finance 02 bon-final

8/6/2019 Finance 02 BON-Final

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B o o k o f N u m b e r s2 0 0 2

F i n a n c e


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EXECUTIVE SUMMARY

Our 2002 Book of Numbers Finance underlines several distinct challenges facing most

finance organizations today: among them, dealing with a legacy of excess cost and com-

plexity and creating lasting value. Processes are obsolete and technology investments are

not fully leveraged. Moreover, measurement practices rarely provide executives with the

information they need to create sustainable shareowner value.

In addition, the global effects of a recession and the events of September 11, 2001, shifted

the concept of risk management to center stage, but the ways in which most finance

organizations conceive of and manage risk are extremely limited. Finally, the decentralization

movement, which strove to increase the responsiveness of individual business units by

granting them greater decision-making autonomy, ended up creating duplicative, paper-

based support functions whose costs today weigh heavily on earnings.

Average finance organizations remain wedded to a tradi-

tional, self-governing, control-oriented modus operandi. In

contrast, those that are most successful rely on proven best

practices to help them pare down excess costs and enable

them to simultaneously manage risk and contribute to value

creation. Below are a few of the most intriguing trends in the

evolution of best practices in finance:

A comprehensive approach to finance cost reduction,

encompassing people, processes and technology,

is demonstrably more effective than spot solutions.

Contrary to the widespread belief that tech-heavy

practices such as self-service and information-on-

demand drive up finance-function costs, world-

class companies that adopt these and other value-

adding best practices actually have 47% lower total

finance costs compared to those that do not.

Companies of all sizes that were formerly contentwith matching the finance benchmarks average

performance metrics are today at risk of falling fur-

ther and further behind, especially in areas that

have benefited from a combination of automation

and process improvements.

Most companies severely underestimate risk. On

average, only 32% use sophisticated business-

simulation models to prepare for non-financial

events such as business discontinuity or sudden

market reverses.

The virtual close is today within reach for companies

that embrace best practices for managing information.

On the following pages, we will explore the most significant new findings and best

practices for each of the five performance dimensions addressed by Hacketts

ongoing best practices benchmark study of finance: strategic alignment, partnering,

organization, technology and process.

FINANCE PROCESSES

TRANSACTION PROCESSINGAccounts PayableFreight PaymentsTravel and ExpenseFixed AssetsAccounts ReceivableCreditCollectionsCustomer Billing

General AccountingExternal ReportingProject AccountingCost AccountingCash ManagementTax AccountingTax Filing and Reporting

CONTROL & RISKMANAGEMENTBudgeting

Outlook/Interim ForecastBusiness PerformanceReporting

Treasury ManagementTax PlanningInternal Auditing

DECISION SUPPORTCost AnalysisBusiness Performance

AnalysisNew Business/

Pricing AnalysisStrategic Planning Support

FINANCE FUNCTIONMANAGEMENT


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STRATEGIC ALIGNMENT

The finance organization has two critical means for ensuring that its goals and activities

are aligned with the rest of the firm, and further, that the firms goals are aligned to

creating value for shareowners. One encompasses the planning processes it typically

manages; the other, the information it delivers to managers in the reporting process.

The balkanized nature of most of todays decentralized companies tends to foster con-

flicting or competing finance initiatives that needlessly sap resources and focus efforts

on projects of marginal strategic importance. Good strategic plans may help set direc-

tion, but achieving long-term goals hinges on a tight linkage of strategic, tactical and

financial plans to leverage the analytical value of finance resources. Importantly,

Hacketts data demonstrates empirically that companies with high levels of integration

do not report higher finance costs as a result. In contrast, fully 25% of companies report

no integration of planning processes.

Hackett Best PracticesSM2

Integrated onlythrough financials

Not integrated

Fully integrated

Integrated at themacro level only

Integration of strategic, tactical and financial planning processes

Internalfinancial

Internaloperating

46%48%

Externalfinancial

26%

33%

17%

13%

Externaloperating

11%

6%

World-classAverage

Mix of measures on balanced scorecards


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To ensure that strategy does not take a back seat to day-to-day operations, 96% of

companies have some form of balanced scorecard. In reality however, the value of

balanced scorecards is seriously diluted by reliance on internal, lagging financial

measurements, which tend to focus attention on short-term fixes at the expense of

achieving long-term strategic objectives. Some leading-edge organizations are moving

closer to the balanced scorecard ideal, integrating external and operational measurements

that tie a wide range of factors operations, customer satisfaction, innovation tofinancial value over the long term.

