The Hackett Group

October 25, 2007

Hackett Plots Evolution of Procurement's Value Proposition To Drive Competitive Advantage, Ensure Long-Term Relevance

Research Highlights from Procurement Practice Leader Chris Sawchuk And Senior Business Advisor Pierre Mitchell

ATLANTA & LONDON, October 25, 2007 - How can procurement organizations evolve from a traditional tactical sourcing focus to a comprehensive position of value management? By moving through five discrete stages which help them develop new skill sets and operating models enabling them to eventually reach a point where procurement's sole agenda is to advance and support business strategy, according to new research from The Hackett Group, a global strategic advisory firm and an Answerthink company (NASDAQ: ANSR).

Hackett's research, "Evolving the Value Proposition of Procurement - A Five-Stage Model," looks at today's procurement environment, where organizations are faced with the growing challenge of delivering ever-increasing savings in the face of tightened supply markets, powerful suppliers, global supply market volatility, and equally volatile demands from customers who want "free, perfect, and now." In addition, many procurement leaders are frustrated in their attempts to deliver value beyond the "low-hanging fruit" by obstacles such as internal budget cuts, re-organizations, poor IT support, outsourcing, and decades of legacy operating models.

From this starting point, Hackett's research endeavors to answer the question being asked by many procurement executives today, "What is the future of procurement, and how can I evolve my value proposition to sustain and improve long-term relevance?" The research describes the path that leading procurement organizations follow as they evolve towards world-class performance levels.

In working with hundreds of procurement leaders and their staff, Hackett has found that successful procurement organizations not only inevitably hit a "tipping point" where the business seeks procurement's involvement, but also move through five discrete evolutionary phases:

• Level 1 - Assurance of Supply: Right goods and services at the right time. Procurement role = buyer / planner.
• Level 2 - Price: Right stuff and at the right price. Procurement role = negotiator.
• Level 3 - TCO: From Price to Total Cost of Ownership. Procurement role = supply expert and project leader.
• Level 4 - Demand Management: See and shape demand. Procurement role = money manager and relationship manager.
• Level 5 - Value Management: Increase business value from spend, not just reduce spend magnitude. Procurement role = Trusted business advisor and change agent.

At each evolutionary stage, Hackett's research details key performance metrics, skill sets, empirically proven best practices, and emerging leading-edge practices.

Hackett's research describes an evolutionary model that starts with a traditional purchasing organization that is reactive and transactional. The next two stages involve separating transactional purchasing from strategic supply management activities and aligning its organizational structures, processes and staff around supply markets in order to gain leverage in spend effectiveness and process efficiency. The final two stages shift 180° to customer management and switch the focus from "SRM" to a set of "CRM" processes that help Procurement get the Voice of the Customer and "assurance of relationship" with spend owners - allowing them get more value from their spend (i.e., better "bang for the buck").

According to Hackett's research, the evolutionary end-state involves much more than a cursory "stakeholder management" process in a traditional sourcing methodology led by a cross-functional supply team. It involves a focus on making sure that the spend owners are getting what they need from both suppliers and also from Procurement as a professional services organization. At the last stage, Procurement's agenda is the CEO's Agenda (e.g., innovation, growth, sustainability, etc.) and there's no parallel measurement system beyond the metrics that define value for the organization.

"What we've detailed here are the steps in a journey that takes procurement organizations five to ten years, at a minimum," said Hackett Procurement Practice Leader Chris Sawchuk. "But the benefits of moving up this evolutionary scale are clear. They begin with broader and deeper spend impact. Then they enable procurement to move beyond cost savings and generate real competitive advantage for their company by harnessing the innovation and intelligence of supply markets."

According to Hackett Senior Business Advisor Pierre Mitchell, "The levels we're detailing with this research build on each other, and companies will evolve at different rates based in their operating models and business needs. Some companies will even find that the highest levels are beyond their grasp. But if companies evolve their model annually, and methodically self-fund new processes, projects, and capabilities, they will make progress, and see powerful benefits."

About The Hackett Group

The Hackett Group, a global strategic advisory firm and an Answerthink company (NASDAQ: ANSR), is a leader in best practice research and advisory programs, benchmarking and transformation consulting services, including shared services, and offshoring and outsourcing advice. Utilizing best practices and implementation insight from more than 4,000 benchmarking studies, executives use Hackett's empirically based approach to quickly define and prioritize initiatives, and to leverage proven strategies that enable world-class performance.

Through its sister company REL, Hackett offers working capital solutions focused on delivering significant cash flow improvements. Hackett has worked with 2,700 major corporations and government agencies, including 97% of the Dow Jones Industrials and 73% of the Fortune 100.

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and involve known and unknown risks, uncertainties and other factors that may cause Answerthink'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 impact such forward-looking statements include, among others, the ability of the products, services, or practices mentioned in this release to deliver the desired effect, our ability to effectively integrate acquisitions into our operations, our ability to attract additional business, our ability to effectively market and sell our product offerings and other services, the timing of projects and the potential for contract cancellations by our customers, changes in expectations regarding the information technology industry, our ability to attract and retain skilled employees, possible changes in collections of accounts receivable, risks of competition, price and margin trends, foreign currency fluctuations, changes in general economic conditions and interest rates as well as other risks detailed in the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 2006 filed with the Securities and Exchange Commission. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.