Key Benchmarks for Future Finance

| 1© 2018 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.

Key Benchmarks for Future Finance

October 24, 2018

Tom Willman – Finance Executive Advisory Practice Leader

Hackett Executive Advisory Transformation Services


93% of Dow Jones Industrials

87% of Fortune 100

88% of Dow Jones Global Titans

87% of DAX

58% of FTSE 100

53% of CAC 40

13 Global offices

We served

1,150+ Clients

Our Clients

A global strategic business advisory and operations

improvement firm

We help companies establish and implement sustainable

business performance improvements

▪ SG&A benchmarking “gold standard” since 1992

▪ We start with “why not”, fact-based, research &

intellectual capital

▪ Senior practitioner model, results focused

▪ Assist our clients in designing and implementing World-

class Digital Service Delivery execution capabilities

▪ Long term transformation journey assistance through

executive advisory membership

▪ Training and certification offerings for GBS

professionals, enterprise analytics and robotics

HACKETT DEFINES AND ENABLES

WORLD-CLASS PERFORMANCE

The Hackett Group

Agenda

▪ Primer on World-Class Finance

▪ Leveraging GBS to Drive Value

▪ Setting up RPA for Success

▪ Moving Forward


World-class Defined: Hackett’s Value GridTM Methodology

EFFICIENCY

▪ Lower total costs

▪ Faster cycle times

▪ Higher productivity levels

▪ Better staffing utilization

▪ Higher transaction automation levels

EFFECTIVENESS

▪ Access to right information at the right time

▪ More engaged, more agile workforce

▪ Value-added supplier leverage

▪ Better alignment to the needs of the business

▪ Optimized use of working capital

World Class Defined

Example Characteristics

41% fewer FTEs

43% lower cost

24% more time on analysis

versus gathering data

24% more customers view

Finance as valued partner

Source: Hackett Benchmarking Database


1.16%

1.03% 1.03%

0.61% 0.59% 0.59%

2012 2015 2018

Peer group World-class

World-class continues to focus on process and cost excellence

Largest Gap

To World

Class

Across G&A

43%


Total Cost of Finance as a % of revenue


Which enables reorientation of teams to drive value and impact capabilities beyond cost such as speed, quality and agility

▪ Aligned to Strategy

2X more likely to be aligned with corporate and

strategic goals

▪ Greater Quality

22% more AR collected within terms

83% lower AP error processing rate

▪ Faster Processes | More Agile

Close and report cycle 25% faster (6 days vs. 8)

Budget cycle 21% faster (95 days vs.120)

Monthly forecast cycle 53% faster (7 days vs. 15)

▪ More Time to Analyze and Partner

24% more time spent on analysis and decision

support vs. time spent collecting and compiling data

40%31%

25%

22%

35%47%

Peer Company World-Class

Process Cost as a Percent of Revenue by Process Category

Transacting Control & Risk Planning & Strategy



The journey to World-class requires proven and emerging best practices

COST LEADERSHIP

Cost leadership continues to

be “table stakes” to “self fund”

and drive enterprise value

CLEAR FINANCE

STRATEGYFinance strategy revisited and

aligned with enterprise with

eyes on advancing the business

CONSTANT FOCUS ON

COMPLEXITY REDUCTIONSimplification & standardization

through relentless application

of proven best practices

TALENT MANAGEMENT

EXCELLENCEEngaged and flexible talent

as the foundation for

sustained excellence

AGILE DELIVERY MODEL

An evolving and more agile

delivery model globally

balanced across BU & GBS

CORE CAPABILITY:

ENTERPRISE ANALYTICS

Relentless focus on reporting &

forecasting while creating an

analytics-driven organization

CUSTOMER EXPERIENCE

FIRST

Stakeholder insight driving

alignment to current and

future capabilities

FINANCE TECHNOLOGY

EXCELLENCE

Ensuring Finance is supported

with proven and foundational

technology to support business

VALUE-BASED

DIGITAL ADOPTION

Digital adoption –RPA cloud,

mobile, Big Data, - is the next

enabler of performance

OUR FOCUS TODAY

Agenda




▪ Moving Forward


Finance Operations

Focus: Delivers operational finance services to BUs

Cash Disbursements, Revenue Cycle, General Accounting

Corporate Center

Focus: Defines corporate strategy and

exercises stewardship

▪ Strategic and Financial Planning &

Performance Management

▪ External Reporting, Tax, Treasury, Mergers &

Acquisitions, Internal Audit

Centers of Excellence

Focus: Supports enterprise-wide stewardship

goals

▪ Tax Management

▪ Cash Management

▪ Capital and Risk Management

▪ Compliance Management

▪ Cost Accounting

Business Partnering

Focus: Defines BU strategy and measures

performance

▪ Planning & Performance Management

▪ Business Analysis

Country/ Entity level (BU)

Focus: supports localized strategy execution

and activities retained for compliance reasons

▪Tax

▪Compliance

▪External reporting

Today’s accepted three-tiered delivery model balances the delivery of finance services between Corporate, BUs and GBS / Shared Services

