Current Date:June 18, 2024

Do Companies that Run Smarter® Trade Higher?

Many years ago, my company coined the term Run Smarter® to capture the essence of what our customers achieve with Laserfiche solutions. Over those years, I’ve become an expert in what sort of company truly understands the value of their investment in IT. I got to thinking these companies might be worth investing in, so I asked my team to survey the research on stock price and IT investment.

As I expected, the team found correlations supporting my theory that companies that Run Smarter®, trade higher: Researchers at the University of Texas at Richardson found a positive correlation between the market value of firms and their current IT spending. The same study found higher market valuation of IT versus non-IT assets as well as “higher incremental market value associated with IT spending” by publicly traded companies. The study concludes: Company market value associated with IT investment is remarkably higher than those companies without. That increased value is attributed to gains from automation as well as from transforming company processes and operations.

Further, the science also suggests that healthy companies are in a better position to invest in the digital transformation these organizations need. IT infrastructure development is a multistep process and one only to be taken deliberately. According to a paper in the International Journal of Academic Research in Accounting, Finance and Management Sciences, for IT infrastructure spending to succeed, it needs to be part of a plan that includes communication, legal and education infrastructure, and workforce training. The study adds that properly utilized and managed development of IT infrastructure have very beneficial effects on a company’s economics. In other words, healthy, growing companies tend to Run Smarter®.

I have seen this in action at organizations that have implemented Laserfiche solutions. While some have simply implemented the software and expected the organization to take full advantage of the power of our offering, others have embraced not just the software solution but the organizational change required to drive their valuation higher.

An example is CIRCOR International, which designs and manufactures highly engineered products for the energy, aerospace and industrial markets. CIRCOR competes with the likes of Boeing, Lockheed and Raytheon—certainly well-known companies one might consider for investment. But I had an insight that few do: Pibiviesse, an Italian subdivision of the company, initially purchased Laserfiche document management in 2012, and significantly upgraded that system in 2015.

Pibiviesse’s Laserfiche implementation started as a digitizing effort, but in 2015 they unveiled a new intent. After attending the Laserfiche Empower Conference, Pibiviesse’s IT staff came to understand that deeper digital transformation opens up new ways of managing information. Information flow is the lifeblood of any organization, and the better it flows the more efficient the organization. In fact, this was the idea behind our Run Smarter® tag line. It was this decision by the Pibiviesse team to Run Smarter® that made me think the parent company might be a good stock to buy, and I was right. An investment in CIRCOR stock produced a double-digit return in about a year.

This got me thinking about what happens inside a company that decides to Run Smarter®, and what makes them trade higher. A deeper dive into Pibiviesse revealed a number of key facts:

1. Pibiviesse manufactures ball valves for power generation and oil and gas corporations across the globe. In this highly regulated industry, Pibiviesse must adhere to more than 400 different standards. If the company delivers a valve without all the required documentation, the valve cannot be used—and months of work go to waste. Before digitizing the manufacturing process, Pibiviesse had a 30-40 percent success rate for delivering documentation to its customers because staff lacked visibility into the many stages of its production cycle.

2. Laserfiche is now the backbone of Pibiviesse’s enhanced production line. The system stores all documentation related valves in a centralized repository, creates reports on order status to identify production delays, and emails to-do lists to appropriate employees when a task or document needs attention. More information on this process is available here.

3. While process automation is an established technology, it’s part of a larger digital transformation the company is undergoing, which provides the opportunity to analyze operations and the performance of individuals involved at every step of the process. Because these analytics reach deep into every facet of operations, they open up the opportunity to tally all these improvements into bottom-line results.

4. From a business perspective, the time savings gained through implementing Laserfiche solutions—business process automation, digital forms and operational analytics—multiply across the number of people involved in any automated process. Engineering firms dealing with highly sensitive products can have dozens of staff interactions with a single document and process. Multiply that savings by the number of information processes flowing through any publicly traded company and my investment strategy starts to gain traction.

Pibiviesse is rounding the corners and straightening the curves in information flow throughout its operations. Without this technology, the only hard numbers the organization had regarding operational efficiency were input and output, while the many stages in between are often left more to guesswork. But we at Laserfiche know that many companies like Pibiviesse are just scratching the surface of the savings they will enjoy through Laserfiche digital transformation. Many of our customers using electronic forms, automating business processes and leveraging analytics report an ROI in less than a year, many achieving greater than a 10:1 return on their Laserfiche investment over time.

This was all starting to add up to a pretty sound investment strategy. So I looked for other companies new to Laserfiche process automation and made another big return on Rogers Communications stock. Looking deeper, I found that of our Laserfiche Fortune 500 customers, 80 percent saw their stock price rise an average of around 350 percent since their first purchase of our solutions. This outperformed the Dow Jones Industrial Average more than 2.5 times over the same time period. Those companies ask that we not reveal their names, but you are welcome to contact my marketing department to learn more. Of course, this is not a promise that you will do as well as I have, but in my opinion it certainly suggests that companies that Run Smarter® will trade higher.

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