There can be no other explanation but that managerial self-interest prevents 77% of

companies from using rolling forecasts, a proven best practice for dramatically improv-

ing the sharpness of forecasts and reducing budget preparation time. The fact that 60%

of companies tie incentive compensation to achievement of the annual plan explains

why so few managers have embraced this technique despite the fact that its use

correlates with a 24% drop in the time it takes to finalize an annual budget. The message

is clear: Incentive plans hold the power to animate and fuse together all the other

elements driving strategic alignment. Get them wrong and other best practices lose

much of their power to guide behavior.

Current year only

Rolling

Use of rolling forecasts

Rolling forecastnot used

122

93

24%

Rolling forecastused

Average days to budget


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PARTNERING

The most effective finance-function analysts are those with first-hand knowledge of

business operations. Here, Hackett data indicates that the picture is brightening: To

assure that cross-functional operations knowledge is developed and communicated,

even at average-performing companies 58% of analysts are experienced in both oper-

ations and finance. (Deploying this best practice brings an added bonus: Leading-edge

organizations have curtailed costly turnover by 14% by rotating analysts among business

units and investing more in targeted training.) That said, the gap to world-class, where 100%

of analysts have a deep understanding of both finance and operations, remains large.


63%

93%

58%

100%

Percent of time analysts

considered partners withoperating management

Percent of analysts

experienced in bothfinance and operations

World-classAverage

Finance analysts with operations experience

Dedicated teammembers spend >30

hours per week

Some team membersspend >20 hours

per week

A few teammembers spend


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At a select few top-performing companies, reducing waste, rework and duplicative serv-

ices not only lowers the cost of fulfilling finances core fiduciary duties, but frees it

to focus on maximizing synergies with suppliers and customers. In the main, however,

finance is not extensively involved with suppliers and customers in these efforts. Even

the best companies do not, on average, have staffers dedicated to strengthening these

partnerships.

The ability to identify and alert leaders to sudden opportunity or increased risk hinges

on focusing the talents of a highly trained corps of analysts on these activities.

Proportionally, however, the amount of time that analysts spend mired in stacking and

restacking data (as opposed to analyzing its implications, considering alternative

courses of action and communicating the associated trade-offs) remains unchanged

since 1998. Analysts at world-class companies spend only 12% of their time getting

data and over half their time in planning and analysis twice as much, proportionately,as average companies.

The traditional corporate cop/number-cruncher mentality we still see in some finance

organizations will increasingly lead to their marginalization as significant contributors to

the value of the firm. As we look ahead, we see that breaking down the barriers between

finance and operations will only become more important as time goes by.

Doing planningand analysis

Getting data

Doing historicalreporting

World-classAverage

Analyst time usage


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ORGANIZATION

After several years of dramatic decreases in the size of finance staffs at the largest

companies, this trend appears to have bottomed out. The number of full-time equivalent

(FTE) employees per billion dollars of revenue declined by only 10% since 1998. By contrast,

finance organizations at mid-sized companies those with between one and five billion

dollars in revenue fell by 22% since 1998, today averaging 124 FTEs per billion in revenue.

Companies under one billion in revenue also made substantial gains in the past four

years, trimming finance staffs by 17%, from 206 to 170 FTEs per billion in revenue. Midsize

and smaller companies benefited by applying best practices adopted earlier by the largest

companies. (It must be noted that the fairly significant decrease in the number of FTEswas offset by an equally large increase in the cost of these employees. For example, a 9%

decline in finance staff size for the largest companies translated into only a 3% decline

in cost.)

While reductions in finances size are directionally correct, our empirical data paints

a worrisome picture of across-the-board rather than selective cuts. Since 1998, the

number of FTEs supporting transaction processing declined by 10%; control and risk

management staff by 12%; and decision support by 13%. It is disturbing to see that the

declines both in risk management and decision support are greater than in transactionprocessing, because the biggest opportunities to squeeze out costs remain in this last

activity, particularly at companies with average finance costs.