Source: Hackett Advisory Proprietary Research – Use Cases Library |


89%

83%

83%

82%

78%

77%

77%

77%

75%

71%

60%

53%

50%

49%

47%

45%

44%

42%

36%

64%

6%

8%

8%

10%

13%

12%

15%

8%

16%

14%

33%

17%

10%

13%

11%

18%

19%

42%

43%

17%

6%

8%

8%

9%

10%

12%

8%

15%

8%

14%

7%

29%

40%

38%

42%

36%

37%

17%

21%

19%

Accounts Payable

Travel & Expense

Fixed Asset Accounting

General Ledger

Credit

Intercompany Accounting

Customer Billing

Cash Application

Dispute Management

Collections

Cost Accounting

Payroll

Enterprise Consolidation

Treasury Management

External Reporting

Compliance Management

Tax Management

Planning & Performance Management

Business Analysis

TOTAL

GBS BU Corporate Center

Finance continues to expand the scope and purpose of GBS; those that have pushed the model the furthest are delivering over 60% of finance activities

▪ Top quartile GBS – those that have taken the

model considerably further than peer – have

moved almost all transactional activities into

GBS, including revenue cycle related activities.

▪ Value-adding activities, with the exception of

cost accounting, are still predominantly

delivered from the BU or corporate center.

However, we are seeing a change in thinking

as more and more organizations are

challenging the status quo for areas like Tax,

Statutory Reporting and Reporting and

Analysis

Finance in GBS, organizational model by process (Top quartile)


World-class performance is significant and worth pursuingWorld-class GBS outperform their peers strategically and in cost, quality and service

7%

9%

10%

8%

5%

5%

6%

6%

Quality Improvement

Customer ServiceImprovement

Operating Cost

Productivity Improvement

PeerWorld-class

Year-on-year performance improvements

Average % improvement peer vs World-classOverall Strategic Outperformance

The Hackett Group, Annual GBS Study


There are a number of critical enablers to achieving World-class in GBS; we believe digital provides game changing opportunities

GBS Strategy

and Value

Alignment

Process

Leverage and

Placement

Sourcing and

Location

Strategy

Organization &

Governance

Structure

Global

Process

Ownership

Customer

Centric Design

GBS Service

Management

Digital & GBS

Technology

Analytics as a

Service

Skills and

Talent

The Hackett Group Executive Advisory GBS Research Center

Key Imperatives and Levers to Advance to GBS World-class


0.587%0.463%

Our research shows a tremendous cost savings opportunity from holistic digital transformation

Baseline

21% reduction

Digital transformation: World-Class

PeerWorld-Class

Total finance cost as a percent of revenue

Transactional Knowledge based Technology Other

1.030%

0.668%

35% reduction

Digital transformation: Peer

Baseline

Peer

Digital

Digital


15%

44%

5%

41%

8%

43%

8%

36%

6%

25%

9%

29%

30%

38%

35%

41%

38%

34%

38%

44%

35%

39%

29%

27%

45%

81%

40%

83%

45%

77%

45%

80%

41%

64%

38%

56%

Current 2-3 years Current 2-3 years Current 2-3 years Current 2-3 years Current 2-3 years Current 2-3 years

Cloud-based applications/SaaS Advanced analytics* Master data managementtechnologies

Data visualization tools Mobile computing Social media/collaboration

Broad adoption Limited adoption

Digital is here – for Mainstream technologies, Finance expects broadest adoption of cloud, advanced analytics and MDM in 2-3 years

Mainstream digital technologies - Finance

2.9x 8.2x 5.4x 4.5x4.2x

3.2x

* Including predictive modelling, big data analytics, unstructured data analytics

Source: Hackett Key Issues Study, 2018 |


Adoption rates have been slower in emerging digital technologies, but Finance expects dramatic growth in robotic process automation

3%

38%

2%

14%9%

2% 5% 5%

18%

40%

14%

20%

6%

31%

3%

32%

3%

13%

21%

78%

15%

34%

6%

41%

5%

37%

3%

17%

Current 2-3 years Current 2-3 years Current 2-3 years Current 2-3 years Current 2-3 years

Robotic process automation Internet of things Cognitive computing/artificialintelligence

Virtual assistants/chatbots Blockchain

Broad adoption Limited adoption

Emerging digital technologies - Finance

12.7x

7.0x

6.8x**

2.5x5.7x**

* Including machine learning, natural language processing, speech recognition, expert systems, augmented reality

** Growth represents limited adoption + mainstream adoption

*



Though actual adoption rates are still fairly low, finance is piloting many digital technologies with RPA at the top of the list

58%

46% 44%39% 39% 38%

31% 30%26% 26%

17%

Robotic processautomation

Advanced analytics Cloud-basedapplications/SaaS

Data visualizationtools

Master datamanagementtechnologies

Cognitivecomputing/artificial

intelligence

Socialmedia/collaboration

Mobile computing Internet of things Virtualassistants/chatbots

Blockchain

Percent of Finance organizations currently piloting the technology

Mainstream Technology Emerging Technology


Agenda




▪ Moving Forward


What Benefits are You Looking to Achieve with RPA?Some real benefits associated with RPA include:

