Outperformance Is Possible Only with Leading-Edge EPM Capabilities, New Hackett Finance Book of Numbers Reveals

Planning, budgeting, forecasting, reporting and business analysis provide the mechanisms through which strategy is set, decisions are evaluated, performance feedback is obtained and course corrections are made. These enterprise performance management (EPM) processes must enable an organization to "outperform," i.e., to respond to uncertainties in a way that creates value. World-class companies view EPM as an integrated, end-to-end activity supported by a common architecture. This model has allowed them to shift from focusing solely on analysis of what happened in the past, in favor of predictive analysis of critical operational drivers and trends, providing real value for decision making. Other key enablers are: careful recruitment, selection and placement of finance professionals; standard, integrated technology and information; and strong leadership and commitment to performance measurement.

Ten Actions Finance Organizations Should Take Now in Enterprise Performance Management to Prepare for 2010

The likelihood of a slow economic recovery lasting well into 2010, if not longer, makes it essential to shape EPM priorities in a way in a way that will help companies be competitive within the context of an increasingly competitive global operating environment. While the cost of the overall finance function continues to drop, many areas remain in which most FP&A/Controlling organizations have room to improve. Based on its proprietary database of the best practices of over 2,000 companies, The Hackett Group has identified 10 key actions that increase the effectiveness of EPM, which can be funded by improvements in the function’s operational efficiency.

Finance Metric of the Month August 2009: Percent of Finance Staff with the Skills and Business Acumen to Partner with the Business

The metric represents the percentage of business/finance analysts in finance who are perceived by the broader enterprise’s stakeholders to have the skills and acumen needed to partner with operations management.

Making Change Stick: Five Principles of Success for the Finance Organization

Economic conditions are causing companies to respond with a variety of changes that are truly transformative rather than incremental or short-term in nature. To fulfill these mandates for change, the finance organization must rethink its tools and practices; how it deploys and prioritize resources; the level of its participation in enterprise performance measurement and reporting; and its position with regard to other G&A functions, corporate management and the business. The key to mak¬ing change stick is adherence to five fundamental principles: - Defining the change mandate - Communicating clearly about what is going to change - Leading change proactively - Organizing in way that supports the ability to initiate and lead change - Measuring and monitoring the impact of change programs

Moving to a Fully Integrated Planning Environment May Yield $35 Million in Annual Savings to Typical Global 1000 Companies

It is no secret that the planning and analysis process today is widely disliked, costly and ineffective. Not only are two out of every three companies unable to accurately forecast earnings for the next quarter, those organizations without an integrated environment spend 27% more on planning and analysis than those at which the process is done in an integrated environment. At organizations that have moved to a fully integrated planning environment, the overall cost of finance as a percent of revenue is 13.6% less. For a typical Global 1000 firm with $22 billion in revenue, this opportunity may represent $35 million in annual savings.

How Innovative Business Partnering (and a Good Map) Helps Unilever Steer Finance into the Future

Unilever’s finance organization has created a strategy called “Finance of the Future” to assist the enterprise in delivering growth goals to 2010. It incorporates five themes: innovative business partnering (IBP); dynamic performance management; world-class finance processes; financial flexibility; and people and organization. Although all five are critical to Unilever’s goals, this Book of Numbers™ Insight will detail two core components of IBP: “effective investment in brands” and “decision-making under uncertainty.” Additionally, we will discuss how the organization identified and monitored best practices and the tools it developed to implement them. As this Insight explains, Unilever’s strategic endeavor, headed by Paul Baumann, vice president of the company’s Finance Academy, is leading to far-reaching changes in information management processes and in the roles of finance professionals as more employees transition to true business partnering roles.

Growing Call to Abandon the Annual Budget Remains Unrealistic for Most Organizations

This Hackett Book of Numbers Insight provides a case-based scenario of where abandoning the budget might be considered, and highlights some of the many pitfalls that await those who elect to follow this approach. It also explains why simply de-emphasizing the budget in the context of the overall planning process might be a more sensible approach.