Under $1B

206

170

159

124

10495

Over $5B$1B - 5B

115

103

Overall

20021998

Average FTEs by company size


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Despite the visibility of shared services as a way to reduce headcount by consoli-

dating functions, only 57% of companies have them. Even at companies that choose to

centralize certain highly structured back-office activities, the average percentage of

company transactions going through that shared service is relatively low. Furthermore,

there is often more than one center for processing transactions. For instance, 40% of

companies report processing accounts payable in both corporate accounting and a

shared service center. When one considers that highly qualified, highly paid managers in

finance spend 42% of their time on transaction-processing activities (such as accounts

receivable, accounts payable and external reporting) a marginal improvement over the

past four years the argument for a continued focus on shared services becomes even

more compelling.

In future years we anticipate that much of the transaction processing traditionally

handled by shared service centers will be eliminated by the Internet. With routine

transactions handled directly by individual employees, companies will increasingly

outsource their shared services to a third party; leading-edge firms will be able to

offer outsourcing services themselves by commercializing their existing shared service

infrastructure.

71%Generalledger

33%

75%

31%

74%

23%

67%

13%

59%

14%

59%

5%

45%

38%

45%

40%

43%

28%

35%

26%

26%

24%

26%

19%

Accountspayable

Travel andexpense

Accountsreceivable

Billing

Credit

Average World-class

Percent of transactionsprocessed centrally

Percent of companies using bothshared services and corporateaccounting for processing

Percent of centralized transactions vs. percent of companies usingshared services and corporate accounting for transactions


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TECHNOLOGY

In this cost-conscious time, its important to note and help concerned stakeholders

understand that adding value to the finance function doesnt necessarily mean higher

costs. Contrary to the widespread assumption that tech-heavy practices such as self-

service and information-on-demand drive up costs, world-class companies that adopt

these and other value-adding practices actually have significantly lower overall financecosts compared to average.

One of the most notable study findings is how a small improvement in technology leverage

can affect finance cost. World-class companies leverage the value of their technology

investments to shrink the cost of finance to as little as 0.56% of revenue. Companies that

fail in this regard spend as much as 3.44% of revenue to support their finance function. Its

significant to note that the best-performing companies spend proportionately about 6%

more on technology than average, however in absolute terms they actually spend 44% less.

Hacketts empirical data demonstrates that a comprehensive approach to finance cost

reduction is vastly more effective than spot solutions. For example, we find that 72% of

companies report medium to high deployment of a common ERP, a considerable over-

statement of the reality. Only 17% of companies have 50% or more of their systems in a

single ERP, and only 36% have 25%-50% of their systems in a single ERP.


World-classAverage

0.18%

0.10%

Cost as a percentof revenue

45%

17%18%

6%

Cost as a percent oftotal finance cost

Cost of technology

50% or moresystems in one ERP

17%

36%

25%-50% ofsystems in one ERP

Low

None

High

Medium

Reported extent to which

a common ERP is deployed

Actual ERP deployment

by systems count

Reported vs. actual ERP deployment


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As a result, implementing ERPs alone will not provide consistent cost savings; rather, acomprehensive approach is required. For example, it is striking that focusing on reducing

system complexity and on implementing data standards delivers greater improvements

than ERPs and centralization alone or together. Companies combining best practices

in systems rationalization, data standards and centralization are able to drive down the

cost of finance by 44%.

The type of real-time collaboration with external partners that world-class companies

are beginning to implement made possible by finance automation is still a pipe

dream for average companies. The latter continue to cling to highly structured back-office

processes like order management or procurement, processes that are logical candidates

for automation. As an indicator, consider that on average only 29% of companies provideonline access to ad hoc reporting applications, compared to 97% of world-class

companies. Even more striking is that barely 16% of companies are even able to offer

something as basic as online submission of travel and expense reports. Cost-conscious

companies appear unwilling to commit the resources required to automate, despite

empirical data demonstrating the value to be gained in exchange.

One of the major hurdles to the pervasive implementation of consistent technologies

throughout the firm is the demand for unique requirements. It is in negotiating the

optimal risk/return balance between individual business units and the corporate center that

world-class companies will differentiate themselves in the future.

Average World-class

16%

Percent of travelers completing/submitting expense reports online

94%

488%

29%

Percent of users with online accessto ad hoc reporting applications

97%

234%

Online travel reportsAd hoc online reporting

Online capabilities

1.44%

Total costof finance

0.80%

44% 0.50%

Transactionprocessing cost

0.29%

42%

Many systems, non-standardized,decentralized

Few systems, standardized,centralized

Average finance cost as a percent of revenue


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PROCESS

Companies of all sizes that were formerly content with matching the finance bench-

marks average performance metrics are today at risk of falling further and further

behind, especially in areas that have benefited from a combination of technology and

process improvements. Indeed, with the cost of processes as common as T&E being five

times as high at average companies compared to world-class (.010% and .002% of rev-enue respectively) and something as basic as accounts receivable costing over four

times more at average companies than world-class (.032% versus .007%), it is evident

that average performance is no longer good enough. Just moving from average per-

formance to the first quartile in routine processes (e.g., accounts payable), would save

about $1.2 million of finance costs per billion of revenue annually. Moving into the ranks

of world-class nearly doubles that amount.

