March 6, 2012

Hackett: Jobless Recovery in Corporate Finance to Continue in 2012 As CFOs Expect to Operate with Smaller Budgets, Fewer Staff

  • In the Face of Higher Volatility, Understanding Regional Differences on a Global Basis is Key

MIAMI & LONDON, March 6, 2012 - The jobless recovery in corporate finance is likely to continue in 2012 and beyond, and CFOs can expect to operate with smaller budgets and fewer staff, according to new key issues research from The Hackett Group, Inc. (NASDAQ: HCKT).

The study also found that companies are heavily focused on improving accuracy and timeliness of information to enable improved decision-making, and on leveraging global standards, resources and organizational models.

The Hackett Group's new key issues Research Insight "2012 Finance Agenda: The Lean Years Continue" finds that CFOs are acknowledging that for 2012, the "New Normal" has been largely accepted as the status quo, or the "Now Normal." For most companies, this means that 2012 will require them to carefully balance the search for new revenue and preserving margins amid continued high volatility.

After several difficult years, The Hackett Group's study found that CFOs were expressing mild optimism about the prospect for enterprise growth in 2012. But finance departments are going to be expected to manage with smaller budgets and fewer staff. The Hackett Group's research found that the rate of corporate revenue growth is expected to increase by nearly 50 percent in 2012 (nearly 8 percent growth over 2011). But CFOs expect to see corporate finance budget cuts of 1.5 percent and staff cuts of nearly 1 percent. So CFOs will be required to do more with less and drive an effective 10 percent increase in productivity. Combined with increased offshoring and automation, the result is almost certainly a continued jobless recovery for corporate finance.

The Hackett Group's research showed that increased volatility has clearly become the new business as usual, and finance leaders are expected to be able to respond rapidly and effectively to sudden market reverses. Companies are expecting dramatically higher volatility in the availability of talent than was seen prior to the recent financial crisis, as well as higher volatility in output pricing, exchange rates, demands, and input pricing.

CFOs have also gotten the clear message that the number one strategic priority is supporting the enterprise with a competitive cost structure. Interestingly, most of the other strategic priorities cited by CFOs in 2012 are not about cost, but rather about supporting enterprise growth and driving more value from existing resources. These include: improving finance's analytic, modeling, and forecasting capability; maximizing return on existing technology investment; and supporting process management across organizational boundaries. This is expected to translate into pressure to develop capabilities to support the enterprise in its globalization efforts and increase the globalization of many finance activities themselves.

The Hackett Group's research also recommended that companies be prepared to adapt their business models and priorities in response to economic changes in regional global markets. This will require companies to fully understand the benefit that comes from adopting global standards and organizational models that allow optimal execution by leveraging both skill and scale more broadly. In addition, the increased volatility in demand across global regions has made it more critical than ever for companies to truly understand how each region should operate while still gaining the advantages that comes from a global process operating platform.

The Hackett Group's research found that the globalization trend will continue to accelerate in 2012 and beyond, for finance and also for other business service areas. If their current plans are successful, companies will more than triple the level of globalization in business functions within the next two to three years. The finance areas with the most aggressive plans for globalization are those which are the least globalized today, such as process design/build (where globalization is expected to increase by over 70 percent), indicating that an enormous amount of work needs to be accomplished in a very short time period. In addition, while most companies with global finance ownership today are working at a functional level, the ambition is to greatly promote global process ownership at a cross-functional level. This will require dramatic changes in the way work is organized and transactions are executed. Companies need to holistically revise their business models to incorporate the capabilities needed to adapt to local or regional economic changes within a global operating framework.

About The Hackett Group, Inc.

The Hackett Group (NASDAQ: HCKT) is an intellectual property-based strategic consultancy and leading enterprise benchmarking and best practices implementation firm to global companies. 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 11,000 benchmarking studies with major corporations and government agencies, including 93% of the Dow Jones Industrials, 86% of the Fortune 100, 87% of the DAX 30 and 52% 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.