2014 EPM Key Issues Study Identifies Three
Key Transformation Focuses For Financial Planning &
Analysis
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They're left with outdated systems that don't generate real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.
The Hackett GroupGary Baker, 917-796-2391Global Communications
Directorgbaker@thehackettgroup.com
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