The Hackett Group Research Alert: Companies Must Transform EPM To Support Innovation-Based Growth

  The Hackett Group Research Alert: Companies Must Transform EPM To Support
  Innovation-Based Growth

  2014 EPM Key Issues Study Identifies Three Key Transformation Focuses For
                        Financial Planning & Analysis

Business Wire

MIAMI & LONDON -- May 5, 2014

With companies now focusing on innovation as a core strategy to deliver
revenue growth and margin improvements, Financial Planning & Analysis (FP&A)
organizations need to rise to the challenge and pursue broad transformation in
Enterprise Performance Management (EPM) and business intelligence, according
to 2014 EPM Key Issues research from The Hackett Group, Inc. (NASDAQ: HCKT).

The Hackett Group's research recommends three main areas of transformation
focus for FP&A: integration of EPM processes and development of better
business partnerships; improvement of core processes to recalibrate FP&A's
value proposition; and development of better business intelligence
capabilities.

"EPM and BI are critical competencies as companies pursue innovation-based
growth," said The Hackett Group’s North American EPM and BI Executive Advisory
Practice Leader Sherri Liao. "These competencies extend well beyond the FP&A
organization. But the implications for FP&A are significant. There's a real
requirement for organizations to rethink their value proposition and reinvent
their service offering and decision support capabilities."

According to The Hackett Group Vice President of Strategic Research Erik Dorr,
"Many companies have let these analytics areas fall by the wayside in the
past. Over time, the business has grown, mergers and acquisitions have taken
place, and markets and customers have changed. But the way they report and
plan has not. They're left with outdated systems that don't generate real
insights, compromising competitiveness. In today's business environment, this
simply isn't something companies can afford to do."

For 2014, business volatility remains high and companies face significant risk
and instability in areas such as competition, regulation, and talent. But
companies are reverting to a focus on revenue growth and margin improvements,
The Hackett Group's research found. Many are choosing innovation-based
strategies -- which historically have been tied to the strategy of growth
acceleration -- in order to simply maintain growth rates.

The Hackett Group's 2014 Key Issues research also found that overall finance
budgets are expected to see only a small rise of 0.7 percent in 2014, while
staffing is expected to be reduced by 0.3 percent. Once expected revenue
growth of 6.7 percent is factored in, the result is expected to be an
efficiency gap of 6 percent and a productivity gap of 7 percent. Therefore, it
is expected that most FP&A transformation efforts will need to be self-funded.

The Hackett Group's research found that to improve the organizational EPM
competency level, a broad FP&A transformation agenda is required, centered
around the following three themes.

Integrate EPM Processes and Develop Business Partnerships

Financial planning and analysis is at the core of the enterprise EPM
capability, which extends beyond finance. The maturity of EPM as a core
competency is a function of integration between planning domains (strategic,
operational and financial) and the maturity of partnerships between FP&A and
the business.

The Hackett Group's research has consistently shown that companies with top
performing EPM functions have much higher levels of process and data
integration. Effective collaboration with stakeholders is also key, and the
most successful companies emphasize both the structured process and
information aspects of integration and the unstructured partnership elements.

Improve Core Processes to Recalibrate FP&A’s Value Proposition

FP&A is the custodian and owner of the organization’s core financial
management control cycle: financial planning and budgeting, forecasting, and
performance reporting, supported by analytics. Continuous improvement in this
cycle is needed to improve service levels, achieve cost reductions, and
address widespread frustration over the ineffectiveness and inefficiency of
the annual financial budgeting process.

In three key areas -- annual budgeting and forecasting, analysis, and accuracy
and timeliness of financial information -- more than half of all companies in
The Hackett Group's EPM Key Issues study said they were either planning major
initiatives or making improvement a top priority for 2014. Most are focusing
on a combination of process improvement, technology enablement, and complexity
reduction.

The Hackett Group's research also recommended that efficiency gains are
necessary to free up resources to move up the value chain with a flat or
declining cost base. Further, providing better value to the enterprise will
rely on FP&A groups’ ability to better integrate and garner business
operational knowledge to take their insights to the next level.

Develop Business Intelligence Information Delivery Capability

As the preeminent value-added information provider to the organization, FP&A
is at the center of the business intelligence revolution. Often a driver and
major contributor to kick-starting initiatives in these areas, FP&A is well
positioned to help bring a focus on what matters in analytics, as well as
bridge the gap between financial analytics and those in other business domains
(e.g., sales, marketing, operations). Transforming and innovating the way
information is delivered will become a critical capability for FP&A.

For years, The Hackett Group's research has found that business intelligence
and analytics rank among the most important technology investments. This
year's findings once again confirmed that.

The Hackett Group's EPM Key Issues research is based on a study conducted in
late 2013. Study participants included executives from over 150 large
companies globally. The study covered their business strategies, revenue and
budget expectations, as well as key initiatives for 2014. A complimentary copy
of The Hackett Group's research insight, "Key Issues 2014: Reinventing
Enterprise Performance Management to Support Sustainable Innovation-Based
Growth," is available with registration at this link:
http://www.thehackettgroup.com/research/2014/reinventing-epm/

About The Hackett Group

The Hackett Group (NASDAQ: HCKT), a global strategic business advisory and
operations improvement consulting firm, is a leader in best practice advisory,
business benchmarking, and transformation consulting services including
strategy and operations, working capital management, and globalization advice.

Utilizing best practices and implementation insights from more than 10,000
benchmarking studies, executives use The Hackett Group's empirically-based
approach to quickly define and implement initiatives that enable world-class
performance. Through its REL group, The Hackett Group offers working capital
solutions focused on delivering significant cash flow improvements. Through
its Archstone Consulting group, The Hackett Group offers Strategy & Operations
consulting services in the Consumer and Industrial Products, Pharmaceutical,
Manufacturing, and Financial Services industry sectors. Through its Hackett
Technology Solutions group, The Hackett Group offers business application
consulting services that help maximize returns on IT investments. The Hackett
Group has completed benchmark studies with over 3,500 major corporations and
government agencies, including 97% of the Dow Jones Industrials, 83% of the
Fortune 100, 87% of the DAX 30 and 48% of the FTSE 100.

More information on The Hackett Group is available: by phone at (770)
225-7300; by e-mail at info@thehackettgroup.com.

Contact:

The Hackett Group
Gary Baker, 917-796-2391
Global Communications Director
gbaker@thehackettgroup.com
 
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