By fully embracing digital transformation typical finance organizations can reduce costs by more than 40%, rapidly accelerating their progress towards previously unattainable world-class efficiency levels, according to new world-class finance research from The Hackett Group, Inc. (NASDAQ: HCKT).
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Finance Smart Automation Efficiency Opportunity – By fully embracing digital transformation, typical finance organizations can reduce costs by more than 40% (Photo: Business Wire)
The research also unveiled The Hackett Group’s new “Digital World Class” analysis, an estimate of the additional benefits that world-class finance organizations can achieve through the combination of operating model changes, full technology landscape optimization, and the successful adoption of digital technologies. Through digital transformation, world-class finance organizations can improve efficiency by nearly 20%, making them 60% more efficient than typical finance, the research found. This ‘breakthrough’ can free up staff and budget resources enabling world-class finance organizations to further digital transformation initiatives, engage in more value-added activity, or fuel company growth.
The Hackett Group’s research also emphasized that in part due to changes driven by digital transformation, next-generation finance organizations are moving beyond the inward-focused metrics of efficiency and effectiveness to also directly measure the experience of key stakeholders. As a result, The Hackett Group has added “experience” as a separate area of analysis, measurement, and transformation focus.
Both typical and world-class finance organizations can accelerate their digital transformation programs with smart automation, including robotic process automation, cognitive automation, intelligent data capture, and other leading-edge technologies. These systems can often be implemented comparatively quickly and easily, and can enable finance organizations to see significant interim improvements in efficiency and effectiveness, the research found.
The research includes a comprehensive look at the changes required to finance’s service delivery model to fully realize the benefits of digital transformation. The Hackett Group’s finance service delivery model for the digital era incorporates six interconnected capabilities: technology, service design, analytics and information management, organization and governance, service partnering, and human capital.
A public version of the research, “World-Class Finance: Redefining Performance in a Digital Era,” which contains nearly 90 metrics detailing the performance of typical and world-class finance organizations, is available on a complimentary basis, with registration, at this link: http://go.poweredbyhackett.com/wcfin1905sm.
According to The Hackett Group Senior Research Director Nilly Essaides, “World-class finance organizations have maintained a steady 40-45% efficiency lead over peers for the past decade. Digital transformation has the potential to propel peers to today’s world class levels, while at the same time redefining what ‘world class’ means for finance leaders.”
“This transition won’t be easy or happen overnight,” said Essaides. “To optimize the effects of digital transformation, finance needs to modernize or eliminate legacy systems and embrace a whole new IT delivery model, including the cloud. Expanding the reach of digital solutions is essential if finance organizations want to be able to more effectively compete in today’s fast-changing and increasingly unpredictable business environment, with its nonstop change and intensified competition.”
According to The Hackett Group Global Finance and GBS Advisory Practice Leader Jim O’Connor, “Overhauling finance’s entire IT architecture will take time and money. But our research shows that by deploying smart automation tools — which are faster to implement and produce a quicker ROI — finance can accelerate its transformation pace. Smart automation can significantly reduce manual work and free up staff time to focus on value-creating activities such as providing insight to support critical management decisions.”
“This is more of a tactical approach,” said O’Connor. “But in many cases these systems can be implemented without wholesale overhaul of the IT infrastructure, and companies can see real benefit fairly quickly, as they continue the longer-term journey to full digital transformation.”
Digital transformation is not solely about technology, The Hackett Group’s research found. Digital world-class finance organizations are also more effective and can provide their stakeholders with a better experience, despite their optimized cost model. For example, the most highly enabled finance functions experience 60% fewer billing errors, close the books much faster and can spend more time analyzing data than collecting it. One key here is a focus on standardization of end-to-end processes.
New technologies are also permitting world-class companies to gain greater visibility into customers’ needs. Finance organizations that are digital leaders are 2.7x more likely to be seen by stakeholders as having a strategic vision, 2.1x more likely to be perceived as a valued business partner, and 44% more likely to be seen as agile in meeting business challenges, The Hackett Group’s research found.
According to The Hackett Group Finance Transformation Principal Jeff Nourie, “It’s also important to note that while technology may be a major catalyst, it is only one of the enablers of world-class performance. As our world-class service delivery model details, it’s critical for finance organizations to focus on other improvements simultaneously. For example, human capital is key. Finance organizations need to understand how their skills needs are changing, and appropriately align their talent management strategy and skills development plans to match the pace of change and innovation. Organization and governance are also critical, with a focus on standardization and migration of services into global business services organizations – and to offer specialized and differentiated services migrate activities into specialized centers of excellence to more effectively perform knowledge-based activities such as decision support.”
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. Digital world class is The Hackett Group’s estimate of the additional benefit that world-class finance organizations can derive from full technology enablement of execution of finance work and optimization of the finance technology landscape. 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 global companies.
About The Hackett Group
The Hackett Group (NASDAQ: HCKT) is an intellectual property-based strategic consultancy and leading benchmarking and best practices firm to global companies, with offerings that include smart automation and enterprise cloud application implementation. Services include business transformation, enterprise analytics, global business services, and working capital management. 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 and SAP practices.
The Hackett Group has completed more than 16,500 benchmarking studies with major corporations and government agencies, including 93% of the Dow Jones Industrials, 89% of the Fortune 100, 83% 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.
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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.