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).
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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.
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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.
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.
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