World-Class Companies Move Beyond Cost in G&A; Improve Speed and Agility, Enhance Responsiveness

According to speakers at The Hackett Group's 16th Annual Best Practices Conference - "Leveraging G&A for Competitive Advantage: From Back Office to Front of the Line" - the best companies are strategically improving performance in finance, IT, HR, procurement, working capital and other areas in ways that help them respond to the pressure of globalization. Executives at the conference discussed how they continue to drive out cost in G&A in response to global forces and other market pressures. Speakers stressed the need for agility and focused on how they are transforming their back-office operations to enable them to react more quickly. The need for leaders who listen and inspire passion, and how that passion drives change was emphasized by many. Nearly 400 executives from many of the world's largest companies attended the two-day conference in Atlanta held on May 5-6. They listened to CEOs, CIOs, CFOs and other senior executives from 17 of the world's most successful companies, including Alcoa, Citigroup, Constellation Energy, HP, Greif, Nissan and U.S. Steele. This special Insight covers highlights of the conference.

World-Class Enterprise Performance Management: 2006 Best Practices and Performance Metrics

The goal of Performance Metrics and Practices of World-Class Enterprise Performance Management is to share the profound impact that a commitment to using best practices can have. This research examines the performance metrics and best practices of organizations that are world-class in EPM that set them apart from their more typical peers. This report will assist finance and other planning executives to meet their goals in ways that are consistent with their company's overall business strategy. We also examine emerging trends among world-class organizations to see how they are taking the next step toward optimal performance, and uncover lessons this activity may offer for other companies.

2005 Performance Metrics and Practices of World-Class Procurement Organizations

Top-of-mind issues among senior procurement executives - such as improving supplier leverage, increasing the level of spend savings, realizing a ROI on Web technologies, and making appropriate business process sourcing decisions - are all examined in detail in this research. Its 50-plus charts represent data selected from hundreds of different performance metrics and best practices in use at client organizations worldwide, and demonstrate the most significant differentiators between specific world-class performers (as identified by our empirically based methodology) and their more typical peers.

Major Business Process Transformation Reduces Working Capital by 41% at Global Manufacturer

The company discussed in this case study is a global manufacturer based in the US that had made a commitment to its investors to reduce costs. By addressing weaknesses in pricing, invoicing, demand forecasting and ordering, the company managed to reduce its working capital by a dramatic 41%. Further, it reduced net debt by 33%, a major factor contributing to a dramatic improvement in the company's stock price. Being sandwiched between large strategic suppliers and even larger customers meant that the firm had limited room to maneuver in relation to negotiating more favorable terms for itself. However, there were other challenges that were more within its ability to improve and control. These challenges, and the solutions deployed to overcome them, are discussed.

Henkel Reengineers Budgeting Process; Cuts Annual Budgeting Cycle Time By Half, Cost By Nearly 40%

Research by The Hackett Group finds that most organizations could reap substantial cost and value benefits from improving their annual budgeting process. For the typical company, budget creation requires more than 100 working days, four iterations and, according to a 2005 Europe-focused Hackett study, costs between 300,000 and 450,000 euros per billion of revenue. The budget itself typically encompasses 180 line items. Through a 2003 Hackett finance benchmark, Henkel KGaA -- a global conglomerate of some 240 affiliated companies -- found that its budgeting process closely matched the profile of the typical company in the benchmark. This Hackett Insight describes the change program deployed by the organization to transform its annual planning process. Benefits achieved include cutting the annual budget cycle time by about 50%; planning costs have fallen from about 4.75 million euros in 2003 to an estimated 2.9 million euros for 2005, with the required staffing requirement falling from 89 to 55. This case study is based on a presentation given by Dr. Matthias Schmidt, Henkel's vice-president of corporate planning/strategic controlling, at The Hackett Group's 2005 European Best Practices Conference.

2005 Performance Metrics and Practices of World-Class Finance Organizations

Top-of-mind issues are addressed in this report such as managing costs, minimizing risk, making appropriate business process sourcing decisions and capitalizing on the promise of Web technologies. Its charts represent data selected from hundreds of different performance metrics and best practices in use at client organizations worldwide. The metrics and associated text define the most significant differentiators between specific world-class performers (as identified by our empirically based methodology) and their more typical peers. Areas addressed include Finance function cost, days sales outstanding, risk and compliance costs and cycle times.

