1. Defining and Enabling World-Class Performance in Public Sector
Hawaii
V2.0

2. The Hackett Group Defines and Enables World-Class Performance
The use of our intellectual capital enables our clients to implement change to affect their ability to attain and sustain world-class performance
We provide strategic advice and implementation assistance based on 4,000 benchmarks with leading global companies
Our implementation tools allow our clients to achieve results from proven best practices of world-class companies
Our recommendations address both efficiency and effectiveness of world-class performance
Our efforts have delivered over $90 billion in sustainable cost savings and $25 billion of improved cash flow improvement through REL, our working capital group for clients across the globe
Operating in the Americas, Europe and Asia, we have served clients in 66 countries
3 Key Points:
The Hackett Group uniquely defines World-Class performance in SGA related processes.
We are a global Business Process Advisory Firm which uses actual performance metrics and best practices to provide research and advise to our clients
Our mission is to empower executives like you to achieve world-class performance levels.
Additional points as necessary:
Hackett does not implement technology. We are not a systems integrator.
We have offices through the United States, with our global headquarters in Atlanta. Additional major locations include the UK, Germany and India.
Our unique intellectual capital is unparalleled in driving successful performance improvement

3. Hackett Insights Leverage Our Work with Over 2,700 of the World’s Leading Organizations and …..
97% of the Dow Jones Industrials
73% of the Fortune 100
88% of the Dow Jones Global Titans
73% of the DAX 30
45% of the FTSE 100

4. …..Leading Government/Public Sector and Higher Ed Institutions through the Benchmarking Program
Texas
Utah
Montana
California
Arizona
Idaho
Nevada
Oregon
Iowa
Colorado
Kansas
Wyoming
New Mexico
Missouri
Minnesota
Nebraska
Oklahoma
South Dakota
Washington
Arkansas
North Dakota
Louisiana
Illinois
Ohio
Florida
Georgia
Alabama
Wisconsin
Virginia
Indiana
Michigan
Mississippi
Kentucky
Tennessee
Pennsylvania
North
Carolina
South
West
New Jersey
Maine
New York
Vermont
Maryland
New Hampshire
Connecticut
Delaware
Massachusetts
Rhode Island H H H H H
Alaska
Hawaii
Government/Public Sector H
Higher Ed Institutions

5. The List of Participating Public Sector Organizations are Growing
Function and Status
C=complete, IP=in progress, P=pending
Finance HR
Procurement IT
State of TN C
State of AZ
State of Delaware
State of CO
Commonwealth of MA IP
State of MS
State of AK
State of GA
State of AL
State of NJ
State of OK
State of OH
State of WV
State of MI
UNC Chapel Hill
UVA
Ohio University*
Yale University
Georgia Board of Regents
Nassau County, NY
Miami-Dade County, FL
King County, WA

6. There are Many, and Different, Reasons for Public Sector to Benchmark
Compare Performance for Continuous Improvement - use of standard definitions, data collection and metrics to learn from other public sector organizations as well as World-Class organizations
Baseline Measurement - Provides a baseline, supporting a “before and after” comparisons when undertaking an improvement project (such as a new ERP)
Foundation for Business Case - Provides insight and data into areas that are performing well and into areas for improvement that will yield the highest ROI, and to prioritize best practices initiatives