Best practices in highly routinized, low-value-adding transactions and control processes

are by now so well established and the path for getting to world-class, while challenging,is so well-marked that it is incomprehensible that companies would knowingly leave

such easy savings on the table.

Hacketts 2002 benchmark data shows that the average cost of finance was slashed by

52% during the past decade, a significant achievement. One cannot fail to note, how-ever, that the most dramatic reduction (about 50%) occurred between 1992 and 1998,

with only a 5% reduction on average since that time.


1988

2.20%

1.12% 1.06%

1998 2002

49% 5%

Average finance cost as a percent of revenue

Manual journal entriesper billion of revenue

184,855

104,305

44%

10,795

4,31060%

World-classAverage

General-ledger reportsper billion of revenue

Monthly close: Best practices


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Although the pace of improvement among world-class companies has decelerated, the

virtual close is within reach for an increasing number of them. Able to close their books

in under three days by utilizing process-based best practices for managing information,

these companies produce 44% fewer manual journal entries and 60% fewer general-

ledger reports than other companies.

Finance outsourcing costs on average since 1998 have not changed much, hovering at 6%of the total finance spend. In the past, the common thought was that outsourcing was a

method for reducing finance costs. What our data shows is that categories such as indi-

vidual process cost as a percent of revenue, or cost per transaction, actually remain the

same after outsourcing.

Yet, on a more positive note, companies that outsource demonstrate higher utilization

of best practices. For example, in accounts payable, the number of online management

approvals increases by 86% at firms that use outsourcing to a high degree. They also

identify and claim overpayments 64% more frequently through their outsourcing part-

nerships. Companies that outsource tend to use electronic invoice submissions (a provenbest practice for reducing errors) 2.5 times more often than other companies.

However, technology is not by itself the answer to increasing either the efficiency or

value supplied to the organization. Companies that devote as much as 21% more of their

annual finance spending to technology on average have slower cycle times for strategic

plans and forecasts than those that spend less. The implication is that managers tend to

succumb to the temptation of spinning more data simply because its there, rather than

focus on filtering out whats truly material. (As an example, consider that companieswith a high level of technology deployment have 48% more budget line-items than aver-

age.) The best practices approach dictates that companies link technology deployment

to process improvements, such as simplifying the budget process by reducing the num-

ber of line-items.

The ability to structure intelligent business processes that make the best use of tech-

nology be it to automate routine processes or deliver the right information to the right

people with the least possible delay will increasingly be a distinguishing feature of

world-class finance.

83

Strategic plan

85

48

Annual plan

108 9980

Forecasting

1421

14

372

551

21

Average cycle times for key businessplanning processes (in days)

Number of budgetline items

Average World-classtechnology-focusedfinance organizations

World-classprocess-focusedfinance organizations

Strategic planning process cycle times


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PROFILE OF A WORLD-CLASS FINANCE ORGANIZATION

Based on analysis of the organizations in our best practices benchmark studies, we find a

strong statistical correlation between the use of best practices and the delivery of signif-

icantly lower costs and greater value. While we congratulate the few companies in our

studies that display superior performance, it is clear that world-class status remains an

elusive goal for the vast majority of others. It is attainable, however, by those thatacknowledge that change is hard and commit to continuous improvement.

Since 1998, all four performance quartiles have narrowed; in particular, the most expensivecompanies have improved dramatically. The upper bound dropped by half, and the breakbetween the worst and the next quartile dropped by 25%.

World-class companies have total finance costs that are 47% lower than average.

Transaction process cost for world-class companies is 22% lower than average. The fact thatthe gap is less than that for overall cost suggests even world-class companies have not yet

fully optimized transaction processes.