2005 Performance Metrics and Practices of World-Class IT Organizations

The goal of this volume is to share the profound impact that a commitment to using best practices can have, not just on the IT organization, but on the enterprise as a whole. A quick glance through the abstract's pages will show you this volume of the Book of Numbers series addresses top-of-mind issues, such as managing costs, meeting service-delivery expectations, capitalizing on the promise of Web technologies, minimizing risk and making appropriate business process sourcing decisions. It features nearly 70 charts representing data selected from hundreds of different performance metrics and best practices in use at client organizations worldwide. The metrics and associated text define the most significant differentiators between specific world-class performers (as identified by our empirically based methodology) and their more typical peers. With this information, you can build your improvement strategies on a foundation of proven practices.

Too Many Metrics Spoil the Scorecard

Hackett research shows that over 80% of companies have implemented a balanced scorecard in some form, however only 17% of peer-group organizations and 44% of world-class companies report having a mature scorecard program. It is a proven best practice in executing strategy to align the planning, forecasting, reporting and reward processes through linked performance measurement. Unfortunately, it is a common problem that balanced scorecards built for this purpose have too many metrics and often lack focus and insightfulness.

September 2005 Performance Metrics and Practices of World-Class Companies: Executive Insights in Finance, IT, HR, and Procurement

September 2005 Performance Metrics and Practices of World-Class Companies: Executive Insights in Finance, IT, HR, and Procurement

July 2005: Optimizing a Return on Business Complexity: Performance Metrics, Practices and Strategies of World-Class Companies

July 2005: Optimizing a Return on Business Complexity: Performance Metrics, Practices and Strategies of World-Class Companies

April 2005 World-Class Defined: Realized Performance Based on Proven Best Practices

April 2005 World-Class Defined: Realized Performance Based on Proven Best Practices

March 2005: 2004 Performance Metrics and Practices of World-Class Procurement Organizations

March 2005: 2004 Performance Metrics and Practices of World-Class Procurement Organizations

March 2005: 2004 Performance Metrics and Practices of World-Class Information Technology Organizations

March 2005: 2004 Performance Metrics and Practices of World-Class Information Technology Organizations

December 2004: Performance Metrics and Practices of World-Class Human Resources Organizations

December 2004: Performance Metrics and Practices of World-Class Human Resources Organizations

November 2004: 2004 Performance Metrics and Practices of World-Class Finance Organizations

November 2004: 2004 Performance Metrics and Practices of World-Class Finance Organizations

August 2004: Performance Metrics and Practices of World-Class Companies: Executive Insights in Finance, Information Technology, Human Resources and Procurement

August 2004: Performance Metrics and Practices of World-Class Companies: Executive Insights in Finance, Information Technology, Human Resources and Procurement

Improving the Quality of Reconciliation and Analysis Can Simultaneously Lead to Reductions in Cost

Finance managers are responsible for knowing the status of their accounts - and assuring their accuracy - at all times. Having solid internal controls is a critical contributor to accuracy and timeliness of period-end account reconciliation processes, a necessity whose overhead has been greatly heightened by the introduction of the Sarbanes-Oxley rules. However, as every finance professional knows, the daily pressures to perform basic transactions, maintain the ledger and perform key controls can eat up precious time and resources required for reconciling and analyzing account status. Doing account reconciliations from general ledger accounts is both time-consuming and costly. But it is a critical business process: Companies that do not reconcile their accounts accurately and regularly are susceptible to making embarrassing and damaging misstatements in financial reports, errors or even committing fraud. So it will be welcome news to hard-pressed finance managers that Hackett research indicates that companies taking a best-practices-driven approach to reducing the resources required - and thus the cost - of the reconciliation and analysis process do so without sacrificing quality. In fact, their reconciliation quality may be better. The keys to success include standardization of the process, willingness to use materiality limits, adhering to time schedules for completion and automating reconciliations.

