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New Digital World-Class Model Details How Finance Orgs Can Further Improve Efficiency & Effectiveness, Impact Revenue Growth, Agility, Customer Experience and More
Today’s world-class finance organizations operate at a 36% lower cost than typical functions, are run with 45% fewer full-time equivalents (FTEs), and are 21% more likely be perceived as agile in meeting business challenges, according to new research from The Hackett Group, Inc. (NASDAQ: HCKT).
The Hackett Group research also projects even higher levels of performance that finance can unlock through accelerated digital transformation. The Hackett Group’s analysis finds that over a three-year period, world-class finance organizations can transition to a "Digital World Class" model that would enable them to operate at 44% lower cost than typical finance organizations with 58% fewer staff, while driving greater value and new digital capabilities for their companies. A 25% improvement in operational efficiency through automation is a key part of this cost advantage. But to achieve this, even world-class finance organizations will need to increase their investment in technology while developing new capabilities, The Hackett Group’s research finds.
In addition to improved efficiency, digital world-class performance drives effectiveness across the enterprise, resulting in greater enterprise value creation. This effectiveness is evident across multiple dimensions, including: enablement of revenue growth strategies; increased customer intimacy; greater return on investment; faster speed to decision-making; and increased agility.
The research offers a detailed action plan for how finance organizations can transition to a next-generation, enterprise-aligned operating model. The finance function of the future will be capability-focused, digitally driven, agile, and enterprise-leveraged, as it more effectively enables future business strategies. Digital world-class finance organizations will allocate resources differently, the research found, shifting staff away from transactional work and reallocating capacity toward Digital Global Business Services Operations and Enterprise Capability Centers, while dramatically reducing resources at the corporate and business unit level.
A public version of the research, "Transforming Finance to Prevail in the Next Normal," which contains more than 50 metrics detailing the performance of typical, world-class, and digital world-class finance organizations, is available on a complimentary basis, with registration, here.
The coronavirus pandemic and the accompanying extreme economic uncertainty have also lent new urgency to the need for finance organizations to improve the agility of their forecasting and analysis processes, the research found. Sophisticated financial planning and analysis teams are beginning to create an end-to-end view of the data analytics process, which starts with data curation and ends with producing actionable insight. They are automating a greater share of data collection and embracing new analytics techniques such as predictive modeling. World-class finance organizations spend more time analyzing data versus collecting and compiling it, the research found. They also focus on proactive analysis and decision-making versus historical reporting, and use more sophisticated, analytics techniques, the research found.
According to The Hackett Group Principal, Finance Transformation Bryan Hall, "World-class has always been a moving target, but today finance can no longer rely on incremental improvement initiatives. It must take bold, accelerated action to adopt digital capabilities and transform its operating model. The benefits can extend far beyond cost reduction. For example, leaders in digital transformation are 3x more likely to have projects meet or exceed ROI, in part because superior analytics leads to greater understanding of risk and return. Digital world-class companies are also able to accelerate innovation and product development, respond more quickly to opportunities and disruptive events, and dramatically improve customer loyalty and intimacy. The effort required to achieve these results is significant. But it’s more than worthwhile."
"Finance must reinvest in both people and technology, while making significant changes to how and where work is done," Hall explained. "It must also upskill and reskill its workforce to improve expertise in a wide array of areas, including advanced analytics, technical IQ, digital savviness and customer-oriented service design. Finally, enhancing business partnering skills such as emotional intelligence and relationship management are key."
According to The Hackett Group Global Finance and GBS Advisory Practice Leader Jim O’Connor, "The next-generation operating model for finance represents a major shift, from functional- to enterprise-alignment of resources. In an optimal future-state operating model, finance resources in the business units become business enablement leaders, with no transactional or finance specialist work remaining in those entities. The chief financial officer’s role shifts from leading a silo of protected resources to coordinating various teams that contribute to finance objectives. This transition represents a major cultural change and radical departure from traditional finance organization design and governance. It involves breaking down functional process barriers within the function and creating enterprise capability to catapult the organization into the next normal."
World-class finance organizations are those that achieve top quartile performance in efficiency, effectiveness, and stakeholder experience across an array of weighted metrics in The Hackett Group’s comprehensive finance benchmark. Digital world class is The Hackett Group’s projection of the additional benefits that world-class finance organizations can derive from technology and digital enablement in executing finance work and optimizing the technology landscape. The Hackett Group’s world-class finance research is based on an analysis of results from benchmarks, performance studies, and advisory and transformation engagements at hundreds of global companies.
About The Hackett Group
The Hackett Group (NASDAQ: HCKT) is an intellectual property-based strategic consultancy and leading enterprise benchmarking and best practices digital transformation firm to global companies, with offerings that include cloud ERP, EPM and analytics implementation. Services include business transformation, enterprise analytics and global business services. The Hackett Group also provides dedicated expertise in business strategy, operations, finance, human capital management, strategic sourcing, procurement and information technology, including its distinguished Oracle, SAP, Coupa and OneStream practices.
The Hackett Group has completed nearly 18,000 benchmarking studies with major corporations and government agencies, including 93% of the Dow Jones Industrials, 90% of the Fortune 100, 80% of the DAX 30 and 57% of the FTSE 100. These studies drive its Best Practice Intelligence Center™ which includes the firm's benchmarking metrics, best practices repository and best practice configuration guides and process flows, which enable The Hackett Group’s clients and partners to achieve world-class performance.
Cautionary Statement Regarding "Forward Looking" Statements
This release contains "forward looking" statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Statements including without limitation, words such as "expects", "anticipates", "intends", "plans", "believes", seeks", "estimates" or other similar phrases or variations of such words or similar expressions indicating, present or future anticipated or expected occurrences or outcomes are intended to identify such forward looking statements. Forward looking statements are not statements of historical fact and involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward looking statements. Factors that may impact such forward looking statements include without limitation, the ability of Hackett to effectively market its digital transformation and other consulting services, competition from other consulting and technology companies who may have or develop in the future, similar offerings, the commercial viability of Hackett and its services as well as other risk detailed in Hackett’s reports filed with the United States Securities and Exchange Commission. Hackett does not undertake any duty to update this release or any forward looking statements contained herein.
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Gary Baker, Global Communications Director - (917) 796-2391 or firstname.lastname@example.org