7. Hackett Value Grid™ − The Foundation for How Hackett Defines World-Class Performance
Hackett Value Grid™ (Finance example)
EFFECTIVENESS
Days sales outstanding
Days payables outstanding
Accounts payable rework rate
Customer billing rework rate
Accuracy of forecasts and analysis
Functional role in strategic decision making
Percent of time analytic focus in on proactive decision making
Percent of time spent collecting and compiling data for analysis
Percent of analysts with acumen to function as business partners
EFFICIENCY
Overall function cost as a % of revenue
Process cost as a % of revenue
Technology cost per function FTE
Staffing levels by process
Cycle times and iterations
Unit cost of transactions
Utilization of self-service for inquiry
Application complexity
Automation of transactions
Reliance on spreadsheets
Percent of business reports distributed electronically
JUST A LITTLE MORE ON THIS UNIQUE MODEL
WE USE ACUTAL PERFORMANCE METRICS AND ARRAY THOSE ON A RELATIVE BASIS TO PLACE FIRMS AS A REPRESENTITIVE DOT ON THIS TYPE OF SCATTER DIAGRAM
THE PERFORMANCE METRICS INCLUDE SUCH THINGS AS ECONOMIC VALUE ADDED, QUALITY METRICS AND BUSINESS ALIGNMENT ON THE EFFECTIVENESS (OR Y AXIS)
AND COSTS, HEADCOUNT AND CYCLE TIME METRICS ON THE EFFICIENCY (OR X AXIS)
THIS METHODOLOGY IS IN ITSELF UNIQUE BUT THE REAL VALUE COMES FROM ANALYZING THE FIRMS THAT FALL INTO THAT UPPER RIGHT SECTOR AND DETERMININGWHAT IS REALLY MAKING THE DIFFERENCE IN THEIR PERFORMANCE.
ORG / SYSTEMS/ PROCESSES
ALTHOUGH NOT USED AS OFTEN, WE DO ALSO CUT A WC EFFICIENCY AND WC EFFECTIVENESS CUT (UPPER DECILE)

8. Hackett uses Actual Data to Identify World-Class Performers in Human Resources
Hackett Value Grid™ (HR example)
EFFECTIVENESS
HR linkage to business strategy
Sourcing utilization
Workforce management alignment
Quality metrics (HR transactions)
Linkages between employee development and business strategy
Percent internal promotions
HR partnering on organizational issues
HR Generalist allocation of time
Use of organizational metrics in HR- managed projects
Retention plans for key employees
Termination rates
Ratio of strategic workforce planning process costs to Total HR process costs
Skills & education of HR staff
EFFICIENCY
Total HR cost per employee
Total HR staffing
Staffing levels by process
Technology allocation
Degree of application integration
Process automation
Automation of reports
HR self-service utilization
Resource allocation
Integration of HR systems
Productivity per FTE
Days to fill positions
Ratio of technology cost to transaction process labor cost
Overall HR span of control
Key Points
We use actual data to define world-class performance
Two dimensions: Efficiency and Effectiveness
Hackett defines world-class as the top quartile performers in both efficiency and effectiveness metrics
Where would you place yourself?
Where would you place yourself?

9. Hackett uses Actual Data to Identify World-Class Performers in Procurement
Hackett Value Grid™ (Procurement example)
EFFECTIVENESS
Economic return
Supply base leverage & performance
Role of procurement
Process quality
Information & analysis
Examples:
Spend cost reduction and avoidance savings as a percent of spend
Percent of suppliers comprising the top 80% of spend
On-time supplier delivery percentage
Internal customer satisfaction ratings
Percent of spend formally influenced by procurement
Percent of transactions requiring post- issuance activity
Ability to view detailed spend data on an enterprise-wide basis
EFFICIENCY
Process costs
Productivity
Cycle times
Technology leverage
Costs per transaction
Staffing Levels
Examples:
Procurement process costs as a percent of spend
Number of POs processed per FTE
Receipt processing cycle time
Percent of RFx’s submitted electronically
Ratio of labor to technology cost
Cost per PO
FTEs per $1B of spend
Key Points
We use actual data to define world-class performance
Two dimensions: Efficiency and Effectiveness
Hackett defines world-class as the top quartile performers in both efficiency and effectiveness metrics
Where would you place yourself?
Where would you place yourself?

10. Our Benchmark Capability uses Actual Data to Identify World-Class Performers in Information Technology
Hackett Value Grid™ (IT example)
EFFECTIVENESS
Member of Executive Committee
Reporting relationship
Percentage of budget control
Planning and strategy resource commitment
Business transactions automated
Projects meeting requirements
Percent SLA being met (internally and externally)
Standard adherence
Vendor & supplier rationalization
Simplification of information access
Usage of self-service
Degree of turnover
Advanced business degrees
EFFICIENCY
IT cost per end-user
Process costs per end user
Technology Investments
Number of FTEs
FTEs per processing groups
Spans of control
Number of Help Desk Calls
Projects meeting budget
FTE productivity - Applications
Projects delivered on time
Help Desk 1st call resolution
Number of data centers
Number of applications
Key Points
We use actual data to define world-class performance
Two dimensions: Efficiency and Effectiveness
Hackett defines world-class as the top quartile performers in both efficiency and effectiveness metrics
Where would you place yourself?
Where would you place yourself?

