Finance 02 BON-Final

Finance 02 BON-final 5/7/02 10:28 AM Page 2
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Book of Numbers
Finance
TABLE OF CONTENTS
Executive Summary .................................................................................1
Best Practices Perspectives
Strategic Alignment .....................................................................2

Partnering .................................................................................4
Organization ..............................................................................6
Technology.................................................................................8
Process...................................................................................10
Profile of a World-Class Finance Organization .............................................12
Best Practices Benchmarking
Study Methodology and Benefits of Participation..............................16

Recent Enhancements ................................................................19
Study Demographics and Participants.............................................20
Hackett Best PracticesSM and Answerthink .................................................21
BE ON THE ROAD TO LASTING IMPROVEMENTS IN JUST FOUR WEEKS

Companies of any size, industry or geography are welcome to participate at any
time in our ongoing, global best practices benchmark studies. Our new, acceler-
ated benchmarking process makes it possible to complete the study in as little as
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Companies that complete the benchmark receive a confidential, detailed

comparison of their performance relative to average and world-class, plus
customized recommendations for quick wins and longer-term opportunities to
reduce costs, better manage risk and deliver greater value.
Participation also entitles companies to a year of access to best practices metrics,

improvement ideas, conferences, white papers and other resources through our
online best practices resource.
Please contact us toll-free at (866) 442-2538 or from outside the United States
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©2002 All material contained herein is the sole property of Answerthink. All rights reserved.
EXECUTIVE SUMMARY
Our 2002 Book of Numbers – Finance underlines several distinct challenges facing most
finance organizations today: among them, dealing with a legacy of excess cost and com-
plexity and creating lasting value. Processes are obsolete and technology investments are
not fully leveraged. Moreover, measurement practices rarely provide executives with the
information they need to create sustainable shareowner value.
In addition, the global effects of a recession and the events of September 11, 2001, shifted
the concept of risk management to center stage, but the ways in which most finance
organizations conceive of and manage risk are extremely limited. Finally, the decentralization
movement, which strove to increase the responsiveness of individual business units by
granting them greater decision-making autonomy, ended up creating duplicative, paper-
based support functions whose costs today weigh heavily on earnings.
Average finance organizations remain wedded to a tradi-

tional, self-governing, control-oriented modus operandi. In FINANCE PROCESSES
contrast, those that are most successful rely on proven best TRANSACTION PROCESSING
practices to help them pare down excess costs and enable Accounts Payable
them to simultaneously manage risk and contribute to value Freight Payments
creation. Below are a few of the most intriguing trends in the Travel and Expense
Fixed Assets
evolution of best practices in finance:
Accounts Receivable
Credit
• A comprehensive approach to finance cost reduction, Collections
encompassing people, processes and technology, Customer Billing
is demonstrably more effective than “spot” solutions. General Accounting
External Reporting
Project Accounting
• Contrary to the widespread belief that tech-heavy Cost Accounting
practices such as self-service and information-on- Cash Management
demand drive up finance-function costs, world- Tax Accounting
class companies that adopt these and other value- Tax Filing and Reporting
adding best practices actually have 47% lower total CONTROL & RISK
finance costs compared to those that do not. MANAGEMENT
Budgeting
• Companies of all sizes that were formerly content Outlook/Interim Forecast
with matching the finance benchmark’s “average” Business Performance
performance metrics are today at risk of falling fur- Reporting
Treasury Management
ther and further behind, especially in areas that Tax Planning
have benefited from a combination of automation Internal Auditing
and process improvements.
DECISION SUPPORT
Cost Analysis
• Most companies severely underestimate risk. On
Business Performance
average, only 32% use sophisticated business- Analysis
simulation models to prepare for non-financial New Business/
events such as business discontinuity or sudden Pricing Analysis
Strategic Planning Support
market reverses.
FINANCE FUNCTION
• The virtual close is today within reach for companies MANAGEMENT
that embrace best practices for managing information.
On the following pages, we will explore the most significant new findings and best
practices for each of the five performance dimensions addressed by Hackett’s
ongoing best practices benchmark study of finance: strategic alignment, partnering,
organization, technology and process.
1
STRATEGIC ALIGNMENT
The finance organization has two critical means for ensuring that its goals and activities
are aligned with the rest of the firm, and further, that the firm’s goals are aligned to
creating value for shareowners. One encompasses the planning processes it typically
manages; the other, the information it delivers to managers in the reporting process.
Integration of strategic, tactical and financial planning processes
Fully integrated
Integrated at the
macro level only
Not integrated
Integrated only
through financials
The balkanized nature of most of today’s decentralized companies tends to foster con-
flicting or competing finance initiatives that needlessly sap resources and focus efforts
on projects of marginal strategic importance. Good strategic plans may help set direc-
tion, but achieving long-term goals hinges on a tight linkage of strategic, tactical and
financial plans to leverage the analytical value of finance resources. Importantly,
Hackett’s data demonstrates empirically that companies with high levels of integration
do not report higher finance costs as a result. In contrast, fully 25% of companies report
no integration of planning processes.
Mix of measures on balanced scorecards
48%
46%
33%
26%
17%
13%
11%
6%
Internal Internal External External

financial operating financial operating
Average World-class
2 Hackett Best Practices SM

