Sarbanes-Oxley to Drive BPM Spending in 2004

Business performance management market will grow 15-20 percent in 2004, META Group predicts

Business performance management market will grow 15-20 percent in 2004, META Group predicts

Stamford, CT  January 9, 2004  The business performance management (BPM) marketplace will grow by 15-20 percent in 2004 as companies look to BPM solutions to help address governance issues and to build more robust performance management frameworks, according to a new report from technology consultancy META Group.

The BPM market grew to approximately $1.1 billion in 2003, META reports, noting that while this represents a 10 percent-15 percent increase over the 2002 marketplace, this growth was less than most BPM vendors had anticipated for the year. However, a recent META study uncovered that 85 percent of firms will work on a BPM project within the next 18 months.

"The anticipation of increased BPM growth in 2003 was primarily due to expectations that companies would use business applications in an effort to comply with regulations for the Sarbanes-Oxley Act (SOX)," said John Van Decker, vice president with META Group's Technology Research Services. "The business drivers for the BPM market in 2003 were primarily more penetration of planning and budgeting solutions, not SOX compliance-driven sales."

In 2003, companies were chiefly involved in Section 404 activities for the assessment of internal controls. Once companies go through one fiscal closing with Section 404, they will be seeking to optimize controls and will look to BPM for improved visibility, compliance dashboards, alerts/notification tools and planning, META believes.

Moving forward, SOX compliance will likely play a larger role as a major business driver in 2004. A large number of these BPM projects will include moving to suite solutions to provide a closed-loop life-cycle approach that includes metrics, reporting and planning.

"Most of the firms that have been concentrating on SOX have been working on Section 404, which addresses internal controls and assessment; this will change by the third quarter of 2004," said Van Decker. "In 2004, we'll likely see a 15-20 percent increase in business performance management, as firms utilize BPM both for SOX compliance activities and as an enabler of closed-loop performance management frameworks."

During the first three quarters of 2004, as firms address the lagging financial management processes identified in SOX Section 404 activities, they should consider leveraging BPM to improve financial visibility, supporting SOX Sections 302 and 906, and improving notifications, which supports Section 409, META advises.

For more information on the challenges of enterprise performance management in the age of real-time data, read "The Reality of Real-time Performance Management," the Net Best Thing column in the October/November 2003 issue of Supply & Demand Chain Executive.