Companies expend a lot of effort (and money) in assessing where they are and where they’re going, but even the best don’t think they do it very well. The Hackett Group, which benchmarks best practices at more than 2,000 companies, found that only a third of the companies it classifies as “world-class” in terms of their finance operations believe that their forecasts and reports are accurate and reliable; for “average” companies, the figure drops to a mere 9 percent.
Among the problems as cited by Hackett: companies rely on two or three ERP systems to provide the data for budgets, reports, and forecasts; and nearly half continue to rely on spreadsheets for much of the process. World-class companies stand out from their peers for their ability to spend only half as much on transaction processing (0.19 percent of revenue) and discrepancy resolution (8 cents per line item). That is, they crunch numbers more efficiently, and in so doing pave the way to become more than mere number crunchers.
Business-intelligence software aims to streamline much of the data-collection process (and it’s worth noting that Hackett is owned by AnswerThink, a BI software and consulting firm), but Hackett argues that another key component is to move beyond an anecdotal reliance on what constitutes “best practices” and toward those that are “data-driven” (that is, proven). With Gartner predicting a flat BI market for 2003, bringing best practices to bear may be essential.