To ensure that strategy does not take a back seat to day-to-day operations, 96% of
companies have some form of balanced scorecard. In reality however, the value of
balanced scorecards is seriously diluted by reliance on internal, lagging financial
measurements, which tend to focus attention on short-term fixes at the expense of
achieving long-term strategic objectives. Some leading-edge organizations are moving
closer to the balanced scorecard ideal, integrating external and operational measurements
that tie a wide range of factors — operations, customer satisfaction, innovation — to
financial value over the long term.
Use of rolling forecasts
Rolling
Current year only
Average days to budget
122
93
24%
Rolling forecast Rolling forecast

not used used
There can be no other explanation but that managerial self-interest prevents 77% of
companies from using rolling forecasts, a proven best practice for dramatically improv-
ing the sharpness of forecasts and reducing budget preparation time. The fact that 60%
of companies tie incentive compensation to achievement of the annual plan explains
why so few managers have embraced this technique – despite the fact that its use
correlates with a 24% drop in the time it takes to finalize an annual budget. The message
is clear: Incentive plans hold the power to animate and fuse together all the other
elements driving strategic alignment. Get them wrong and other best practices lose
much of their power to guide behavior.
3
PARTNERING
Finance analysts with operations experience
100%
93%
63%
58%
Percent of time analysts Percent of analysts

considered partners with experienced in both
operating management finance and operations
Average World-class
The most effective finance-function analysts are those with first-hand knowledge of
business operations. Here, Hackett data indicates that the picture is brightening: To
assure that cross-functional operations knowledge is developed and communicated,
even at average-performing companies 58% of analysts are experienced in both oper-
ations and finance. (Deploying this best practice brings an added bonus: Leading-edge
organizations have curtailed costly turnover by 14% by rotating analysts among business
units and investing more in targeted training.) That said, the gap to world-class, where 100%
of analysts have a deep understanding of both finance and operations, remains large.
Finance involvement with suppliers and customers
Dedicated team
members spend >30
hours per week
Some team members

spend >20 hours
per week
A few team
members spend <10
hours per week
No time spent
Finance involvement Finance involvement
with suppliers to with customers to
improve processes and make sales process
information flow more efficient
Average World-class

At a select few top-performing companies, reducing waste, rework and duplicative serv-
ices not only lowers the cost of fulfilling finance’s core fiduciary duties, but frees it
to focus on maximizing synergies with suppliers and customers. In the main, however,
finance is not extensively involved with suppliers and customers in these efforts. Even
the best companies do not, on average, have staffers dedicated to strengthening these
partnerships.
Analyst time usage
Average World-class
Doing planning
and analysis
Getting data
Doing historical
reporting
The ability to identify and alert leaders to sudden opportunity or increased risk hinges
on focusing the talents of a highly trained corps of analysts on these activities.
Proportionally, however, the amount of time that analysts spend mired in stacking and
restacking data (as opposed to analyzing its implications, considering alternative
courses of action and communicating the associated trade-offs) remains unchanged
since 1998. Analysts at world-class companies spend only 12% of their time getting
data and over half their time in planning and analysis – twice as much, proportionately,
as average companies.
The traditional “corporate cop/number-cruncher” mentality we still see in some finance

organizations will increasingly lead to their marginalization as significant contributors to
the value of the firm. As we look ahead, we see that breaking down the barriers between
finance and operations will only become more important as time goes by.
5
ORGANIZATION
Average FTEs by company size
206
170
159
124
115
104 103
95
Under $1B $1B - 5B Over $5B Overall
1998 2002
After several years of dramatic decreases in the size of finance staffs at the largest
companies, this trend appears to have bottomed out. The number of full-time equivalent
(FTE) employees per billion dollars of revenue declined by only 10% since 1998. By contrast,
finance organizations at mid-sized companies — those with between one and five billion
dollars in revenue — fell by 22% since 1998, today averaging 124 FTEs per billion in revenue.
Companies under one billion in revenue also made substantial gains in the past four
years, trimming finance staffs by 17%, from 206 to 170 FTEs per billion in revenue. Midsize
and smaller companies benefited by applying best practices adopted earlier by the largest
companies. (It must be noted that the fairly significant decrease in the number of FTEs
was offset by an equally large increase in the cost of these employees. For example, a 9%
decline in finance staff size for the largest companies translated into only a 3% decline
in cost.)
While reductions in finance’s size are directionally correct, our empirical data paints
a worrisome picture of across-the-board rather than selective cuts. Since 1998, the
number of FTEs supporting transaction processing declined by 10%; control and risk
management staff by 12%; and decision support by 13%. It is disturbing to see that the
declines both in risk management and decision support are greater than in transaction
processing, because the biggest opportunities to squeeze out costs remain in this last
activity, particularly at companies with average finance costs.