Budgeting and Mid-Term Planning Practices and Trends in Europe: Part I

This is the first in a two-part report detailing the findings of The Hackett Group's 2005 survey of budgeting and planning practices at European companies, titled "Planning on the Move!" Below, we address the study's methodology and principal findings. In Part II, we will examine in detail current budgeting and midterm planning approaches as reported by respondents, contrasting them with practices reported in 2003, and those projected to be adopted within the next one to three years. While US CFO's share a desire to improve budgeting with their European counterparts, improvement efforts in the US are now focused less on improving "budgeting" than on creating effective decision-support systems. Top performers in the US take half the time of their European counterparts to complete the budget and are trending toward a more dynamic approach. This is often reflected by the adoption of a rolling forecast which replaces the traditional, annual budget.

Budgeting and Mid-Term Planning Practices and Trends in Europe: Part II

This is the second in a two-part report detailing the findings of The Hackett Group's 2005 survey of budgeting and planning practices at European companies, titled "Planning on the Move!" In Part I, we examined the study's key findings and learned about its methodology and participants. In Part II, we present current budgeting and mid-term planning approaches as reported by respondents, contrasting them with practices reported in 2003, and those projected to be adopted within the next one to three years.

Reducing Detail in Out-Periods of Forecasts Simplifies, Speeds Forecasting Process

At many companies, there is so much similarity between planning and forecasting that the fundamental distinction between them has been lost. Optimally, while planning involves what the future should look, forecasting is concerned with what the future will look like. In other words, planning involves setting goals and objectives, and defining action plans and targets for an annual period, while forecasting is done to update those action plans periodically and revise near term targets.

Sarbox Compliance Efforts Bring Added Benefit of Faster Financial Close to Rohm and Haas

Rohm and Haas, like other public corporations, had to institute effective controls ensuring the accuracy of its financial statements to meet Sarbanes-Oxley compliance requirements. At the same time it embarked upon that task, it needed to accelerate its financial close process and reform all of its inefficient and fragmented global financial operations, including reporting. While it was completing a three-year project, in May 2004, to implement an SAP global instance to singlesource its front-to-back-end functions, it had also decided to get optimum results from that instance through a software upgrade that would consolidate its global reporting. Yet its many unreconciled and obsolete processes kept the company well below The Hackett Group's best practices standards. To move toward that best practice status, Rohm and Haas adopted a change management strategy that utilized its experience in achieving Sarbox compliance and documentation. The company successfully installed processes to shorten its financial close time and centralized key practices with the cooperation and active input of leaders in all of its regions around the world.

The Effective Execution of Business Strategy Differentiates Best Practice Companies

Recently, business strategists have come under fire for abusing best practice benchmarking. The critics accuse managers of turning a process improvement technique into the end game of strategy development. The argument is that in addition to modeling the operational processes of world-class companies to improve efficiency and productivity, strategists have decided to mimic their most successful competitors' product, pricing and channel strategies as well, thereby driving down margins across their industry. This practice has been called "strategic herding." This Hackett Perspective highlights four practices which are useful in linking strategic objectives with tactical plans and performance measurement.

Boston Scientific Credits Quarterly Planning and Rolling Forecasts for Successful Transformation

Empirical research by The Hackett Group constantly finds high levels of dissatisfaction with the annual budgeting process. The average company requires 80 business days (fully 16 weeks) to complete the budget, and the political game playing that is a well-entrenched part of the process means a typical budget goes through four iterations. Perhaps more damning, Hackett observes a growing number of organizations that believe the budget to be out-of-date the very day it is published. For instance, a sense of such obsolescence was reported by 71% of participants in Hackett's 2005 "Study of Budgeting and Mid-term Planning Practices and Trends in Europe."

Fast Close Helps Leading-Edge Companies Close Their Books in Hours Instead of Weeks

The closing cycle is a commonly watched performance metric by CFOs, and a barometer of the ability to feed timely information to management. Dell, Motorola and Cisco have popularized the fast close, and their successes have been duly noted by corporate managers around the globe. The concept of a fast close -- with business-unit results completed in less than a day and total company consolidated results available, at most, a few days later -- is understandably appealing to CFOs. A 2001 survey by a well-known research and consulting firm indicated that, among the largest companies surveyed (with revenues in excess of $10 billion), 43% hoped to implement a fast close by 2005.