▪ Cheaper: ~$5-10k license per robot; 1/3 – 1/9 cost of an FTE

▪ More productive: min 3x faster, optimal utilization (87%) is 21 hrs/day vs. 8 hr FTE workday

▪ Higher quality: 100% accuracy

▪ Cost savings: 25-50% average cost savings from RPA

▪ Scale: Improved processing times eliminate process constraints; ability to scale faster than people

Operational

benefits

Short cycle

Long-term

business

benefits

▪ 6-12 weeks for initial pilot

▪ Average deployment after initial implementation = <9 weeks

▪ Payback <9-12 months

▪ Ability to integrate with existing systems - no changes to IT architecture

▪ Release talent from mundane, tactical work

▪ Refocus on high value activities

▪ Improve analytics and insights

▪ Greater compliance & auditability

▪ Key element of a self-funding transformation

▪ Drive process efficiencies and effectiveness

▪ Better utilize technology landscape

▪ Improve data management / governance

▪ Drive cost reduction

▪ Redeploy talent to more value-add activities

1


Large scale deployment of Robotics on an

End to End Process

Redesign process to maximize ROI of

automation technologies

Determine How RPA Will Be Used – What Need Will It Address?

TacticalTransformational Disposable

2-4 year horizon

No imminent replacement plans

Payback and other benefits

Robots developed for

limited duration roles

Payback and disposal

within 6-12 months

Three Ways How RPA is Being Used Today:

2


Look at the end to end process, then choose the right set of sub-process activities to pilot using an agreed upon set of criteria or characteristics…

Consider RPA Applicability – Which Processes are Suitable for Automation?

▪ Some key considerations for RPA application are FTEs impacted, process costs, transaction

volumes, and internal control requirements.

▪ Greatest deployment opportunity for RPA is across fragmented application landscapes with labor-

intensive, repetitive, manual processes.

▪ Finance has used RPA across many processes including close & consolidation, P2P, and O2C. We

are also seeing more application across FP&A, namely in data validation and standard reporting.

3


1

1

11

1

1

1

2

2

2

2

2

Research RPA

Identify and evaluate candidate

processes

Develop business case

Build and deploy robots

Expand program, building on initial

successes and learning

Evaluate RPA solution development

options against highest value use cases

Build and deploy pilot

PILOT PHASE

OPERATIONAL / EXPANSION PHASESource: Hackett Research

4Establish a Structured Evaluation Process

OPERATIONAL /

EXPANSION PHASE

Develop an Evaluation Model* for your business case:

– End goals / objectives

– Budget

– Timeline

– Enterprise goals vs. function specific goals

– Expected ROI / benefits

– Investment cost vs. ongoing cost to run pilot vs. scale

*Separate criteria and considerations for process selection and vendors


What is Typically Measured

▪Run time

▪Failure rates & reason for failure

▪Exception rates

▪Bot / license utilization

What We Should Also Measure

▪# of automation elements in data library

▪Assisted turned unassisted automations

▪# of tasks and rules performed by script

▪Bot development time

▪Backlog automations

What is Typically Measured:

▪Dollar / FTE savings

▪Build / development costs

▪ Implementation costs

What We Should Also Measure

▪# or % of manual tasks/hours now

automated

▪Customer / employee satisfaction

▪Risk reduction / compliance improvement

▪Processing time before vs. after

Automation Program

Bot Operations

5Align Business Case with Performance Measurement


Establish governance and delivery capabilities

Smart

AutomationCenter of

Excellence (CoE)

Strategy

▪ Vision & Alignment

▪ Solution Advisor

▪ Adoption

▪ Talent Development

Delivery

▪ Mobilize

▪ Design

▪ Build

▪ Test

▪ Deploy

▪ Run

Governance

▪ Governing Council

▪ Operating Infrastructure

▪ Program Management

▪ Performance Management

6

Agenda




▪ Moving Forward


What Could the Finance 2025 Operating Model Look Like and What Role Does GBS Play?

Source: Hackett Advisory Research, Finance 2025, 2017 |


Questions?

Tom Willman

Finance Executive Advisory Practice Leader

Mobile: 678.296.5745

[email protected]

mailto:[email protected]


Statement of Confidentiality and Usage Restrictions

This document contains trade secrets and information that is sensitive, proprietary, and confidential to The Hackett Group the disclosure of which would provide a competitive advantage to

others. As a result, the information contained herein, including, information relating to The Hackett Group’s data, equipment, apparatus, programs, software, security keys, specifications,

drawings, business information, pricing, tools, taxonomy, questionnaires, deliverables, including without limitation any benchmark reports, and the data and calculations contained therein,

may not be duplicated or otherwise distributed without The Hackett Group Inc.’s express written approval.

www.thehackettgroup.com

Key Benchmarks for Future Finance

Documents

Transcript of Key Benchmarks for Future Finance