Percent of centralized transactions vs. percent of companies using

shared services and corporate accounting for transactions
Average World-class
45% Accounts 75%

40% payable 31%
45% General 71%

ledger
38% 33%
43% Travel and 74%

expense
28% 23%
35% Accounts 67%

receivable
26% 13%
26% 59%
Billing
24% 14%
26% 59%
Credit
19% 5%
Percent of transactions Percent of companies using both

processed centrally shared services and corporate
accounting for processing
Despite the visibility of shared services as a way to reduce headcount by consoli-

dating functions, only 57% of companies have them. Even at companies that choose to
centralize certain highly structured back-office activities, the average percentage of
company transactions going through that shared service is relatively low. Furthermore,
there is often more than one center for processing transactions. For instance, 40% of
companies report processing accounts payable in both corporate accounting and a
shared service center. When one considers that highly qualified, highly paid managers in
finance spend 42% of their time on transaction-processing activities (such as accounts
receivable, accounts payable and external reporting) – a marginal improvement over the
past four years – the argument for a continued focus on shared services becomes even
more compelling.
In future years we anticipate that much of the transaction processing traditionally

handled by shared service centers will be eliminated by the Internet. With routine
transactions handled directly by individual employees, companies will increasingly
outsource their shared services to a third party; leading-edge firms will be able to
offer outsourcing services themselves by commercializing their existing shared service
infrastructure.
7
TECHNOLOGY
In this cost-conscious time, it’s important to note — and help concerned stakeholders
understand — that adding value to the finance function doesn’t necessarily mean higher
costs. Contrary to the widespread assumption that tech-heavy practices such as self-
service and information-on-demand drive up costs, world-class companies that adopt
these and other value-adding practices actually have significantly lower overall finance
costs compared to average.
One of the most notable study findings is how a small improvement in technology leverage
can affect finance cost. World-class companies leverage the value of their technology
investments to shrink the cost of finance to as little as 0.56% of revenue. Companies that
fail in this regard spend as much as 3.44% of revenue to support their finance function. It’s
significant to note that the best-performing companies spend proportionately about 6%
more on technology than average, however in absolute terms they actually spend 44% less.
Cost of technology
0.18% 18%
17%
0.10%
45% 6%
Cost as a percent Cost as a percent of

of revenue total finance cost
Average World-class
Reported vs. actual ERP deployment
Reported extent to which Actual ERP deployment

a common ERP is deployed by systems count
None
36%
High
Low
17%
50% or more 25%-50% of

systems in one ERP systems in one ERP
Medium
Hackett’s empirical data demonstrates that a comprehensive approach to finance cost

reduction is vastly more effective than “spot” solutions. For example, we find that 72% of
companies report medium to high deployment of a common ERP, a considerable over-
statement of the reality. Only 17% of companies have 50% or more of their systems in a
single ERP, and only 36% have 25%-50% of their systems in a single ERP.

Average finance cost as a percent of revenue
1.44%
0.80%
44% 0.50%
0.29%
42%
Total cost Transaction

of finance processing cost
Many systems, non-standardized, Few systems, standardized,

decentralized centralized
As a result, implementing ERPs alone will not provide consistent cost savings; rather, a
comprehensive approach is required. For example, it is striking that focusing on reducing
system complexity and on implementing data standards delivers greater improvements
than ERPs and centralization — alone or together. Companies combining best practices
in systems rationalization, data standards and centralization are able to drive down the
cost of finance by 44%.
Online capabilities
Ad hoc online reporting Online travel reports

97%
94%
29%
16%
234% 488%
Percent of users with online access Percent of travelers completing/

to ad hoc reporting applications submitting expense reports online
Average World-class
The type of real-time collaboration with external partners that world-class companies
are beginning to implement — made possible by finance automation — is still a pipe
dream for average companies. The latter continue to cling to highly structured back-office
processes like order management or procurement, processes that are logical candidates
for automation. As an indicator, consider that on average only 29% of companies provide
online access to ad hoc reporting applications, compared to 97% of world-class
companies. Even more striking is that barely 16% of companies are even able to offer
something as basic as online submission of travel and expense reports. Cost-conscious
companies appear unwilling to commit the resources required to automate, despite
empirical data demonstrating the value to be gained in exchange.
One of the major hurdles to the pervasive implementation of consistent technologies