Improving the Accuracy and Reliability of Reporting at a Highly Decentralized, $10 Billion Company

April 2005 - The subject of this case study is a highly decentralized, $10 billion global technology company. Its many business units offer a vast array of products, from inexpensive to very costly, and an array of services as well. Like most companies with a complex operating model, at the beginning of its improvement initiative the reporting process was complicated by multiple systems, inconsistent definitions and processes, and business units that were loathe to give up the flexibility offered by their customized legacy systems in favor of a common ERP. As a result, enterprise-wide reporting was limited to the basics.

Growing Business Complexity and Volatility Lead to 96% Rise in Rolling Forecast Utilization

"Budget season" continues to be an annual rite for most firms. The process is protracted; tedious and contentious, and the resulting budget is often outdated by the time it is approved. The average company burns 100 days developing the budget from initiation to approval. During that time it will go through an average of four iterations to reach approval. Worst of all, the budget, when finally completed, often ends up being out of alignment with the company's competitive environment. Forward-thinking firms utilize an alternative to the annual budget -- an integrated planning process centered around a rolling forecast that continually looks ahead four, six or eight quarters.

Hackett-Certified Practices^sm Help Planning Executives Anticipate, Assess and Deal Effectively with Material Change

In June 1996, magazine published a story about child labor in Asia. The lead photograph showed a 12-year-old boy assembling a Nike soccer ball, for which he would spend most of the day and earn for his efforts a grand total of 60 cents. Nike, of course, was aware of how suppliers were meeting their quotas for product, and, while counter to traditional Western labor standards, from a financial perspective this did not represent a material risk. Indeed, the practice kept manufacturing costs low. However, within days of the story breaking, activists across the US and Canada were picketing in front of Nike stores and the company's stock price sank like a stone. From that perspective, the activity -- once widely known -- was indeed 'material to shareholders' interests'. Within accounting, the concept of materiality has distinct meaning. However, when it involves something other than a dollar value, material change -- how to define it, foresee it and deal with it -- is less well-understood. As a result, it is often given short shrift in critical planning processes. In this issue of "Hackett Perspective," we examine a variety of planning and reporting activities and how world-class companies incorporate mechanisms for dealing with material events within each.

Reducing Cycle Time to Complete the Annual Budget Can Save €200,000 Per Billion of Revenue for Typical European Companies

Accelerating cycle time for completing budgets is on the front burner for the majority of European organizations studied in a recent Hackett Group survey. Empirical data derived from the study demonstrates an unequivocal correlation between cycle times and the cost of the budgeting process. Management's interest in streamlining budgeting would certainly sharpen if the potential cost savings to be reaped were to become known. Yet, few organizations actually know the cost of this activity. Just 15% of participants could put a price tag on the process -- which they set between €1 million and €6 million. Accelerating the budgeting process offers potential savings of €200,000 per billion of revenues for an average company. For organizations with the longest budget cycle times, the potential savings are substantially larger. Moreover, as survey participants trace the shortcomings in their budgets' decision-support capabilities to lengthy cycle times (41% of Europe-based organizations require 100+ business days to complete the annual budget), the benefits of trimming cycle time go far beyond cost savings.

Forecasting and Business Change in European Companies: A Dangerous Misalignment

Based on data drawn from a study of 60 large and complex Europe-based organizations, this issue of Hackett Perspective reveals the shortcomings of present forecasting processes in Europe and argues that a dangerous misalignment is emerging between the forecasting process and the capabilities required to accurately predict future revenues and business performance. It also discusses why new approaches, most notably rolling forecasts, provide best-practice-based solutions to the problem of risk levels that today are seriously out of step with the frequency and cycle times of forecasts. By way of example, 82% of study participants characterize business volatility for their company as medium or medium-to-high across the company, with a further 5% claiming that volatility is high in all or most of the company. Yet only 33% of these same companies do monthly re-forecasting and 58% do only a quarterly forecast. The report concludes with a checklist of Hackett-Certified Practices for improving forecasting and budgeting cycle times and accuracy.

Sarbanes-Oxley and Regulation FD Are Hindering Efforts to Shorten Closing Cycle Times

The closing cycle is a commonly watched performance metric by CFOs. It is considered a barometer of the ability to feed timely information to management and, increasingly, to external audiences. As such, one might expect a tight band of performance, as companies have widely been eager to work on reducing cycle time. Surprisingly, a significant gap still exists among companies examined by Hackett Business Advisors. During the month-end, the number of business days to close the books ranges from 2 to 11 days. This issue of Hackett Perspective includes data about the best practices that world-class companies deploy to minimize closing cycle time.

