Drive process improvement by optimizing SG&A expenses
Optimizing and understanding the value of selling, general and administrative expenses, or SG&A expenses, is key to improving performance and profitability. Companies that consistently define, measure and communicate the value of marketing efforts and align sales resources to achieve business objectives will inevitably perform better than companies who have trouble tracking SG&A costs.
To aid businesses in this effort, The Hackett Group® provides an unparalleled benchmarking service with a repository of critical processes, best practices and SG&A benchmarking data. Developed through benchmarking projects inducted for more than 25,000 of the world’s leading companies, The Hackett Group’s proprietary Best Practice Intelligence Center™ delivers deep insight into the performance and business practices of world-class sales and marketing organizations. With this insight, organizations in every business vertical can more easily understand their current capabilities, assess performance, identify process transformation opportunities and address the highest areas of risk.
How leading businesses manage SG&A
Based on empirical insights gleaned from an unrivaled set of intellectual property assets, The Hackett Group has empirically defined digital world-class performance when it comes to managing SG&A expenses.
Our research suggests that performance leaders in this area have the most effective decision support, higher quality and accuracy in reporting, and better alignment with the needs of the business. Digital World Class® performers also are the most efficient, with lower total costs, faster cycle time, higher productivity and optimized working capital.
Companies with world-class SG&A also use digital technology to reinvest capacity into driving effective improvement. For example, digital world-class leaders have 74% fewer FTEs per billion in revenue than their peer group. They spend 51% less than their peers per employee on HR costs, and their per-end-user equivalent in IT costs is 32% less.
In addition to efficiency and effectiveness, digital world-class performers are focused on experience – optimizing the relationship value through superior employee, customer and supplier engagement. For example, 80% more digital world-class companies focus on aligning finance to business strategy than their peers, and HR is perceived as a valued business partner by stakeholders 100% more than their peers.
Managing SG&A expenses with The Hackett Group
The Hackett Group is an intellectual property-based strategic consultancy that provides leading benchmarking and best practices services to global companies. To deliver insight into the performance and business best practices of peers and digital world-class SG&A functions, we help clients understand:
- The mathematical potential: our world-leading SG&A performance database allows us to quickly and precisely define your performance against peers and digital world-class SG&A functions to size and prioritize the potential improvement opportunity, with detailed root-cause analysis
- The addressable opportunity: our skilled consultants, leveraging their real-world experience as well as our performance database & codified best practices can quantify the ‘cost of doing business’ in terms of the structural factors (size, complexity, industry) which may be driving costs or other performance gaps so that you have a clear understanding of the addressable opportunity to improve which reflects your specific business
- The realizable opportunity: by working collaboratively with you, The Hackett Group build a set of recommendations and a benefits case which further reflects your strategic priorities, budget availability, operating model guiding principles and change capacity so that you can quickly move into implementation with increased assurance that the steps you will take will deliver the true benefit to your organization.
Using these data points, we apply a proprietary process benchmarking methodology to quantify the gap between a company’s performance and the performance of digital world-class peers. We compare the ability of sales and marketing functions to execute efficiently and effectively, and we define the steps for continuous process improvement.
When tracking and analyzing SG&A expenses, our key deliverables include:
- An executive summary highlighting key findings and recommendations.
- Best practices required to achieve targeted efficiencies.
- Identification of areas of risk due to under-investment.
- Detailed comparisons of marketing and sales KPIs to the statistical median and to world-class organizations.
- Root-cause analysis of complexity and an assessment of the value of sales and marketing services delivered.
The megatrends driving reduction in SG&A expenses
With help from The Hackett Group, organizations can make innovative investments in three technologies that can help to drive down SG&A costs.
- Automation. Smart automation and cross-functional technology like RPA/optical character recognition/cognitive/chat are transforming functional applications. The affordability and prevalence of these technologies are rapidly increasing.
- Analytics. As barriers to data-driven insight are disappearing, companies can make far greater use of data and analytics (including advance tools & analytical technology) to derive value from large/complex data sets.
- AI. Machine Learning systems that imitate human thought processes are providing new frontiers of prediction, pattern recognition and learning. The result is greater access to non-human expertise.
Why choose The Hackett Group?
As a leading global strategy and operations consulting firm, The Hackett Group has unparalleled expertise in performance benchmarking and business process change. Offering an acclaimed benchmarking and best practices database, The Hackett Group provides consulting, support and guidance on digital transformation, enterprise cloud application implementation, finance planning and analysis, enterprise analytics, working capital management and global business services.
Our exclusive offerings include:
- The Hackett Institute, a source for professional development and certification programs.
- Quantum Leap®, a benchmarking platform that automates data collection and reduces effort by half.
- Best Practices Intelligence Center™, the world’s largest searchable online repository of empirically proven business best practices, performance metrics, implementation tools and associated research.
- Hackett-Certified® Best Practices, a collection of proven, repeatable, documented techniques that deliver measurable improvement in business performance management.
- Digital Transformation Platform, a solution that aligns cloud functionality with best practices and configuration guidance. The platform also provides benchmark metrics and best practice process flows that heighten the value of cloud services and applications.
What are SG&A expenses?
Selling, general and administrative expenses (SG&A expenses) are all the expenses on a company’s profit and loss statement that are not directly attributable to making a product or performing a service.
What is the value of tracking SG&A expenses?
SG&A expenses represent a prime area for cost reduction, especially after a merger or acquisition. Tracking and understanding the value of SG&A costs can help companies to optimize sales and marketing efforts to improve performance and increase efficiency.
Who are The Hackett Group?
The Hackett Group is a strategic consultancy and enterprise benchmarking firm providing unparalleled intellectual property gleaned from more than 25,000 benchmark studies with the world’s leading businesses. From strategy & operations to enterprise applications, smart automation, and enterprise analytics, The Hackett Group captures data about how best business practices generate results, helping companies to measure performance excellence and accelerate business transformation.