throughout the firm is the demand for unique requirements. It is in negotiating the
optimal risk/return balance between individual business units and the corporate center that
world-class companies will differentiate themselves in the future.
9
PROCESS
Companies of all sizes that were formerly content with matching the finance bench-
mark’s “average” performance metrics are today at risk of falling further and further
behind, especially in areas that have benefited from a combination of technology and
process improvements. Indeed, with the cost of processes as common as T&E being five
times as high at average companies compared to world-class (.010% and .002% of rev-
enue respectively) and something as basic as accounts receivable costing over four
times more at average companies than world-class (.032% versus .007%), it is evident
that “average” performance is no longer good enough. Just moving from average per-
formance to the first quartile in routine processes (e.g., accounts payable), would save
about $1.2 million of finance costs per billion of revenue annually. Moving into the ranks
of world-class nearly doubles that amount.
Best practices in highly routinized, low-value-adding transactions and control processes

are by now so well established — and the path for getting to world-class, while challenging,
is so well-marked — that it is incomprehensible that companies would knowingly leave
such easy savings on the table.
Average finance cost as a percent of revenue
2.20%
1.12%
1.06%
49% 5%
1988 1998 2002
Hackett’s 2002 benchmark data shows that the average cost of finance was slashed by
52% during the past decade, a significant achievement. One cannot fail to note, how-
ever, that the most dramatic reduction (about 50%) occurred between 1992 and 1998,
with only a 5% reduction on average since that time.
Monthly close: Best practices
Manual journal entries General-ledger reports

per billion of revenue per billion of revenue
184,855
10,795
104,305
4,310
44% 60%
Average World-class

Although the pace of improvement among world-class companies has decelerated, the
virtual close is within reach for an increasing number of them. Able to close their books
in under three days by utilizing process-based best practices for managing information,
these companies produce 44% fewer manual journal entries and 60% fewer general-
ledger reports than other companies.
Finance outsourcing costs on average since 1998 have not changed much, hovering at 6%
of the total finance spend. In the past, the common thought was that outsourcing was a
method for reducing finance costs. What our data shows is that categories such as indi-
vidual process cost as a percent of revenue, or cost per transaction, actually remain the
same after outsourcing.
Yet, on a more positive note, companies that outsource demonstrate higher utilization
of best practices. For example, in accounts payable, the number of online management
approvals increases by 86% at firms that use outsourcing to a high degree. They also
identify and claim overpayments 64% more frequently through their outsourcing part-
nerships. Companies that outsource tend to use electronic invoice submissions (a proven
best practice for reducing errors) 2.5 times more often than other companies.
Strategic planning process cycle times
Average cycle times for key business Number of budget

planning processes (in days) line items
108 99 551
83 85
80
372
48
21
14 14
Strategic plan Annual plan Forecasting 21
Average World-class World-class

technology-focused process-focused
finance organizations finance organizations
However, technology is not by itself the answer to increasing either the efficiency or
value supplied to the organization. Companies that devote as much as 21% more of their
annual finance spending to technology on average have slower cycle times for strategic
plans and forecasts than those that spend less. The implication is that managers tend to
succumb to the temptation of spinning more data simply because it’s there, rather than
focus on filtering out what’s truly material. (As an example, consider that companies
with a high level of technology deployment have 48% more budget line-items than aver-
age.) The best practices approach dictates that companies link technology deployment
to process improvements, such as simplifying the budget process by reducing the num-
ber of line-items.
The ability to structure intelligent business processes that make the best use of tech-
nology – be it to automate routine processes or deliver the right information to the right
people with the least possible delay – will increasingly be a distinguishing feature of
world-class finance.
11
PROFILE OF A WORLD-CLASS FINANCE ORGANIZATION

Based on analysis of the organizations in our best practices benchmark studies, we find a
strong statistical correlation between the use of best practices and the delivery of signif-
icantly lower costs and greater value. While we congratulate the few companies in our
studies that display superior performance, it is clear that world-class status remains an
elusive goal for the vast majority of others. It is attainable, however, by those that
acknowledge that change is hard and commit to continuous improvement.
Cost as a percent of revenue
6.88%
3.44%
Quartile 4
2.25%
1.70%
1.12% 1.48% 1.06% Quartile 3
1.24%
average average Quartile 2
0.94% 0.83%
Quartile 1
0.32% 0.43%
1998 2002
Since 1998, all four performance quartiles have narrowed; in particular, the most expensive
companies have improved dramatically. The upper bound dropped by half, and the break
between the worst and the next quartile dropped by 25%.
Total cost of finance as a percent of revenue
1.06%
0.56%
47%
Average World-class
World-class companies have total finance costs that are 47% lower than average.
Cost of transaction processing as a percent of revenue
0.36%
0.28%
22%
Transaction
process cost
Average World-class
Transaction process cost for world-class companies is 22% lower than average. The fact that
the gap is less than that for overall cost suggests even world-class companies have not yet
fully optimized transaction processes.

