Typical finance organizations can substantially narrow the gap
between their cost levels and that of top performers, and top
performers can become even better by leveraging digital
transformation, according to new world-class finance research from
The Hackett Group, Inc. (NASDAQ: HCKT).
A public version of the research, “Raising the World-Class Bar
in Finance Through Digital Transformation,” is available on a
complimentary basis, with registration, at this link:
https://www.thehackettgroup.com/research/2017/wcpafn17/.
World-class finance organizations are those that achieve
top-quartile performance in both efficiency and effectiveness
across an array of weighted metrics in The Hackett Group’s
comprehensive finance benchmark.
According to The Hackett Group’s research, typical finance
organizations can cut process costs by 35 percent by adopting
digital technologies, nearly matching the level seen today by
world-class organizations. World-class finance organizations run
their shops at 45 percent less overall cost as a percentage of
revenue than peer organizations.
While cost per revenue for world-class finance functions has
been flat for the last several years, the research found that
world-class performers continue to improve by investing in key
areas such as technology rationalization, advanced analytics,
process optimization and application modernization.
To break the cost barrier, world-class finance organizations
need to turn to digital transformation, The Hackett Group’s
research finds. World-class finance organizations can use digital
tools to cut process costs by an additional 20 percent while
substantially increasing effectiveness. For example, adopting
digital tools can increase the amount of time top performers spend
on analytics to 75 percent, reduce billing errors to 1 percent and
increase invoices paid within terms to 95 percent.
Already, technology is making a big difference in the efficiency
and effectiveness of world-class finance organizations, enabling
them to add greater value to the enterprise. Technology-enabled
world- class finance organizations see up to 66 percent lower error
rates. They also facilitate more analysis and smarter decisions by
spending 24 percent less time collecting and compiling data.
Technology advancements are also enabling top performers to
better support their companies with more advanced analytics. They
are 41 percent more likely to include both financial and
non-financial key performance indicators in their analysis, and are
85 percent more likely to rely on a mature performance scorecard to
measure finance performance.
Although world-class finance organizations owe a great deal of
their success to technology, they expect to spend 61 percent less
on it in 2017 than typical finance organizations, relying on
deliberate planning, sound governance, systems rationalization and
new tools to reshape their service delivery model and keep a lid on
costs. But The Hackett Group’s research indicates that world-class
finance organizations are planning to increase their spending on
technology over the next few years, to address digital
transformation.
“Finance has largely reached an inflection point, where legacy
approaches to automation and transformation are simply not yielding
additional performance improvements,” said Nilly Essaides, senior
EPM & finance research director at The Hackett Group “The good
news is that digital transformation technologies, including robotic
process automation, big data, advanced analytics and cloud-based
applications offer exceptional improvement opportunities for both
world-class and typical companies.”
“Typical finance organizations can virtually match world-class
process costs using digital transformation, and world-class finance
organizations can use digital transformation to break through the
cost-reduction plateau where they’ve been trapped for several
years,” said Ms. Essaides.
The Hackett Group’s research details six areas where finance
organizations can harness digital technologies to improve
efficiency and effectiveness. Digital customer engagement
tools can be used to get closer to internal and external
stakeholders -- for example by setting up portals to interact with
vendors or customizing reports for internal end users. Robotic
process automation can enable software to perform rule-based
activities previously handled by people. The savings of opportunity
of such individual activities can amount to up to 90 percent.
Depending on how many activities in a process are automatable with
RPA, total process cost savings typically range between 20 and 40
percent.
Advanced analytics can enable the finance function to use
big data and more powerful analytical models and tools to drive
greater insight and improved decision making. For example,
predictive analytics can help finance pull external data on
particular companies, plus project economic data on particular
geographies and combine it with customer payment history to make
credit decisions. Or algorithms can be used to enhance forecasting
by examining social media posts about potential trouble spots and
analyzing the intensity of discussion based on specific key words
collected in big data repositories.
Modern digital architecture includes ongoing
rationalization of the legacy finance application portfolio,
adopting cloud-based based alternatives for new functionality or
migration of existing financial application, mobile enablement,
modularization and (big data) analytics support. Digital
workforce enablement can help enhance productivity, streamline
the creation and capture of knowledge, and improve the value
contribution of individual workers and their virtual teams. One
pharmaceutical finance organization, for example, relies on Yammer,
an intracompany social media platform, to connect employees,
crowdsource answers, speed up the development of new ideas and
appeal to younger employees. Finally, cognitive computing --
self-learning systems that use data mining, pattern recognition and
natural language processing to mimic the way the human brain works
-- can augment the ability of finance staff to run models, make
predictions and analyze large data sets.
“We’ve seen many clients generate dramatic improvements in
finance using these tools, individually or in combination,” said
Richard Cardillo, The Hackett Group principal and finance
transformation practice leader. “Finance organizations must
continue to invest in digital technologies to significantly
accelerate the transformation of their service delivery model
through improving capability across organization design, process
standardization, working more effectively with third-party
providers and reinventing their talent model through deploying a
digital-ready workforce.”
Jim O’Connor, finance advisory practice leader and principal,
added that “Finance cannot ignore the digital promise or it risks
compromising its ability to compete in the fast-changing business
environment. By adopting digital technologies, finance can
substantially reduce cost and boost effectiveness resulting in
greater enterprise agility and the ability to keep pace with
external change.”
The Hackett Group’s world-class finance research is based on an
analysis of results from recent benchmarks, performance studies,
and advisory and transformation engagements at hundreds of large
global companies. Download a public version on a complimentary
basis, with registration, at this link:
https://www.thehackettgroup.com/research/2017/wcpafn17/.
About The Hackett Group
The Hackett Group (NASDAQ: HCKT) is an intellectual
property-based strategic consultancy and leading enterprise
benchmarking and best practices implementation firm to global
companies, offering digital transformation and enterprise
application approaches including robotic process automation and
cloud computing. Services include business transformation,
enterprise performance management, working capital management
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 award-winning Oracle EPM and
SAP practices.
The Hackett Group has completed more than 13,000 benchmarking
studies with major corporations and government agencies, including
93% of the Dow Jones Industrials, 87% of the Fortune 100, 87% of
the DAX 30 and 58% 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.
More information on The Hackett Group is available at:
www.thehackettgroup.com, info@thehackettgroup.com, or by calling
(770) 225-3600.
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version on businesswire.com: http://www.businesswire.com/news/home/20171102005869/en/
The Hackett GroupGary Baker, 917-796-2391Global Communications
Directorgbaker@thehackettgroup.com
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