Recent research by The Hackett Group®, a leading global strategy and operations consulting firm, has found a substantial and growing gap between the business cost management effectiveness of top-performing companies and that of typical companies. The business cost management disparities between world-class companies – defined as those that rank in the top quartile in operational efficiency and effectiveness – and typical performance can be seen across a variety of measures:
- In terms of overall back-office expenses, the business cost management strategies and tactics of world-class companies enable them to spend 24% less on total back-office costs than their peers. For a typical Global 1000 company this equates to more than $230 million in annual back-office savings if it could achieve the business cost management successes of top performers.
- Regarding specific areas of spending, The Hackett Group has found numerous examples where the business cost management practices of top-performing companies drive substantial savings as compared with typical performance. For instance, when managing non-recurring project-based spending, world-class organizations use procurement department professionals to a greater degree than typical companies do, resulting in better pricing and contract flexibility. For another example, optimized finance processes and controls at world-class companies enable these companies to achieve regulatory compliance with only half the internal compliance staff and spending only half on external audit fees in comparison to typical companies.
- During the recession, world-class companies tended to make business cost reductions that were more likely to be sustainable into recovery and growth than the cost reductions made by typical performance.
The Hackett Group defines and enables world-class business cost management
The Hackett Group can help your company with all facets of developing and implementing a world-class business cost management strategy:
- As the world leader in process benchmarking, we can help you to evaluate your current processes and see where you stand in comparison to top performers. We will work closely with you to size and prioritize your opportunities for cost-saving efficiency gains.
- Our experienced consultants will work with you to develop an optimal service delivery strategy, the key to effective business cost management. Developing a service delivery strategy entails determining how work should be done, where, and by whom. In support of your strategy development, The Hackett Group provides deep expertise across all back-office sourcing options, including the use of shared services and centers of excellence; offshoring including global business services; and function-specific outsourcing options such as HR outsourcing or IT outsourcing.
- At the process level, The Hackett Group can help you achieve cost-saving business process improvement by applying proven best practices across all your back-office functions.
To learn more about how The Hackett Group can help you achieve world-class business cost management, or about our function-specific consulting services such as finance consulting, HR strategy development and more, contact us.