11. The Impact of World-Class Performance on Terms of Cost Savings is Significant….
$6.3 million in savings per $1 billion of revenue / budget
$1.7 million in savings per 10,000 employees
$1.9 million in cost savings per $1 billion of spend
World-class are investing more in IT
51% 9%
Median
1,995 5%
Median
1.24%
Median
0.82%
23%
$9,198 WC
$8,701
Median WC
1,822 WC
0.63% WC
0.61%
Overall Finance cost
as a % of revenue /budget
Overall HR cost
per employee
Overall Procurement cost as a % of spend
Overall IT cost
per end user
AND IS THERE A DIFFERENCE IN THE PERFORMANCE OF WORLD CLASS FIRMS VS THE AVERAGE COMPANY – YOU BET THERE IS
COSTS RANGE FROM 13 – 45% LOWER AT THESE FIRMS
WITH THE EXCEPTION OF IT – WHERE WE FIND WORLD CLASS FIRMS ACTUALLY SPENDING SLIGHTLY MORE
AND KEEP IN MIND – THESE ARE WORLD CLASS FIRMS WHICH MEANS THEY DIDN’T GET HERE ON COST ALONE – THEY HAD TO BE PERFORMING AT THE UPPER QUARTILE ON EFFECTIVENESS AS WELL
SO WHAT DOES THIS MEAN – WHAT WE SEE IS THAT WC FIRMS ARE SPENDING PRODUCTIVELY IN TECHNOLOGY WHICH IS ENABLING THEM TO DRIVE PERFORMANCE ACROSS THEIR OTHER FUNCTIONS
What are your performance improvement opportunities?
Hackett 2007 Functional Performance Data - Select SG&A Functions

12. Enterprise Performance Management (EPM)
…..and We Believe that the Effectiveness Opportunity is a Significant Multiple Cost Opportunity
Enterprise Performance Management (EPM)
Working Capital
Talent Management
$3,564
2.40
$3,102
Million of EBITDA
Receivables
$1,329
1.0
Inventory
$798
Peer Group
World-Class
Peer Group
World-Class
World-class EPM organizations deliver 2.4 times the equity market returns of industry-peer companies
Top performing organizations are able to free up $2.9 billion more in working capital than the typical Global 1000 organization
A strong correlation of $462 million in additional EBITDA for companies with top-performing talent management programs versus their industry peers

13. Our Data Shows that Public Sector Can Attain World-Class Performance Levels
Finance Cost as a % of Operating Budget
Quartile Breakdown as a % of Operating Budget
1.9%
Quartile 4
Quartile 3
Cross Functional Peer
Public Sector Peer
Quartile 2
World-Class
Quartile 1
0.3%

14. Whether Public or Private, World-Class Organizations Have Common Opportunities
Control and Risk Management
Optimized Cycle Times
Integrated transaction system feeding data warehouse to provide full visibility for decision support
Information from core transaction system and date warehouse provided via Portal
Shared Services
Transaction Processing performed in centralized Service Organization
Performance efficiency and customer service driven
Perform standardized transaction processing
Transaction Processing
Cost efficient and effective fully leveraging integrated systems for speed and accuracy
Processing though out the business cycle
Streamlined processes - automated transactions, maintaining data in the core transaction system, touching things once
Integrated sub systems
Do it right the first time approach
Performance Management
Linked departmental & operational goals to objectives
Develop performance measurement scorecards
Financial performance
Operational performance
Customer satisfaction
Measure according to established and shared metrics
Reward the behavior you desire
Business Intelligence
The right data at the right level
High degree of automation allows for drill down to sub ledger data
Data Warehouse to provide analytics and feed standard reporting