Manager allocation to decision support
18%
56%
28%
Average World-class
World-class companies devote 56% more managerial resources, proportionately, to value-

adding decision support than average companies.
Average days to close the books and report
5.2
4.1
2.9
44% 76% 1.0
Close Report
Average World-class
World-class companies, which can get information to managers quickly, close their books
44% faster than average companies and prepare reports in one quarter of the time.
Relationship between transaction-processing applications and cost as a percent of revenue
3.00%
2.00%
Finance cost
as a percent
of revenue
1.00%
0.00%
0 50 100 150 200
Applications per billion of revenue
There is a clear relationship between the number of systems and overall finance cost.
As the number of systems rises, so does cost. World-class companies use best practices
to minimize redundant systems.
13
Applications per billion in revenue (core processes)
31.9
91%
2.8
Average World-class
World-class companies have rationalized their applications dramatically. They use 91%
fewer applications per billion dollars of revenue than the average company.
Cost as a percent of revenue by component
1.06%
Other 0.18%
Technology 0.18%
Outsourcing 0.06% 0.56%
0.08%
0.10%
Labor 0.05%
0.64%
0.33%
Average World-class
World-class companies spend less in every cost category, although they spend slightly more
proportionately on technology.
FTEs per billion in revenue, by activity
Finance-function 103
management 4
Decision support 12
Control and risk 19
management 44
2
Transaction 6
68 9
processing
27
Average World-class
World-class companies run finance with 57% fewer FTEs per billion of revenue than the
average company. At this same time, they put 13% greater emphasis proportionally on
decision-support.

Finance cost as a percent of revenue: Selected regional comparisons
1.58%
1.27%
1.22%
0.97% 1.01%
0.68%
0.54% 0.54%
57% 39% 44% 45%
Europe Latin America Asia-Pacific North America
Average World-class
In general, areas outside of North America have significantly higher costs for finance, both
on average and for world-class companies.
FTEs per billion: Selected regional comparisons
253
186
146
127
85 85
68
40
42% 50% 63% 53%
Average World-class
Areas outside of North America devote significantly more FTEs to finance, particularly in
Latin America.
Cost mix: Selected regional comparisons
Other 21% 20% 21% 16%

Technology 12% 10% 9% 19%
5% 8%
Outsourcing 7% 5%
Labor 60% 65% 62% 60%
Companies in the Asia-Pacific have embraced outsourcing more than any other region. The
percent of spend in technology is lower outside North America, suggesting that one driver of
higher cost is less leverage of technology relative to labor (as is also evident from the gen-
erally higher numbers of FTEs).
15
STUDY METHODOLOGY AND BENEFITS OF PARTICIPATION

Stringent, standardized process and activity definitions remain the basis of our reliable,
“apples to apples” comparisons between organizations of different sizes and across
industries and geographies. Our unique approach provides a wide-angle perspective that
energizes staff and focuses management on aligning improvement efforts with overall
strategic goals.
UPDATED PERFORMANCE METRICS AND BEST PRACTICES

Benchmark questions about your company’s utilization of best practices include quali-
tative metrics (functional alignment with corporate strategy, process, level of technol-
ogy integration, ability/readiness to partner with customers and suppliers, and organi-
zational design) as well as traditional quantitative metrics such as cost, cycle time,
quality and productivity. Comparisons of your company’s performance are made against
our continuously updated database of global best practices.
Performance dimensions
Efficiency Value
Strategic alignment Strategic alignment

• Completeness of vision • Linkage to business plan
Wo Wo
rld rld
-c
la -c
ss la
Process Partnering Process ss Partnering
• Productivity • Business • Service • Linkage to
• Unit cost partnering with • Quality suppliers and
operations customers
Technology Organization Technology Organization

• Complexity • Spans of control • Internal integration • Decision-support
• Use of technology • Process • Innovation ratios
fragmentation • Information access • People development
Sample company Average First quartile
Benchmark results are mapped to the Hackett Value GridSM. This robust, multi-dimensional
scorecard links performance to best practices in efficiency and value. It is unsurpassed
at providing companies with a crystalline view of how they compare to average and
world-class.
Organizations participating in Hackett’s best practices benchmark studies receive

detailed, tailored, confidential evaluations of their performance, as measured against
the best-run companies in the world. Your final report will contain a prioritized list of
improvement opportunities within each performance dimension. It will also quantify the
impact of insufficient technological integration and organizational complexity, skills
and wage mismatches, and unnecessary controls.
The goal of the enhanced Hackett performance scorecard and the Hackett Value GridSM is
not to persuade companies to slavishly duplicate the practices of world-class organizations.
Rather, it offers a framework for understanding the drivers of cost and complexity, and
a method for generating fresh thinking about improvements in ways that are appropriate
to your particular situation.

