Last week, The Hackett Group released a report aptly titled “Transforming the Finance Organization: Ambition vs. Reality.” It combines the results of two Hackett research projects and reaches the conclusion that finance teams have been biting off more than they can chew when it comes to transformational projects. However, Hackett also finds that finance executives’ change agenda in 2013 was considerably more modest than it was a couple years prior—suggesting that ambition in the finance function may be starting to align more closely with reality.
In its 2013 “Key Issues Study,” Hackett asked finance executives in a wide range of companies whether their organization has global standards in eight areas: technology infrastructure, key performance indicators (KPIs) and reporting, talent management, master data, centers of excellence/transaction processing centers, setting policies and strategies, designing and building processes, and operations/process execution. See Figure 1, below.
The report released last week also considers results of a separate Hackett study, conducted in 2012, that explored which finance processes companies have been working to transform, and which they expect to tackle in the near future. In that survey, Hackett divided respondents into two performance categories based on the cost of their finance function, its degree of standardization, and indicators of the quality of its outputs. Top performers accounted for around 20 to 25 percent of the participants, and Hackett grouped the rest of the organizations into a “peer group.”
Half of all top performers reported that they had comprehensively transformed their compliance management practices from 2010 to 2012, while 40 percent had engaged in comprehensive transformation of their planning and performance management processes, and the same proportion had transformed “service, process improvement, and function management.” In contrast, only 19 percent of the peer group had completed comprehensive transformations of compliance management or of service, process improvement, and function management—and only 12 percent had transformed planning and performance management.