World-class finance organizations now spend 42 percent less than typical companies and use 44 percent fewer staff, while at the same time driving higher levels of effectiveness, agility, and insight, according to the newly-released 2016 analysis of finance benchmarks from The Hackett Group, Inc.
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.
The research finds that digital business transformation is one of five initiatives key to achieving world-class performance.
World-class finance organizations also enable analytics-based decision making to generate insights that improve enterprise agility, notes the report.
The Hackett Group's research identifies a total of five strategies that world-class finance organizations use to achieve superior results: embrace digital transformation; enable analytics-based decision making; reallocate resources from transactional focus to value added; adopt customer-centric service design and delivery; and re-skill the finance function.
Minimal investments to date
The research shows that more than 70 percent of all finance organizations are planning major transformation, but most finance organizations have made only minimal investments to date in cloud technologies, and even less in robotic process automation, mobile, and other digital technologies.
Overall, world-class companies have done more to automate basic transactions and finance processes across the board, which can drive an array of benefits, such as lower cost for customer invoices, fewer errors, shorter time to bill, and better cash flow.
Automating customer invoicing, for example, reduces cost by 76 percent, leads to nearly 40 percent fewer errors, and results in 44 percent shorter time to bill.
“To succeed, finance leaders must embrace new technologies such as improved analytics enabled by big data, mobility, the cloud, and advanced process automation tools,” says The Hackett Group Finance Transformation Principal Richard Cardillo. “They must investigate and deploy pilot programs so they can better understand how to scale solutions and realize the long-term benefits promised by these technologies.”
Re-skilling the finance function
One of the biggest challenges facing finance organizations is aligning the competencies and skills of finance talent with the needs of the business.
Top management looks to finance to help the business execute strategies more successfully and to implement the organizational changes needed to become more agile and innovative. This means moving beyond technical accounting and data skills to establish broad leadership and business acumen capabilities throughout the finance organization.
World-class finance organizations demonstrate this by having nearly 50 percent more staff per manager than typical companies, offering greater autonomy for individual decision-making and fewer layers in the organization.
"Getting to world-class is a real challenge for even the most agile finance organizations. But the benefits are tangible," said The Hackett Group's Global Practice Leader of GBS and Finance Advisory Programs Jim O'Connor.
"To jump start their journey, finance leaders can take steps like measuring baseline efficiency and effectiveness levels to gauge performance and test their service delivery model. They can document and evaluate the customer value they create, and find ways to reduce complexity. They can explore digital opportunities for more agile platforms and cost reduction. And finally they can adopt a service delivery model that enhances finance's alignment with business objectives."