Finance Staffs Overlook Proven Techniques for Planning Amidst Uncertainty

A very important part of the art of planning amidst uncertainty is developing skills and techniques for looking at projects and investments across a continuum of possible future outcomes. Unfortunately, most finance staffs are not trained to use the many techniques that have been developed for managing uncertainty and risk. This issue of Hackett Perspective describes a variety of techniques that can supplement more commonly used analytical methods, such as discounted cash flow, which in and of themselves donâ¿¿t adequately address the concept of risk or uncertainty. The report also provides several starting points for executives who wish to equip their finance organizations to plan more effectively in spite of market volatility, price fluctuations and other types of risk.

Human Resources Performance Metrics and Practices of World-Class Companies 2004

Get a glimpse of the insights into the performance metrics and practices of world-class Human Resource organizations contained within Hackett's upcoming 2004 Book of Numbers Series. These volumes are produced exclusively for Hackett's Chief Human Resource Officer Executive Advisory Program members to provide our executive-clients with fact-based information to respond successfully to the return of growth.

Fully Integrated Planning Processes Help Companies React Quickly to Change

At most companies, there is little connection among planning processes (the strategic plan, annual plan or budget, forecast, capital budget, and project or investment approval process) in terms of common metrics, connected timeframes or common uses. Less than 30% of firms in The Hackett Group's finance benchmark report they have fully integrated their strategic plan into their annual budget or tactical plan. Even among world-class companies, less than two-thirds report full integration. This lack of integration translates to longer cycle times for creating reports, lost opportunities for communicating the goals and direction of the firm to all its associates. Further, failing to connect the flows of the processes makes them far less responsive and effective in dealing with changes in business conditions.

Balanced Scorecards: Are Their 15 Minutes of Fame Over?

Is the balanced scorecard really the valuable tool for management it is claimed to be by its proponents, or is it just another over-praised fad? Hackett data shows only 18 percent of companies in 2003 reporting having no scorecard at all. Yet only 27% report having a mature program - indicating that many firms are having difficulty going from the concept to the realization. Implementing any change in a firm's measurement system involves significant effort - in upfront design, in systems implementation and in training managers to interpret and understand the new measurement system. Such an effort can take months, with costs running into the millions of dollars. This issue of Hackett Perspective describes the things that successful scorecard programs have in common.

Best Practices in Planning and Performance Measurement

Planning and Analysis -- Planning and Performance Management

Best Practices in Planning and Analysis --

Planning and Analysis -- Business Analysis

Topic Analysis - Planning & Analysis Organisation Models - Who is Doing What?

The Planning function takes on a different look at most companies, with even companies in the same industry having drastically different organisational designs. Additionally, with so many alternatives for organisational design, it is often difficult to determine which model is best suited for your company. Learn what other organisations, including Telephone & Data Systems, Rockwell-Collins and McGraw-Hill Companies are doing in this important aspect of planning.

Topic Analysis - Integrating Performance Measurement into the Planning Process

Effective performance measurement is a critical success factor for any planning organisation. The level to which performance measurement is integrated into the planning process from even the early stages of strategic plan development to providing management reporting can directly influence the value derived from the overall planning process. Learn how other companies, with perspectives from Agilent Technologies, Commonwealth Bank, Fidelity Investments, IBM, McGraw-Hill Companies and Rockwell Collins, have carried out this important aspect of their planning efforts in this interesting analysis.

Hackett Overview: 2003 World Class Finance Profile

The well-managed finance organization is not just about reining in cost; it is also synonymous with a well-controlled business. However, under pressure from all sides to do something - anything - and to do it quickly, CFOs who mandate sweeping budget cuts are in jeopardy of eliminating resources that are essential to managing risk or sustaining future growth and innovation. The better solution lies in establishing a balance between cost and value if the function is to act as a reliable and effective translator of data into actionable business information. This profile examines the best-practices-driven differentiators of world-class performance, as identified through analysis of Hackett's renowned database of finance benchmark participants.