Closing in on world-class

The Hackett Group, an Atlanta-based advisory firm, sees a widening gap between Global 2000 organizations that achieved world-class performance levels in their selling, general and administrative (SG&A) operations versus typical companies.

Hackett's 2006 Enterprise Book of Numbers found that by achieving world-class performance in four core areas—information technology (IT); finance; human resources; and procurement—companies can reduce annual SG&A costs by $60 million per billion in revenue. At the same time, these world-class performers deliver higher-quality services, show increased economic returns, and experience less risk.

World-class companies are strong in five best-practices categories:

• Strategic alignment of business goals and operating procedures;
• Complexity reduction;
• Technology enablement;
• Business processing sourcing; and
• Cross-functional partnering.

"The best companies may differ in size, industry, or regulatory environment, but they all use back-office functions—traditionally viewed as cost centers—to generate competitive advantage," says Pierre Mitchell, Hackett senior business advisor. "They do this by relying on specific management approaches in the five areas we've identified. They support continuous improvement within individual functions, cross-functionally, and in end-to-end processes."