Hackett Value Grid SM overall performance
High
First quartile World-

class
Process
Technology
Organization
Strategic Alignment
VALUE
Partnering
Sample
company
Overall
Low
Low EFFICIENCY High
BENEFITS OF PARTICIPATION
Benchmarking and the sharing of best practices are potent tools for organizational
change and should be part of any quality-improvement initiative. In the past, the deci-
sion to benchmark was usually triggered by a specific event, such as a change in leader-
ship or shrinking profit margins. Today, however, the velocity of technological change
and its resulting impact on the competitive landscape make benchmarking an annual
(or at least a routinely scheduled) business imperative.
Recently, our clients have initiated many changes based on insights from their benchmark
results:
• A global market-research company utilized a multi-function benchmark to

identify and prioritize over 15% savings within finance alone (0.5% reduction in
finance cost as a percent of revenue) through a quick-wins program.
• A Fortune 100 company found that it could cut in half the time it takes each
month to close its books by raising materiality limits, enforcing standards and
realigning the transaction-processing organization.
• A global technology company — despite, ironically, the extensive technology

resources available to it — determined that it could reduce annual finance
spending by 22% by combining best practices in transaction processing and
organizational design.
• A global manufacturer of retail products found it could reduce or redeploy over

25% of its finance staff through organizational redesign and adoption of best
practices in transaction processing.
• An international travel and entertainment company used its human resources

benchmark findings to document the business case for investing more than
$7 million in a new HR information system.
• A $5 billion garment manufacturer discovered that it could save 40% of its

procurement costs by implementing a global organizational structure to sup-
port indirect procurement.
• One of the world’s leading chemical manufacturers learned that it could save
35% of its information technology costs by implementing a formal M&A model
to integrate business functionality into common applications and infrastructure.
17
WWW.HACKETTBESTPRACTICES.COM
This powerful online best practices information resource, maintained exclusively for
benchmark participants, features simplified navigation and a new search capability.
Principal information resources include:
• Process-by-process performance metrics to keep companies abreast of cur-
rent data in our best practices studies and enable them to compare the
progress they’re making in their improvement programs
• Executive summaries of recent articles, culled from over 7,500 business-
media sources, offering insights into topics such as strategic decision-making,
shared services, outsourcing and electronic procurement
• Best practices case studies prepared by world-class client companies
• Continuously updated information addressing both the “what” and “how” of
proven and emerging best practices
BEST PRACTICES COMMUNITIES

Hackett Best PracticesSM now offers opportunities for deep-process learning in:
• Global shared services • Accounts payable
• Payroll • Travel and expense
• General ledger • Accounts receivable
Titled Hackett Collaborative Learning, this offering is unique for the complete and
unmasked visibility of the data and information made available to members.
Additional subscriber benefits, supporting the most useful insights into implemen-
tation of end-to-end process improvements, include:
• Dedicated analytical resources
• Regularly scheduled webcasts and conferences
• White papers based on study findings
Visit www.hackettcollaborative.com for details.

RECENT ENHANCEMENTS SPEED AND SIMPLIFY

BEST PRACTICES BENCHMARKING
The success of world-class companies is directly traceable to a consistent focus on best
practices through good times as well as bad. Hackett Best PracticesSM is dedicated to
helping senior executives make rapid, accurate and confident decisions about improve-
ment opportunities and the direction of their business.
We are constantly on the lookout for ways to speed the identification and deployment of
best practices through a variety of tools. These include benchmarking, custom research
and collaborative, ongoing learning communities. Below are just some of the enhance-
ments we have made recently:
• Benchmark results in four weeks: By leveraging Web-based tools and a new,

accelerated data-collection model, we have streamlined the benchmark
process to enable you to be on your way to making lasting improvements in as
little as one month.
• Subscription-based best practices communities: Hackett Best PracticesSM now

offers opportunities for learning and performance improvement in global
shared services, accounts payable, payroll, travel and expense, general ledger
and other processes. Titled Hackett Collaborative Learning, this unique service,
with over 200 participating companies, combines best practices benchmarking
with regularly scheduled webcasts, conferences and other avenues for group
learning. Visit www.hackettcollaborative.com for details.
• Hackettbestpractices.com, an online resource for all your best practices

information needs: Access benchmark tools, best practices metrics, white
papers, case studies, presentations, article abstracts and more via our
enhanced, searchable Web site – Available exclusively to Hackett clients.
• The Hackett Value GridSM: This proprietary multi-dimensional scorecard helps

you prioritize action plans for improving efficiency (cost and productivity) and
effectiveness (quality and value) by enabling you to see how your company
compares to average and world-class across these performance dimensions:
strategic alignment, partnering, organization, use of technology and process.
Participants’ individual scorecards are linked with empirical data on perform-
ance and best practices usage for each dimension.
New organizations of any size and geography, and from any business sector, are welcome
to participate in ongoing Hackett studies at any time.
19
STUDY DEMOGRAPHICS AND PARTICIPANTS

Since 1988, Hackett Best PracticesSM benchmark studies have evaluated the efficiency and
effectiveness of staff functions at nearly 2,000 global companies. Participants are about equally
divided between the goods-producing and service sectors, and virtually every major industry,
organizational structure and geographical distribution is represented. This allows us to scan across
multiple industries to pinpoint the most innovative practices — those that transcend product
lines or specific businesses. The size of companies in the finance benchmark ranges from $21 million
in annual sales to over $100 billion, with finance staffs as small as seven and as large as 7,600.
Below is a partial list of companies that have benchmarked with Hackett:
3Com Corporation Duke Energy Corporation McKesson Corp.

