The Hackett Group’s New Digital World Class™
Standards Raise the Bar on Procurement Performance
By fully embracing digital transformation, procurement
organizations can achieve superior levels of efficiency,
effectiveness, and customer experience, including 25% lower cost,
2.5x greater procurement ROI, and more, according to new Digital
World Class™ procurement research from The Hackett Group,
Inc. (NASDAQ: HCKT).
“For decades The Hackett Group’s benchmarks have been the gold
standard by which most global companies measure world-class
performance in procurement and other business services. Now, with
the growing impact of digital transformation, The Hackett Group is
raising the bar further with its shift to a Digital World Class
measurement standard. Our new research details how highly
technology-enabled organizations are achieving new levels of peak
performance,” said The Hackett Group Vice President, Research Erik
Dorr.
“The results are impressive. But the bottom line is
straightforward. Our research provides empirical evidence of the
impact that digital transformation is having,” said Dorr. “For
years, companies have been making incremental improvements,
optimizing processes, cutting costs and reducing transactional
labor to reach world-class performance. But new technologies allow
many companies to fast-forward to Digital World Class levels of
operational excellence and business value. And they can get much of
this benefit by overlaying digital technology on their existing
systems, rather than embarking on large-scale infrastructure
changes.”
A public version of the research, “Digital World Class
Procurement: Reaching New Heights in Peak Performance” is available
free, with registration, at
http://go.poweredbyhackett.com/procdigwc2106sm. It contains more
than 30 metrics detailing the performance of Digital World Class
procurement organizations. But here is a summary of key research
findings:
Greater Efficiency – Digital
World Class procurement organizations demonstrate their operational
excellence in the form of greater efficiency. They now operate at
25% lower cost than typical procurement organizations (i.e., peers)
and 6% lower cost than traditional world-class procurement
organizations, despite having greater spend on technology. For a
$10 billion company, this represents procurement cost savings of
$6.9 million and $1.3 million, respectively. Over the past decade,
the cost gap between world class and peers has widened slightly,
and in 2021, it has grown even wider. Digital World Class
procurement organizations also employ 33% fewer full-time
equivalent (FTEs) than peers per billion dollars of revenue. The
gap is even greater for operations and compliance management FTEs
(57%), enabling them to deliver those processes at 55% lower
cost.
Enhanced Effectiveness – The Digital
World Class advantage is not just about cost. These elite
procurement organizations are also able to deliver greater business
value in the form of higher-quality services – better stakeholder
engagement, supplier relationship management, and product
innovation. Compared to peers, they have 2.5x higher procurement
ROI and 25% more spend influenced or managed by procurement. They
have 70% more FTEs in strategic roles like product development
support, and 15% more FTEs in supplier partnering. Technology plays
a key role in achieving these results, with Digital World Class
procurement organizations spending 20% more than peers on
technology as a percentage of spend. They also invest in emerging
technologies such as smart automation, advanced analytics, and
collaboration tools to reduce labor costs.
Improved Customer Experience – The
greater business value that Digital World Class organizations
provide also extends to stakeholder experience – they have a
performance edge over peers when it comes to customer perceptions.
They are 85% more likely to be viewed by stakeholders as taking a
proactive approach to supply risk mitigation and 19% more likely to
be considered a valued business partner. In addition, they are
nearly 7x more likely to be viewed as having effective business
knowledge skills.
Six Areas of Excellence – Technology
enablement is at the heart of the Digital World Class performance
advantage. However, to fully unlock the potential of technology,
leading procurement organizations also focus on five other critical
levers: data and analytics; technology architecture; operating
model evolution; end-to-end process design and ownership; and
talent. The research provides details about Digital World Class
performance in procurement in each of these areas. For example, in
data and analytics, the pandemic has led to new urgency in
improving procurement’s data management practices, and Digital
World Class procurement organizations have a significant head
start. Digital World Class procurement organizations are also at
the forefront of architecture modernization and cloud migration.
Finally, to focus on talent, leading procurement organizations
continue to invest in their workforce by increasing head count in
more strategic areas. A highly skilled strategic workforce is at
the core of Digital World Class companies as advanced technologies
provide new tools to deliver better service for stakeholders and
suppliers. These roles require advanced analytical acumen to drive
insights, as well as emotional intelligence, relationship
management, innovation and change orientation, and enhanced
understanding of business operations and stakeholder needs.
Action Plan for Digital World Class –
The Hackett Group’s research offers an outline of how companies can
assess of their current performance, maturity, and capabilities,
identify future capabilities to advance their digital agenda, and
create a journey map to progress towards Digital World Class
performance levels.
Digital World Class procurement organizations are those that
achieve top quartile performance in operational excellence and
business value across an array of weighted metrics in The Hackett
Group’s comprehensive procurement benchmark. The Digital World
Class analysis is also designed to quantify the performance
improvement opportunity achievable by maximizing technology
enablement of procurement work and optimizing the procurement
technology landscape. The Hackett Group’s Digital World Class
procurement research is based on an analysis of results from recent
benchmarks, performance studies, and advisory and transformation
engagements at hundreds of global companies.
About The Hackett Group
The Hackett Group® (NASDAQ: HCKT) is an intellectual
property-based strategic consultancy and leading enterprise
benchmarking firm to global companies, offering digital
transformation including implementation of leading enterprise cloud
applications, workflow automation and analytics that enable digital
world class performance.
Drawing from our unparalleled IP from nearly 20,000 benchmark
studies with the world’s leading businesses – including 93% of the
Dow Jones Industrials, 91% of the Fortune 100, 80% of the DAX 30
and 55% of the FTSE 100 – captured through our leading benchmarking
platform, Quantum Leap®, and our Digital Transformation Platform
(DTP), we accelerate best practices implementations.
More information on The Hackett Group is available at:
www.thehackettgroup.com, info@thehackettgroup.com, or by calling
(770) 225-3600.
The Hackett Group, quadrant logo, World Class Defined and
Enabled, and Digital World Class are the registered marks of The
Hackett Group.
Cautionary Statement Regarding “Forward Looking”
Statements
This release contains “forward looking” statements within the
meaning of Section 27A of the Securities Act of 1933 as amended and
Section 21E of the Securities Exchange Act of 1934, as amended.
Statements including without limitation, words such as “expects”,
“anticipates”, “intends”, “plans”, “believes”, seeks”, “estimates”
or other similar phrases or variations of such words or similar
expressions indicating, present or future anticipated or expected
occurrences or outcomes are intended to identify such forward
looking statements. Forward looking statements are not statements
of historical fact and involve known and unknown risks,
uncertainties and other factors that may cause the Company’s actual
results, performance or achievements to be materially different
from the results, performance or achievements expressed or implied
by the forward looking statements. Factors that may impact such
forward looking statements include without limitation, the ability
of Hackett to effectively market its digital transformation and
other consulting services, competition from other consulting and
technology companies who may have or develop in the future, similar
offerings, the commercial viability of Hackett and its services as
well as other risk detailed in Hackett’s reports filed with the
United States Securities and Exchange Commission. Hackett does not
undertake any duty to update this release or any forward looking
statements contained herein.
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version on businesswire.com: https://www.businesswire.com/news/home/20211007005106/en/
Gary Baker, Global Communications Director - (917) 796-2391 or
gbaker@thehackettgroup.com
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