6.88%

1998 2002

2.25%

0.94%

0.32%

1.12%average

1.48%

3.44%

1.70%

0.83%

0.43%

1.06%average

1.24%

Quartile 4

Quartile 3

Quartile 2

Quartile 1

Cost as a percent of revenue

World-classAverage

1.06%

0.56%

47%

Total cost of finance as a percent of revenue

World-classAverage

0.36%0.28%

Transactionprocess cost

22%

Cost of transaction processing as a percent of revenue


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World-class companies devote 56% more managerial resources, proportionately, to value-adding decision support than average companies.

World-class companies, which can get information to managers quickly, close their books44% faster than average companies and prepare reports in one quarter of the time.

There is a clear relationship between the number of systems and overall finance cost.

As the number of systems rises, so does cost. World-class companies use best practicesto minimize redundant systems.

13

18%

28%

World-classAverage

56%

Manager allocation to decision support

5.2

2.9

4.1

1.0

ReportClose

World-classAverage

44% 76%

Average days to close the books and report

0.00%

Finance costas a percent

of revenue

Applications per billion of revenue

0

1.00%

2.00%

3.00%

50 100 150 200

Relationship between transaction-processing applications and cost as a percent of revenue


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World-class companies have rationalized their applications dramatically. They use 91%

fewer applications per billion dollars of revenue than the average company.

World-class companies spend less in every cost category, although they spend slightly moreproportionately on technology.

World-class companies run finance with 57% fewer FTEs per billion of revenue than theaverage company. At this same time, they put 13% greater emphasis proportionally ondecision-support.


Average

68

124

19

World-class

27

9

26

Finance-functionmanagement

Decision support

Control and riskmanagement

Transactionprocessing

103

44

FTEs per billion in revenue, by activity

31.9

2.8

World-classAverage

91%

Applications per billion in revenue (core processes)

Average

0.64%

0.18%

0.18%

World-class

0.33%

0.08%

0.10%

Other

Technology

Outsourcing

Labor

1.06%

0.56%0.06%

0.05%

Cost as a percent of revenue by component


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In general, areas outside of North America have significantly higher costs for finance, bothon average and for world-class companies.

Areas outside of North America devote significantly more FTEs to finance, particularly inLatin America.

Companies in the Asia-Pacific have embraced outsourcing more than any other region. Thepercent of spend in technology is lower outside North America, suggesting that one driver ofhigher cost is less leverage of technology relative to labor (as is also evident from the gen-erally higher numbers of FTEs).

15

World-classAverage

Europe

1.27%

0.54%

1.58%

0.97%1.22%

0.68%

Latin America Asia-Pacific

57% 39% 44%

1.01%

0.54%

North America

45%

Finance cost as a percent of revenue: Selected regional comparisons

World-classAverage

Europe

146

85

253

127

186

68

Latin America Asia-Pacific

42% 50% 63%

85

40

North America

53%

FTEs per billion: Selected regional comparisons

Europe

60%

12%

21%

Latin America

65%

10%

20%

Asia-Pacific

62%

21%

9%

Other

TechnologyOutsourcing

Labor

7%

North America

60%

16%

19%5% 8% 5%

Cost mix: Selected regional comparisons


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STUDY METHODOLOGY AND BENEFITS OF PARTICIPATION

Stringent, standardized process and activity definitions remain the basis of our reliable,

apples to apples comparisons between organizations of different sizes and across

industries and geographies. Our unique approach provides a wide-angle perspective that

energizes staff and focuses management on aligning improvement efforts with overall

strategic goals.

UPDATED PERFORMANCE METRICS AND BESTPRACTICES

Benchmark questions about your companys utilization of best practices include quali-

tative metrics (functional alignment with corporate strategy, process, level of technol-

ogy integration, ability/readiness to partner with customers and suppliers, and organi-

zational design) as well as traditional quantitative metrics such as cost, cycle time,

quality and productivity. Comparisons of your companys performance are made against

our continuously updated database of global best practices.

Benchmark results are mapped to the Hackett Value GridSM. This robust, multi-dimensional

scorecard links performance to best practices in efficiency and value. It is unsurpassed

at providing companies with a crystalline view of how they compare to average and

world-class.

Organizations participating in Hacketts best practices benchmark studies receive

detailed, tailored, confidential evaluations of their performance, as measured against

the best-run companies in the world. Your final report will contain a prioritized list of

improvement opportunities within each performance dimension. It will also quantify theimpact of insufficient technological integration and organizational complexity, skills

and wage mismatches, and unnecessary controls.

The goal of the enhanced Hackett performance scorecard and the Hackett Value GridSM is

not to persuade companies to slavishly duplicate the practices of world-class organizations.

