"But the work is clearly taking its toll in other areas," continued Roth. "For years companies have been able to cut overall finance costs and reduce time to close by streamlining their operations, implementing best practices and improving their use of technology. For the moment, this has become almost impossible, because companies are being forced to spend anything they can save in other areas on Sarbanes-Oxley compliance initiatives. The changes in procedures, combined with greater overall scrutiny and review of financial results and forecasts by executives, auditors, and even, once they're made public, investors and financial analysts, mean that it takes longer to close the books each month.
"Our results show that most companies are clearly taking a very labor-intensive approach to solving these finance problems, investing significant time and energy to grind out the results they need," explained Roth. "This is a shame, because by doing this they're missing a real opportunity. Hackett's research proves that it clearly costs significantly less to run a world-class finance operation. Peak efficiency and effectiveness save money, and companies could be turning Sarbanes-Oxley into a wake-up call to drive process improvements and reap these rewards."
The Hackett Group, a business advisory firm, specializes in best practices research and process benchmarking. Hackett offers analysis backed by research at more than 2,400 client organizations, including 93 percent of the Dow Jones Industrials.
Hackett's 2004 Book of Numbers series has been produced annually for the past 12 years. This year, Hackett has made the research an integrated part of its Executive Advisory Programs, which are designed to address the needs of C-level executives in finance, information technology, human resources and procurement through a combination of progress reports, best practices research, confidential advisory services, and member networking opportunities.
The source of Hackett Group's 2004 Book of Numbers research into world-class finance performance is the company's continuously updated database of best practices and corresponding performance metrics. To receive Hackett's world-class designation, an organization must score in the top 25 percent of Hackett's database in both efficiency (cost and productivity) and effectiveness (quality and value) output metrics in a given functional area. In this way, Hackett defines "world-class" with empirical data, isolating the characteristics shared by today's world-class organizations in finance, information technology, human resources, procurement and other areas.