Counting the results

What kind of improvements are companies getting, and in what part of their business, as the result of an initiative to improve their BI and performance management capabilities?

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  32.7% gross margin versus 24.7% for industry norm, and 15.3% for laggards
  

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  65.7% profitable segments versus 41.3% for industry norm, and 31.5% for laggards
  

• 
  27.2% share of profitable segments versus 20.1% for industry norm, and 14.9% for laggards

Best-in-class companies improved the most in terms of an absolute increase in percentage gross margin, but enterprises that we ranked performing within the industry norm achieved the highest proportional gains. These companies had both more improvement potential than the best in class, and deployed true closed-loop programs as compared to many laggard companies who were more focused on improving automation and reporting.

More than two-thirds of survey respondents reported at least some improvement in performance metrics such as margin, profitable growth and profitable segments. The most improvement centered on customer-facing metrics such as percentage gross margin, and percentage profitable growth. The high profile given by enterprises to tracking segment portfolio profitability and market share is consistent with the emphasis placed by most enterprises with the objective of winning where it matters most -- in the external marketplace.

Best-in-class companies increased annual profits by an average of $35 million versus $24 million for industry norm and $20 million for laggards (based on annual revenue of $500 million). Sellers (Retailers/Wholsales/Distributers) achieve the highest relative and absolute gains in performance (seven percentage point gain in ROA versus a five percentage point average).

Larger companies achieve better overall performance mainly due to their more mature Corporate Performance Management (CPM) practices and technologies, as well as the economies of scale. Medium-sized companies benefit the most from a proactive program (14 percentage points gain in ROA and 25 percentage points in percent gross profit versus 5 percentage points and 4 percentage points for larger companies), which can be attributed to their greater cross-functional flexibility and the relatively higher upside from a base of less advanced CPM practices.

The evidence is clear that improved business intelligence and performance management capabilities -- processes and technologies -- are paying off impressively for companies across all industries and sizes.