Upfront: The Uphill Battle to Best Practices

Regulators continue to prod public companies to improve financial operations, but most businesses are responding to the challenge very slowly. The Hackett Group's 2003 Finance Profile surveyed average companies, defined as companies in the Hackett Group database that score outside the top quartile in terms of both efficiency and effectiveness. These organizations have little faith in financial forecasting and use inefficient budgeting tools.

According to the study, just 9 percent of the average companies surveyed have confidence in their forecasting and reporting outputs. Average companies use spreadsheets as their primary budgeting tool nearly half the time, rather than relying on more sophisticated software that can improve data integrity and efficiency. Only 6 percent of average companies base decisions on a mix of financial and nonfinancial metrics. And these businesses still take five full days to close their books each month.

What about the organizations that rank in the top quartile? Even those finance functions have a long way to go to reach best-practices compliance, according to Hackett. The best finance operations are only half to two-thirds of the way through their best-practices deployments, leaving much room for improvement. Hackett Group research also shows that world-class finance operations still rely on an average of 1.7 ERP systems for their information. While this is significantly less than average companies, which run a mean of 2.7 ERP systems, the lack of a single companywide software platform represents a substantial roadblock in the path to improving critical business processes and decision-making.