3M Corporation E.I. duPont de Nemours MeadWestvaco Corporation
Abbott Laboratories and Company Meredith Corporation
Aetna Inc. Eastman Kodak Company Merck & Co.
Agilent Technologies, Inc. EDS METRO AG
Alcoa, Inc. EMC Corporation Metropolitan Life
Allergan, Inc. Entergy Corporation Insurance Company
Allied Domecq PLC Equiva Services, LLC Motorola, Inc.
Allstate Corporation Ericsson Inc. NationsBank Corporation
Altria Group, Inc. Exxon Mobil Corporation Nationwide
American Express Company Fidelity Investments Northrop Grumman
American International Group Financial Times Limited Corporation
AOL Time Warner Inc. Ford Motor Company Oracle Corporation
Applied Materials, Inc. Fujitsu Microelectronics, Inc. PeopleSoft, Inc.
AT&T Corporation The Gap, Inc. PepsiCo, Inc.
Avon Products, Inc. General Electric Company Pfizer Inc.
Bank of America Corp. General Mills, Inc. Pharmacia
Bank One Corporation General Motors Corporation Philips Electronics NV
BellSouth Corporation Goodyear Tire & Procter & Gamble Company
Boeing Company Rubber Company QUALCOMM Incorporated
BP PLC Hard Rock Café Qwest Communications
Bristol-Myers Squibb Company Heidelberger International Inc.
British Airways Druckmaschinen AG Renault S.A.
British Broadcasting Corp. Hershey Foods Corporation Robert Bosch Corporation
BT Group PLC Hewlett-Packard Company SAP America
Bull Hoffmann LaRoche Inc. Sara Lee Corporation
Cable & Wireless plc Honeywell International Inc. Sears, Roebuck & Co.
Cadbury Schweppes PLC IBM Corporation Siemens AG
Capital One Financial Ingersoll-Rand Company Silicon Graphics, Inc.
Corporation Ingram Micro Inc. Sirona AG
Cardinal Health, Inc. International Paper Sprint Corporation
Cargill, Inc. Company Sun Microsystems, Inc.
CBS Television Network Intuit Inc. Synovus Financial Corp.
ChevronTexaco Corporation Iomega Corporation Starbucks Corporation
Chiron Corporation Johnson & Johnson Tektronix, Inc.
Cirrus Logic, Inc. J.P. Morgan Chase & Co. Tenet Health Care
Cisco Systems, Inc. Kimberly-Clark Corporation Corporation
Citigroup Inc. Kinko’s, Inc. Texas Instruments
Coca-Cola Company Kmart Corporation Incorporated
Compaq Computer Corporation KSB AG Timken Company
ConAgra Foods, Inc. L.L. Bean, Inc. TMD Friction Group
Connect Austria Ges. für Labatt Breweries of Canada TRW Inc.
Telekommunikation GmbH Levi Strauss & Co. Tupperware Corporation
Corning Incorporated Lexmark International, Ltd. UBS AG / UBS Warburg
CSX Corporation The Limited, Inc. U.S. Government (most
Cummins, Inc. Lloyds TSB Group PLC Federal agencies)
DaimlerChrysler AG Lockheed Martin Corporation Unisys Corporation
Degussa AG LSI Logic Corporation United Technologies
Dell Computer Corporation Lucent Technologies Inc. Corporation
Delta Air Lines, Inc. Manpower PLC USAA
Diageo PLC MBNA Corporation Verizon Communications
Dow Chemical Company McDonald’s Corporation Waste Management Inc.
DSM Fine Chemicals Austria The McGraw-Hill Weyerhaeuser Company
GmbH & Co. KG Companies, Inc. WorldCom, Inc.

HACKETT BEST PRACTICES SM AND ANSWERTHINK

Hackett Best PracticesSM is dedicated to helping executives identify and deploy proven
and emerging best practices using a variety of tools such as benchmarking, research and
collaborative learning. A division of Answerthink, Inc., Hackett Best PracticesSM is the
global leader in best practices benchmarking, with ongoing studies of finance, IT, human
resources, procurement, strategic decision-making, call centers, SG&A (sales, general
and administrative) and related areas. Study participants comprise nearly 2,000 global
organizations, including 100% of the Dow Jones Industrials, 90% of the Fortune 100 and
84% of the Dow Jones Global Titans Index.
Hackett Best PracticesSM recently introduced subscription-based best practices communities

in global shared services, accounts payable, accounts receivable, payroll, travel and expense,
and other processes. Titled Hackett Collaborative Learning (www.hackettcollaborative.com),
this service offering currently features over 200 participating companies.
A leading provider of technology-enabled business transformation solutions, Answerthink

