Costs for finance firms going up for first time in decades

The Hackett Group says ‘Digital World Class’ finance organisations are highly resilient and managing to reduce costs to nearly half that of their peers

Countless companies across the globe have seen a significant increase in operating costs over the past couple of years, driven in the main by inflationary pressures, geopolitical unrest and other uncertainty factors.

Finance organisations have not been immune to this, meaning most of them are this year experiencing rising costs for the first time in decades. 

That’s according to new research from the The Hackett Group, which found ‘Digital World Class’ businesses were highly resilient and managed to reduce costs to nearly half that of their peers, while delivering dramatic improvements in value, including efficiency, effectiveness and customer experience.


Digital World Class organisations have managed to reduce costs by 1.3%

The consultancy defines Digital World Class organisations as those that achieve top-quartile performance in business value (a combination of stakeholder experience, digital enablement and traditional effectiveness metrics) and operational excellence (including efficiency and business process automation metrics) in its comprehensive finance benchmark. Finance research is based on analysis of results from recent benchmarks, performance studies and advisory and transformation engagements at hundreds of global companies. 

Digital World Class organisations manage to reduce costs

The Hackett Group reports that most finance organisations have experienced an operational cost increase of 7.5% in 2023, but Digital World Class organisations have managed to reduce costs by 1.3% – demonstrating their greater agility and resilience.

Moreover, while most finance organisations employed more staff in 2023, Digital World Class companies in the sector reduced the size of their workforce by 7% and operated with only 50% of the finance staff of peers.

The impressive performance of Digital World Class firms is further demonstrated by the fact they have accumulated a US$48 million annual cost advantage over peers (for a typical US$10 billion enterprise).  

Tom Willman, Principal, Global Practice Leader – Finance Advisory at The Hackett Group, said: “For several years, we’ve seen a narrowing cost gap between Digital World Class finance organisations and their peers. But this year, most finance organisations have been unable to hold the line on costs. They simply couldn’t offset the impact of inflation, geo-political unrest, supply chain challenges, and more with productivity improvements and cost savings.

Tom Willman, Principal, Global Practice Leader – Finance Advisory at The Hackett Group

“At the same time, Digital World Class finance organisations still managed to decrease costs slightly despite these factors because they have optimised their operations to enhance agility and resilience, streamline processes, implement greater process automation and provide more strategic insights to their companies. That’s an impressive accomplishment.”

Spending strategically on digital transformation

While Digital World Class finance organisations were found to spend 10% less on technology than peers, they instead invest more strategically in digital transformation and create value from emerging technologies such as advanced analytics and smart automation. 

The result? Increased productivity and cost reductions in areas including labour, outsourcing, real estate and travel. 

“Technology is a key driver to how Digital World Class finance organisations achieve their superior results,” added Shawn Fitzgerald, Senior Director at The Hackett Group.

“Although they spend less on technology, the difference is largely about how they approach finance transformation by focusing on five other key areas: data and analytics, modern cloud architecture, operating model evolution, end-to-end process design and talent management. 

“When done correctly, all this can drive greater reliability, more and faster value creation, and elevated status as a valued business partner.”

Read the full report: Resilience: The Digital World Class Finance Advantage


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