacerbate the need to create a more "granular" picture of where the company is heading and why.

As Haddleton summarizes the issue, "CFOs need to know what's happening in their companies today. Having real-time information about business performance is very important right now."

— Justin Kestelyn

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