Rather, it offers a framework for understanding the drivers of cost and complexity, and

a method for generating fresh thinking about improvements in ways that are appropriate

to your particular situation.


Strategic alignment

Linkage to business plan

Partnering

Linkage tosuppliers andcustomers

Organization

Spans of control Process

fragmentation

Technology

Complexity Use of technology

Process

Productivity Unit cost

Strategic alignment

Completeness of vision

Partnering

Businesspartnering withoperations

Organization

Decision-supportratios

People development

Technology

Internal integration Innovation Information access

Process

Service Quality

Efficiency Value

World-class

World-clas

s

Sample company Average First quartile

Performance dimensions


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BENEFITS OF PARTICIPATION

Benchmarking and the sharing of best practices are potent tools for organizational

change and should be part of any quality-improvement initiative. In the past, the deci-

sion to benchmark was usually triggered by a specific event, such as a change in leader-

ship or shrinking profit margins. Today, however, the velocity of technological change

and its resulting impact on the competitive landscape make benchmarking an annual

(or at least a routinely scheduled) business imperative.

Recently, our clients have initiated many changes based on insights from their benchmark

results:

A global market-research company utilized a multi-function benchmark toidentify and prioritize over 15% savings within finance alone (0.5% reduction infinance cost as a percent of revenue) through a quick-wins program.

A Fortune 100 company found that it could cut in half the time it takes eachmonth to close its books by raising materiality limits, enforcing standards and

realigning the transaction-processing organization.

A global technology company despite, ironically, the extensive technologyresources available to it determined that it could reduce annual financespending by 22% by combining best practices in transaction processing andorganizational design.

A global manufacturer of retail products found it could reduce or redeploy over25% of its finance staff through organizational redesign and adoption of bestpractices in transaction processing.

An international travel and entertainment company used its human resourcesbenchmark findings to document the business case for investing more than$7 million in a new HR information system.

A $5 billion garment manufacturer discovered that it could save 40% of itsprocurement costs by implementing a global organizational structure to sup-port indirect procurement.

One of the worlds leading chemical manufacturers learned that it could save

35% of its information technology costs by implementing a formal M&A modelto integrate business functionality into common applications and infrastructure.

High

Low

Low High

VALUE

EFFICIENCY

StrategicAlignment

Partnering

Organization

Technology

Proc

ess

World-class

First quartile

Samplecompany

Overall

Hackett Value GridSM overall performance


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WWW.HACKETTBESTPRACTICES.COM

This powerful online best practices information resource, maintained exclusively for

benchmark participants, features simplified navigation and a new search capability.

Principal information resources include:

Process-by-process performance metrics to keep companies abreast of cur-rent data in our best practices studies and enable them to compare theprogress theyre making in their improvement programs

Executive summaries of recent articles, culled from over 7,500 business-media sources, offering insights into topics such as strategic decision-making,shared services, outsourcing and electronic procurement

Best practices case studies prepared by world-class client companies

Continuously updated information addressing both the what and how of

proven and emerging best practices

BESTPRACTICES COMMUNITIES

Hackett Best PracticesSM now offers opportunities for deep-process learning in:

Global shared services Accounts payable Payroll Travel and expense General ledger Accounts receivable

Titled Hackett Collaborative Learning, this offering is unique for the complete and

unmasked visibility of the data and information made available to members.Additional subscriber benefits, supporting the most useful insights into implemen-

tation of end-to-end process improvements, include:

Dedicated analytical resources Regularly scheduled webcasts and conferences White papers based on study findings

Visit www.hackettcollaborative.com for details.



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RECENT ENHANCEMENTS SPEED AND SIMPLIFY

BEST PRACTICES BENCHMARKING

The success of world-class companies is directly traceable to a consistent focus on best

practices through good times as well as bad. Hackett Best PracticesSM is dedicated to

helping senior executives make rapid, accurate and confident decisions about improve-ment opportunities and the direction of their business.

We are constantly on the lookout for ways to speed the identification and deployment of

best practices through a variety of tools. These include benchmarking, custom research

and collaborative, ongoing learning communities. Below are just some of the enhance-

ments we have made recently:

Benchmark results in four weeks: By leveraging Web-based tools and a new,accelerated data-collection model, we have streamlined the benchmark

process to enable you to be on your way to making lasting improvements in aslittle as one month.