brings together multi-disciplinary expertise in best practices benchmarking, business
transformation, interactive direct marketing, business applications and technology
integration to serve the needs of Global 2000 clients. Its solutions span all functional
areas of a company including finance, human resources, information technology, sales,
marketing, customer service, and supply chain, as well as across a variety of industry
sectors. The company is also part of a joint venture called HCL-Answerthink, which pro-
vides custom application development services and application maintenance services
through 15 facilities in India and Europe. Founded in 1997, Answerthink has more than
1,100 associates and offices in 14 cities throughout the United States and in Europe.
Best practices inform everything Answerthink does for clients. High-value solutions are
delivered by optimizing the four key dimensions of business infrastructure (people,
process, technology and information), using a proprietary approach termed Business
Process Intelligence, or BPI. In combination with Hackett Best Practices’ data about
proven drivers of performance excellence, BPI allows Answerthink to quickly, credibly
design and implement solutions that help companies reduce cost and increase efficiency.
Clients also profit from enhanced analysis and decision-making, collaboration, adapt-
ability, innovation, agility and productivity across the enterprise.
Answerthink’s BPI approach and Hackett Best PracticesSM division are leveraged to enable
people both inside and outside a company’s walls to become more effective.
Answerthink does this by designing information and knowledge strategies that improve
decision-making; implementing package applications pre-configured with process best
practices; incorporating workflow, collaboration and Web services technologies that
enhance process efficiency and personal productivity; and developing portal applications
that provide access to the functions and information your employees, suppliers and
customers need to conduct business with you efficiently. Please call 877-423-4321 to
learn how Answerthink can help you achieve breakthrough performance gains.
Hackett Best PracticesSM

www.hackettbestpractices.com
Email: hackett@answerthink.com
817 West Peachtree Street Rathausplatz 12-14

Atlanta, GA 30308 65760 Eschborn / Frankfurt a.M.
Tel: (404)682-2500 Germany
Fax: (404)682-2507 Tel: +49-6196-77726-0
Fax +49-6196-77726-10
5th Floor, Condor House
5-12 St. Paul’s Churchyard 1742 Georgetown Road
London EC4M 8BE Hudson, OH 44236
United Kingdom Tel: (330)656-3110
Tel: +44 (0) 20 7246 1560 Toll-free: (866)442-2538
Fax: +44 (0) 20 7248 2502 Fax: (330)463-5471

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Finance 02 BON-final 5/7/02 10:28 AM Page 2

Executive Summary .................................................................................1

Best Practices Perspectives

Strategic Alignment .....................................................................2

Profile of a World-Class Finance Organization .............................................12

Best Practices Benchmarking

Study Methodology and Benefits of Participation..............................16

Hackett Best PracticesSM and Answerthink .................................................21

BE ON THE ROAD TO LASTING IMPROVEMENTS IN JUST FOUR WEEKS

Companies that complete the benchmark receive a confidential, detailed

Participation also entitles companies to a year of access to best practices metrics,

Average finance organizations remain wedded to a tradi-

Integration of strategic, tactical and financial planning processes

Mix of measures on balanced scorecards

Internal Internal External External

2 Hackett Best Practices SM

Use of rolling forecasts

Current year only

Average days to budget

Rolling forecast Rolling forecast

Finance analysts with operations experience

Percent of time analysts Percent of analysts

Finance involvement with suppliers and customers

Some team members

4 Hackett Best Practices SM

Analyst time usage

The traditional “corporate cop/number-cruncher” mentality we still see in some finance

Average FTEs by company size

Under $1B $1B - 5B Over $5B Overall

6 Hackett Best Practices SM

Percent of centralized transactions vs. percent of companies using

45% Accounts 75%

45% General 71%

43% Travel and 74%

35% Accounts 67%

Percent of transactions Percent of companies using both

Despite the visibility of shared services as a way to reduce headcount by consoli-

In future years we anticipate that much of the transaction processing traditionally

Cost as a percent Cost as a percent of

Reported vs. actual ERP deployment

Reported extent to which Actual ERP deployment

50% or more 25%-50% of

Hackett’s empirical data demonstrates that a comprehensive approach to finance cost

8 Hackett Best Practices SM

Average finance cost as a percent of revenue

Total cost Transaction

Many systems, non-standardized, Few systems, standardized,

Ad hoc online reporting Online travel reports

Percent of users with online access Percent of travelers completing/

One of the major hurdles to the pervasive implementation of consistent technologies

Best practices in highly routinized, low-value-adding transactions and control processes

Average finance cost as a percent of revenue

1988 1998 2002

Monthly close: Best practices

Manual journal entries General-ledger reports

10 Hackett Best Practices SM

Strategic planning process cycle times

Average cycle times for key business Number of budget

Strategic plan Annual plan Forecasting 21

Average World-class World-class

PROFILE OF A WORLD-CLASS FINANCE ORGANIZATION

Cost as a percent of revenue

Total cost of finance as a percent of revenue