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How corporate finance and treasury departments can reinvent themselves in 2015

A recent Hackett study titled “The World-Class Performance Advantage: How Leading Finance Organizations Outperform Their Peers,” which combined research and information derived from Hackett’s benchmarking service found the gap between top performers and their peers, at 46 percent, was higher for finance than any other business support function. Hackett found that the greatest benefit of these cost savings was the value-added resources those savings supported.

Balancing the benefits of efficiency and effectiveness

Hackett found that, “End-to-end process standardization is a foundational differentiator of world-class organizations, which surpass the peer group in ability to establish common policies, procedures and technology company-wide - see figure below. While the benefits of standardization are well known, companies in the peer group have not made as much progress in acting on this best practice.”

Percent of companies with one standard set of procedures followed by all business units

Source & Copyright©2014 - The Hackett Group

However, critically Hackett also stressed that, “The other key dimension of world-class performance is effectiveness – in this context meaning the ability to deliver sustainable, high-quality services and outcomes. Efficiency and effectiveness are not mutually exclusive, and the pursuit of one does not inherently preclude achievement of the other. Our research demonstrates that world-class finance organizations are successful at balancing both.”

They also stressed that driving out costs should not be a “goal in and of itself”.

Finance’s Mandate for self re-invention

With finance budgets increasing only by single digits if at all, organizations must continue their aggressive search for opportunities to trim costs while finding innovative ways to support company growth. Hackett found that, there are three primary tenets for finance reinventing itself as a value-adding entity, see figure below.

The three dimensions of finance reinvention

Source & Copyright©2014 - The Hackett Group

The three-dimensions of reinvention - realigning talent, re-architecting service delivery and retooling finance - are woven into the five conclusions and recommendations. Definitely worth a read.

CTMfile take: These words, “Efficiency and effectiveness are not mutually exclusive, and the pursuit of one does not inherently preclude achievement of the other.” are vital for everyone in business.

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