While many large companies are aggressively pursuing
globalization of their products and brands, the large majority are
flying blind, without the ability to truly see what is happening
globally or make adjustments, according to new research from The
Hackett Group, Inc. (NASDAQ: HCKT).
Hackett's new "Global Operating Model" Book of Numbers research,
which looks at the performance of more than 100 companies, found a
strong acceleration of the trend towards globalization of business,
with most companies moving toward high levels of globalization for
their products and services lines and expanding the globalization
of delivery of business services over the next few years. In large
part these trends are being driven by historically high growth
rates in China and other emerging markets combined with stagnation
in developed markets.
But despite high levels of automation, most companies cannot
quickly access much of the information required to truly understand
their global performance. In a recent study, Hackett found that
less than half have near real-time visibility into customer
information and business volumes, and even fewer have the same
level of visibility into supplier spend, working capital, financial
performance and forecasts, and risk.
The Hackett Group's research details the need for companies to
align the globalization of their business services operations with
those of their overall enterprise, in order to truly succeed at
their globalization efforts. Globalization of business services
requires dramatic changes to improve visibility of management
information, in part through expanded use of automation. But most
companies lag far behind in this area.
"Globalization is undoubtedly one of today's most important
business trends," said The Hackett Group President of Advisory
& Research Services Sean Kracklauer. "Companies understand that
tapping into emerging markets is a key to success in the future.
This is driving the need to focus outside of their domestic markets
and truly globalize and standardize their product lines, brands,
customer and supplier bases, and business processes. To accomplish
this, they require both visibility and control, so that they can
understand their customer base, make the best pricing decisions,
and make the right choices regarding a wide array of opportunities
and risks.
"But it's pretty obvious that most companies simply don't have
the 'global DNA' that they need to do this effectively," Mr.
Kracklauer explained. "For example, companies understand the value
of having one view of the customer. But most don't have the ability
to quickly see and understand what they're doing across different
parts of their organizations, given the highly manual methods in
use to compile information from many different sources. Timeliness
of financial performance and forecasts information is an even
greater challenge for most companies. Incredibly, although we have
been talking for years on the need to move beyond stand-alone
spreadsheets, they are still the primary forecasting tool in nearly
three quarters of companies.
"This continued reliance on spreadsheets and manual data
sourcing are preventing companies from moving to more
forward-looking analyses based on a wider variety of non-financial
data sources. The challenge is only compounded as companies further
globalize their operational footprint," said Mr. Kracklauer. "As a
result, companies are missing opportunities, and are likely to get
hit with problems that they could have anticipated and mitigated
otherwise."
According to The Hackett Group's research, less than half of all
typical companies have "near real-time" access to customer
information. Only about a quarter of all typical companies have
similar access to financial performance and forecasts. Similarly,
less than 30 percent have "near real-time" access to supplier base
spend volumes. In all cases, globalization leaders show
dramatically greater levels of access to near real-time
information, having access to all this information and more nearly
80 percent of the time, on average. Automation is one key strategy
companies use to achieve these results, with The Hackett Group's
research showing that globalization leaders say they have "mostly
or fully" automated key areas up to 50 percent more often than
typical companies.
The Hackett Group's research found that while globalization
leaders have already almost completely globalized their brands and
products and service lines, typical companies have only done this
about half the time, on average. But typical companies are hoping
to increase globalization in these areas by up to 30 percent over
the next two to three years. In areas such as supplier and customer
bases, even leaders say they have achieved significant levels of
globalization only about half the time. But this is still about
twice as often as typical companies. Compared to typical companies,
globalization leaders also have much higher levels of
standardization across everything from marketing and R&D to
customer support, manufacturing, and sales.
The Global Operating Model Book of Numbers research also details
the critical importance of governance, particularly in regards to
clearly defining decision rights across cross-functional end to end
processes, organizational spans, and ownership of specific
activities to successfully execute the design, build and running of
processes through global process ownership.
"What we're seeing is that globalization leaders take a much
more holistic approach to developing their global operations," said
The Hackett Group Senior Research Director Erik Dorr. "They
understand the need to transform their service delivery model. This
is a process that begins with issues such as governance, service
placement, and high-level design of information and processes, then
moves on to detailed process and information design. Finally, the
process is completed as companies specify the new skills and talent
needed to run the service delivery organization, and develop a new
sourcing model specifying which processes will remain in-house and
which will be outsourced, as well as where they will be executed.
This is a complex process, and there's no boilerplate approach. But
it's critical for companies to focus on this if they are to truly
succeed at their globalization efforts."
The Global Operating Model Book of Numbers, available to members
of The Hackett Group's Executive Advisory programs, highlights over
50 metrics defining excellence in globalization. The research also
introduces The Hackett Group's Globalization Index, which compares
a company’s stage of enterprise globalization with its capabilities
for taking advantage of the level of globalization within its
business services organization. In addition, the book details the
“Anatomy of a Globalization Leader" across business portfolio type,
organizational alignment, and geographical scope.
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 8,400 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,
84% 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.
The Hackett GroupGary Baker, 917-796-2391Global Communications
Directorgbaker@thehackettgroup.com
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