Subscription-based best practices communities: Hackett Best PracticesSM nowoffers opportunities for learning and performance improvement in globalshared services, accounts payable, payroll, travel and expense, general ledgerand other processes. Titled Hackett Collaborative Learning, this unique service,with over 200 participating companies, combines best practices benchmarkingwith regularly scheduled webcasts, conferences and other avenues for grouplearning. Visit www.hackettcollaborative.com for details.

Hackettbestpractices.com, an online resource for all your best practicesinformation needs: Access benchmark tools, best practices metrics, whitepapers, case studies, presentations, article abstracts and more via ourenhanced, searchable Web site Available exclusively to Hackett clients.

The Hackett Value GridSM: This proprietary multi-dimensional scorecard helpsyou prioritize action plans for improving efficiency (cost and productivity) andeffectiveness (quality and value) by enabling you to see how your companycompares to average and world-class across these performance dimensions:strategic alignment, partnering, organization, use of technology and process.Participants individual scorecards are linked with empirical data on perform-ance and best practices usage for each dimension.

New organizations of any size and geography, and from any business sector, are welcome

to participate in ongoing Hackett studies at any time.


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3Com Corporation3M CorporationAbbott LaboratoriesAetna Inc.Agilent Technologies, Inc.

Alcoa, Inc.Allergan, Inc.Allied Domecq PLCAllstate CorporationAltria Group, Inc.American Express CompanyAmerican International GroupAOL Time Warner Inc.Applied Materials, Inc.AT&T CorporationAvon Products, Inc.Bank of America Corp.

Bank One CorporationBellSouth CorporationBoeing CompanyBP PLCBristol-Myers Squibb CompanyBritish AirwaysBritish Broadcasting Corp.BT Group PLCBullCable & Wireless plcCadbury Schweppes PLCCapital One Financial

CorporationCardinal Health, Inc.Cargill, Inc.CBS Television NetworkChevronTexaco CorporationChiron CorporationCirrus Logic, Inc.Cisco Systems, Inc.Citigroup Inc.Coca-Cola CompanyCompaq Computer CorporationConAgra Foods, Inc.Connect Austria Ges. fr

Telekommunikation GmbHCorning IncorporatedCSX CorporationCummins, Inc.DaimlerChrysler AGDegussa AGDell Computer CorporationDelta Air Lines, Inc.Diageo PLCDow Chemical Company

DSM Fine Chemicals AustriaGmbH & Co. KG

Duke Energy CorporationE.I. duPont de Nemours

and CompanyEastman Kodak CompanyEDS

EMC CorporationEntergy CorporationEquiva Services, LLCEricsson Inc.Exxon Mobil CorporationFidelity InvestmentsFinancial Times LimitedFord Motor CompanyFujitsu Microelectronics, Inc.The Gap, Inc.General Electric CompanyGeneral Mills, Inc.

General Motors CorporationGoodyear Tire &

Rubber CompanyHard Rock CafHeidelberger

Druckmaschinen AGHershey Foods CorporationHewlett-Packard CompanyHoffmann LaRoche Inc.Honeywell International Inc.IBM CorporationIngersoll-Rand Company

Ingram Micro Inc.International Paper

CompanyIntuit Inc.Iomega CorporationJohnson & JohnsonJ.P. Morgan Chase & Co.Kimberly-Clark CorporationKinkos, Inc.Kmart CorporationKSB AGL.L. Bean, Inc.

Labatt Breweries of CanadaLevi Strauss & Co.Lexmark International, Ltd.The Limited, Inc.Lloyds TSB Group PLCLockheed Martin CorporationLSI Logic CorporationLucent Technologies Inc.Manpower PLCMBNA CorporationMcDonalds Corporation

The McGraw-HillCompanies, Inc.

McKesson Corp.MeadWestvaco CorporationMeredith CorporationMerck & Co.METRO AG

Metropolitan LifeInsurance CompanyMotorola, Inc.NationsBank CorporationNationwideNorthrop Grumman

CorporationOracle CorporationPeopleSoft, Inc.PepsiCo, Inc.Pfizer Inc.Pharmacia

Philips Electronics NVProcter & Gamble CompanyQUALCOMM IncorporatedQwest Communications

International Inc.Renault S.A.Robert Bosch CorporationSAP AmericaSara Lee CorporationSears, Roebuck & Co.Siemens AGSilicon Graphics, Inc.

