Top companies hold huge edge in returns.

Call it EPM, CPM or BPM, it seems that improving it can do much to bolster a company's equity market returns.

So says research from The Hackett Group, a strategic advisory firm. According to a recent "Book of Numbers" study by Hackett, companies with world-class EPM (enterprise performance management, essentially the same as business or corporate performance management) generate 2.4 times the three-year equity market returns, including stock price increase and dividends, of typical companies in their industry. In addition, these top companies outperform the equity market returns seen by typical companies in the Dow Jones Industrials.

World-class EPM organizations, Hackett concluded, focus on fewer budget line items than typical companies and make greater use of online reporting tools. They produce reports faster than typical companies, and company management has much greater confidence in the reliability of forecasting and reporting outputs.

"The bottom line is that when it comes to shareholder value, most companies are talking the talk but not walking the walk," said Hackett Senior Business Advisor John McMahan. "They are so focused on making their numbers each quarter that they ignore the bigger picture, and aren't looking strategically at their company's performance. This research quantified precisely how much it costs a company and its shareholders to take this short-term approach."

According to Hackett's Chief Research Officer, Richard T. Roth, "Companies with world-class EPM performance ... have transformed the planning process from a painful chore into a valuable tool that helps them 'see into the future' and chart a course for success. These companies make better decisions, identify opportunities more quickly, respond faster to changes in their market, and keep their eye focused on the critical issue of building shareholder value."

"A key metric is linking planning with some economic value measure, such as EVA or ROIC," Roth said in an interview, referring to economic value added and return on invested capital.

Roth adds, "If you look at the technology used to support some of these processes, transaction processes represent the first wave. The next wave was budgeting and forecasting--and now the tools are a lot better. World-class companies have gone beyond that, and are looking at how data translates into decision information."

While nearly half of typical large corporations today still rely on spreadsheets as their primary budgeting tool, Hackett found, top companies are using enterprise resource planning (ERP) systems to effectively centralize information management. These top companies do a better job of linking budgeting and strategic planning, Roth adds.

In fact, Hackett found that companies that have centralized their systems as part of automating and being more strategic in their planning and budgeting are delivering more than twice the equity market returns of their peer group. These top performers are delivering a better budget, with 57 percent fewer staff.