15. Methodology

16. Unique Process Taxonomy Spans SG&A 8 functions across 59 process groups
Finance
Cash disbursements
Revenue cycle
Accounting and external reporting
Tax management
Treasury management
Compliance Management
Planning & Performance Management
Business Analysis
Function Management
Executive and Corporate Services
General Administration Mgt
Travel & Transportation Services
Real Estate & Facilities Mgt
Government Affairs
Legal
Quality Management
Risk & Security Management
Corporate Communications
Planning & Strategy
Executive Office
Information Technology
Infrastructure Management
End User Support
Infrastructure Development
Application Maintenance
Application Development & Implementation
Quality Assurance
Risk Management
IT Business Planning
Enterprise Architecture Planning
Emerging Technologies
Function Management
Service
Order & Contract Management
Service Execution
Service Operations
Planning & Strategy
Function Management
Marketing
Marketing Communication & Program Management
Brand & Product Management
Planning & Strategy
Market Research & Analytics
Function Management
Human Resources
Total Rewards Administration
Payroll Services
Data Management, Reporting & Compliance
Staffing Services
Workforce Development Services
Organizational Effectiveness
Total Rewards Planning
Strategic Workforce Planning
Function Management
Sales
Sales Execution
Sales Operations
Planning & Strategy
Function Management
Procurement
Supply Data Management
Requisition & PO Processing
Supplier Scheduling
Receipt Processing
Compliance Management
Customer Management
Sourcing Execution
Supplier Management & Development
Function Strategy & Performance Management
Sourcing & Supply Base Strategy
Function Management
Hackett’s taxonomy ensures an apples-to-apples comparison

17. Hackett’s Process Taxonomy Ensures “Apples-to-Apples” comparisons
Process Groups
Cash disbursements
Processes
Accounts payable
Travel and expense
Sub-Processes
Supplier set-up
Pre-processing
Verification / approval
Processing
Discrepancy resolution
Payments
Inquiry response
File / store / retrieve
Reconciliation/ accrual/compliance
Activities
Processing and routing of incoming mail specific to cash disbursements process, including handling of invoices, bills of lading & receiving documents and expense reports
Matching of supplier invoice, purchase order, receipt acknowledgement and other required documents or information to validate and verify payment can be made to suppliers
(More)
We then describe each process group further into processes; sub-processes and activities
We collect data from organizations by process group, irrespective of
who they report to;
what you call it or
where it is located
This level of specificity ensures that we get metrics which are fundamentally similar in which to conduct our statistical analysis
Data collected based on work performed, not on reporting structures or functions

18. Entity (University-wide) Information Technology Purchasing Department
Hackett’s Toolset has been Tested in Thousands of Engagements and Facilitates Rapid, Accurate Data Collection
Entity (University-wide)
Central Departments
Finance
Human Resources
Procurement
Information Technology
Office of Finance
Office of Technology
Purchasing Department
Provost Office
College A
College B
College C
College D
Locations can be set up in parent / child structures to allow function and department/college coordinators to see progress of locations for which they are responsible

19. Overall program features
Standardized approach and taxonomy – aligned for public sector
Results are based on objective facts and documented in a report to include:
Evaluation of efficiency and effectiveness
Understanding on use of best practices
Quantify opportunities for improvement
Comparisons included:
Public Sector (after 7 states, counties and/or higher eds complete their data submission for each function – now available in the finance function)
The first 7 states will get an updated report that includes the State peer group when available
Hackett World-class and peer group organizations
An organization may decide to participate in one or more benchmark studies at any time
An organization may complete a first benchmark, with contract allowing for another benchmark in 2-3 years

20. Hackett’s Portfolio

21. Hackett Solution Portfolio Advisory, Benchmarking and Business Transformation Services
Deliverables
Benefits
Advisory Insight into World-Class Performance
Best Practice Research
Advisor Access
Best Practice Intelligence Center
Peer Interaction
*World-Class Progress Report (*Executive Advisory only)
Identify the strategies and practices employed by Leaders
Validation of Current Initiatives
Determining What’s Possible (World-Class Performance Metrics)
Process Implementation Support
Continuous Best Practice Adoption
Benchmarking Assess World-Class Performance
Peer & World-Class comparison Performance metrics
Detailed analysis
Stakeholder Survey
Executive Presentation
Objective comparison to peer group and world-class performers
Quantify performance Gaps
Uncover hidden costs
Prioritization of improvement initiatives
Business Transformation Transforms Performance into World-Class
Strategic Direction
Detailed Business Case
Initiative Plans & Detailed Designs
Implementation of Best Practices
Reduced Cost
Working Capital Optimization
Enhanced Service Delivery
Business Insight
Sustainable Benefits
Speed of Solution Delivery
Risk Mitigation
Working Capital Solutions Transforms Performance into World-Class
Trained and Motivated Organization
Key Metrics to Track Performance
A Focus on Continuous Improvement
Reduced Working Capital
Reduced Costs
Increased Flexibility
Our services lines are comprised of Advisory Programs, Benchmarking and Business Transformation Services.
Briefly review high-level deliverables and benefits per service line
Through a flexible array of services, we enable executives to address their continuous challenges…making the unpredictable “predictable”
What capabilities do you need to address your continuous challenges in today’s environment?