Sirona AGSprint CorporationSun Microsystems, Inc.Synovus Financial Corp.Starbucks CorporationTektronix, Inc.Tenet Health Care

CorporationTexas Instruments

IncorporatedTimken CompanyTMD Friction GroupTRW Inc.Tupperware CorporationUBS AG / UBS WarburgU.S. Government (most

Federal agencies)Unisys CorporationUnited Technologies

CorporationUSAAVerizon CommunicationsWaste Management Inc.Weyerhaeuser CompanyWorldCom, Inc.


STUDY DEMOGRAPHICS AND PARTICIPANTS

Since 1988, Hackett Best PracticesSM benchmark studies have evaluated the efficiency and

effectiveness of staff functions at nearly 2,000 global companies. Participants are about equally

divided between the goods-producing and service sectors, and virtually every major industry,

organizational structure and geographical distribution is represented. This allows us to scan across

multiple industries to pinpoint the most innovative practices those that transcend productlines or specific businesses. The size of companies in the finance benchmark ranges from $21 million

in annual sales to over $100 billion, with finance staffs as small as seven and as large as 7,600.

Below is a partial list of companies that have benchmarked with Hackett:


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817 West Peachtree StreetAtlanta, GA 30308

Tel: (404)682-2500Fax: (404)682-2507

5th Floor, Condor House5-12 St. Pauls Churchyard

London EC4M 8BE

United KingdomTel: +44 (0) 20 7246 1560Fax: +44 (0) 20 7248 2502

Rathausplatz 12-1465760 Eschborn / Frankfurt a.M.

GermanyTel: +49-6196-77726-0

Fax +49-6196-77726-10

1742 Georgetown RoadHudson, OH 44236

Tel: (330)656-3110Toll-free: (866)442-2538Fax: (330)463-5471

HACKETT BEST PRACTICESSM AND ANSWERTHINK

Hackett Best PracticesSM is dedicated to helping executives identify and deploy provenand emerging best practices using a variety of tools such as benchmarking, research andcollaborative learning. A division of Answerthink, Inc., Hackett Best PracticesSM is theglobal leader in best practices benchmarking, with ongoing studies of finance, IT, human

resources, procurement, strategic decision-making, call centers, SG&A (sales, generaland administrative) and related areas. Study participants comprise nearly 2,000 globalorganizations, including 100% of the Dow Jones Industrials, 90% of the Fortune 100 and84% of the Dow Jones Global Titans Index.

Hackett Best PracticesSM recently introduced subscription-based best practices communitiesin global shared services, accounts payable, accounts receivable, payroll, travel and expense,and other processes. Titled Hackett Collaborative Learning (www.hackettcollaborative.com),this service offering currently features over 200 participating companies.

A leading provider of technology-enabled business transformation solutions, Answerthink

brings together multi-disciplinary expertise in best practices benchmarking, businesstransformation, interactive direct marketing, business applications and technologyintegration to serve the needs of Global 2000 clients. Its solutions span all functionalareas of a company including finance, human resources, information technology, sales,marketing, customer service, and supply chain, as well as across a variety of industrysectors. The company is also part of a joint venture called HCL-Answerthink, which pro-vides custom application development services and application maintenance servicesthrough 15 facilities in India and Europe. Founded in 1997, Answerthink has more than1,100 associates and offices in 14 cities throughout the United States and in Europe.

Best practices inform everything Answerthink does for clients. High-value solutions aredelivered by optimizing the four key dimensions of business infrastructure (people,process, technology and information), using a proprietary approach termed BusinessProcess Intelligence, or BPI. In combination with Hackett Best Practices data aboutproven drivers of performance excellence, BPI allows Answerthink to quickly, crediblydesign and implement solutions that help companies reduce cost and increase efficiency.Clients also profit from enhanced analysis and decision-making, collaboration, adapt-ability, innovation, agility and productivity across the enterprise.

Answerthinks BPI approach and Hackett Best PracticesSM division are leveraged to enablepeople both inside and outside a companys walls to become more effective.Answerthink does this by designing information and knowledge strategies that improvedecision-making; implementing package applications pre-configured with process bestpractices; incorporating workflow, collaboration and Web services technologies thatenhance process efficiency and personal productivity; and developing portal applicationsthat provide access to the functions and information your employees, suppliers andcustomers need to conduct business with you efficiently. Please call 877-423-4321 tolearn how Answerthink can help you achieve breakthrough performance gains.

Hackett Best PracticesSM

www.hackettbestpractices.com

Email: [email protected]


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