Analysis & Commentary:

HACKETT BEST PRACTICES ANNOUNCES 2002 FINDINGS/TRENDS

Hackett Best Practices, a division of Answerthink Inc, announced findings from the 2002 edition of its ongoing study of best practices in strategic decision-making.

Considered the world's most comprehensive best practices benchmarking firm, Hackett Best Practices has tracked the performance of nearly 2,000 complex, global organizations and identified key differentiators between world-class and average companies across a diverse set of industries. Participants in Hackett's studies comprise 80 percent of the Dow Jones Industrials, two-thirds of the Fortune 100 and 60 percent of the Dow Jones Global Titans Index. Global study participants include AT&T, Citigroup, Dell USA, Delta Airlines, Dow Corning, EDS, Hewlett-Packard, ExxonMobil, General Electric, Northrop Grumman, Philip Morris USA and Lockheed Martin.

In compiling its 2002 best practices trend data, Hackett evaluated the effectiveness (quality and value) and efficiency (cost and productivity) of corporate planning, forecasting and decision-making processes across four dimensions: use of tools and technology; types of information used; focus; and process and methodology.

Significant best practices findings and trends include:

• Nearly half -- 45% -- of companies still treat the planning process as financial and annual instead of a continuous decision-support activity. A serious consequence of this approach is a one-dimensional view of risk as solely financial in nature. Scenario planning, the most common technique for evaluating non-financial risk, is used spottily by companies with a predominantly financial focus and only slightly more by those with a continuous focus.
• In 77% of companies, the focus of the forecast process is only on the current fiscal year; it is rarely used to scan forward for potential problems and opportunities. One of the reasons why the best practice of rolling forecasts -- which force a more long-range view of the business and can virtually eliminate the time-consuming annual budget -- still dominates is that in 60% of companies, incentive compensation is paid on a match to an annual plan instead of by other measures, such as value created.
• Managers at world-class companies are twice as likely to obtain critical information for decision-making using Web technology as those in average companies. By comparison, at average companies, reports are not available until 11 days into the month -- about one-third of a month passes before managers can evaluate what happened the previous month, impairing their ability to make and act on decisions effectively. "The sad truth about the business meltdowns making the headlines these days is that most could have been predicted, or at least the resulting fallout managed better, if only companies had used the decision-making tools and technologies already available to them," stated Richard T. Roth, managing director of Hackett Best Practices. "In today's economy, the companies that are best-positioned to avoid being battered by sudden reverses or external factors are those that treat planning as a continuous exercise in operational decision-making, resource allocation and performance management, and make consistent use of their Web architecture and the business-intelligence tools available to them."

Additional Study Findings

A sampling of other findings follows; additional metrics and insights are available upon request.

• Ninety-six percent of companies either have balanced scorecards or plan to deploy them over the next two years. However, on average, these widely misused tools are overwhelmingly financial (62% of all measures) and lagging (76% of all measures). For most companies, they have become a financial drill-down mechanism instead of a tool to gain insight into the operational factors driving financial performance.
• Not only must managers at 74% of companies wait until the end of each month for reports, but they are then inundated with an average of 141 distinct measures. While world-class companies deliver more information more frequently, even they are not immune to the temptation to overload managers with excessive mounts of undifferentiated data.
• Even when companies capture significant information on their customers as part of their balanced scorecard approach, their analysts typically generate little analysis of customer behavior -- even at companies with a professed customer-focused business model. Only half of all companies perform general analysis of customer behavior and one in four does not use customer data to develop new products.

Hackett Best Practices and Answerthink

Hackett Best Practices, www.hackettbestpractices.com, 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, Hackett Best Practices is the global leader in best practices benchmarking, with ongoing studies of finance, IT, human resources, procurement, strategic decision-making and related areas. Study participants comprise nearly 2,000 global organizations, including 80% of the Dow Jones Industrials, two-thirds of the Fortune 100 and 60% of the Dow Jones Global Titans Index. In early 2002, Hackett Best Practices introduced subscription-based best practices communities in global shared services, accounts payable, payroll, travel and expense, and other processes. Titled Hackett Collaborative Learning, www.hackettcollaborative.com, this service offering, with over 200 participating companies, was founded in the mid-1990s by Gunn Partners Research and was known as Exult Process Intelligence Center until its acquisition in early 2002 by Answerthink.

Making use of Hackett's unparalleled knowledge base, Answerthink provides best practices-based solutions in enterprise transformation, business applications, technology integration and interactive marketing to serve the needs of Global 2000 clients. Answerthink's 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. Answerthink is also part of a joint venture called HCL-Answerthink which provides 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.

Contact Debra Greenberg for Hackett Best Practices, 330-656-3110 x5380, dgreenberg@answerthink.com.