22. Hackett Advisory Program Portfolio Research-centric membership programs that support continuous improvement initiatives
Deliverables
Benefits
Advisory Insight into World-Class Performance
Best Practice Research
Advisor Access
Best Practice Intelligence Center
Peer Interaction
*World-Class Progress Report (*Executive Advisory only)
Identify the strategies and practices employed by Leaders
Validation of Current Initiatives
Determining What’s Possible (World-Class Performance Metrics)
Process Implementation Support
Continuous Best Practice Adoption
Executive Advisory Programs
Enterprise
Finance
Human Resources
Information Technology
Procurement Executive
Executive Advisory Programs
Finance Operations
Purchase-to-Pay
Account-to-Report
Finance Shared Services
Payroll
Invoice-to-Cash
Key Points
Our services lines are comprised of Advisory Programs, Benchmarking and Business Transformation Services.
Briefly review high level deliverables and benefits per service line
Through a flexible array of services, we enable executives to address their continuous challenges…making the unpredictable “predictable.”
What capabilities do you need to address your continuous challenges in today’s environment?
Why do clients engage us for Advisory services? 22

23. Hackett Benchmark Solutions Portfolio Performance metrics that assess both efficiency and effectiveness
Deliverables
Benefits
Benchmarking Assess World-Class Performance
Peer & World-Class comparison Performance metrics
Detailed analysis
Stakeholder Survey
Executive Presentation
Objective comparison to peer group and world-class performers
Quantify performance Gaps
Uncover hidden costs
Prioritization of improvement initiatives
Benchmark Programs
SG&A
G&A
Merger & Integration Analysis
Benchmark Programs
Finance
Human Resources
Information Technology
Procurement
Marketing, Sales & Service
Key Points
Our services lines are comprised of Advisory Programs, Benchmarking and Business Transformation Services.
Briefly review high level deliverables and benefits per service line
Through a flexible array of services, we enable executives to address their continuous challenges…making the unpredictable “predictable.”
What capabilities do you need to address your continuous challenges in today’s environment?
Are you performing at a world-class level? 23

24. Hackett Transformation Solutions Portfolio Initiative-based strategy, design and implementation services
Deliverables
Benefits
Business Transformation Transforms Performance into World-Class
Strategic Direction
Detailed Business Case
Initiative Plans & Detailed Designs
Implementation of Best Practices
Reduced Cost
Working Capital Optimization
Enhanced Service Delivery
Business Insight
Sustainable Benefits
Speed of Solution Delivery
Risk Mitigation
Functional Expertise
Finance
Human Resources
Procurement
Information Technology
Planning & Performance Management
Workforce Management
Working capital management
Featured Solutions
Shared Services design and implementation
Transaction processing optimization
Planning, budgeting and forecasting
Business process sourcing
IT Strategy
Globalization impact analysis
Business performance management & reporting
Key Points
Our services lines are comprised of Advisory Programs, Benchmarking and Business Transformation Services.
Briefly review high-level deliverables and benefits per service line
Through a flexible array of services, we enable executives to address their continuous challenges…making the unpredictable “predictable”
What capabilities do you need to address your continuous challenges in today’s environment?
Why do clients engage The Hackett Group for transformation scopes of work? 24

25. For further information please contact
Paul Goodwin
Hackett Account Director
Raleigh, NC
Statement of Confidentiality and Usage Restrictions
This document contains trade secrets and other information that is company sensitive, proprietary, and confidential, the disclosure of which would provide a competitive advantage to others. As a result, the reproduction, copying, or redistribution of this document or the contents contained herein, in whole or in part, for any purpose is strictly prohibited without the prior written consent of The Hackett Group.
Copyright © 2008 The Hackett Group, Inc. All rights reserved. World-Class Defined and Enabled.