Presentation on theme: "Defining and Enabling World-Class Performance in Public Sector"— Presentation transcript:
1Defining and Enabling World-Class Performance in Public Sector HawaiiV2.0
2The 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 performanceWe provide strategic advice and implementation assistance based on 4,000 benchmarks with leading global companiesOur implementation tools allow our clients to achieve results from proven best practices of world-class companiesOur recommendations address both efficiency and effectiveness of world-class performanceOur 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 globeOperating in the Americas, Europe and Asia, we have served clients in 66 countries3 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 clientsOur 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
3Hackett Insights Leverage Our Work with Over 2,700 of the World’s Leading Organizations and ….. 97% of the Dow Jones Industrials73% of the Fortune 10088% of the Dow Jones Global Titans73% of the DAX 3045% of the FTSE 100
4…..Leading Government/Public Sector and Higher Ed Institutions through the Benchmarking Program TexasUtahMontanaCaliforniaArizonaIdahoNevadaOregonIowaColoradoKansasWyomingNew MexicoMissouriMinnesotaNebraskaOklahomaSouth DakotaWashingtonArkansasNorth DakotaLouisianaIllinoisOhioFloridaGeorgiaAlabamaWisconsinVirginiaIndianaMichiganMississippiKentuckyTennesseePennsylvaniaNorthCarolinaSouthWestNew JerseyMaineNew YorkVermontMarylandNew HampshireConnecticutDelawareMassachusettsRhode IslandHHHHHAlaskaHawaiiGovernment/Public SectorHHigher Ed Institutions
5The List of Participating Public Sector Organizations are Growing Function and StatusC=complete, IP=in progress, P=pendingFinanceHRProcurementITState of TNCState of AZState of DelawareState of COCommonwealth of MAIPState of MSState of AKState of GAState of ALState of NJState of OKState of OHState of WVState of MIUNC Chapel HillUVAOhio University*Yale UniversityGeorgia Board of RegentsNassau County, NYMiami-Dade County, FLKing County, WA
6There 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 organizationsBaseline 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
7Hackett Value Grid™ − The Foundation for How Hackett Defines World-Class Performance Hackett Value Grid™ (Finance example)EFFECTIVENESSDays sales outstandingDays payables outstandingAccounts payable rework rateCustomer billing rework rateAccuracy of forecasts and analysisFunctional role in strategic decision makingPercent of time analytic focus in on proactive decision makingPercent of time spent collecting and compiling data for analysisPercent of analysts with acumen to function as business partnersEFFICIENCYOverall function cost as a % of revenueProcess cost as a % of revenueTechnology cost per function FTEStaffing levels by processCycle times and iterationsUnit cost of transactionsUtilization of self-service for inquiryApplication complexityAutomation of transactionsReliance on spreadsheetsPercent of business reports distributed electronicallyJUST A LITTLE MORE ON THIS UNIQUE MODELWE USE ACUTAL PERFORMANCE METRICS AND ARRAY THOSE ON A RELATIVE BASIS TO PLACE FIRMS AS A REPRESENTITIVE DOT ON THIS TYPE OF SCATTER DIAGRAMTHE 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/ PROCESSESALTHOUGH NOT USED AS OFTEN, WE DO ALSO CUT A WC EFFICIENCY AND WC EFFECTIVENESS CUT (UPPER DECILE)
8Hackett uses Actual Data to Identify World-Class Performers in Human Resources Hackett Value Grid™ (HR example)EFFECTIVENESSHR linkage to business strategySourcing utilizationWorkforce management alignmentQuality metrics (HR transactions)Linkages between employee development and business strategyPercent internal promotionsHR partnering on organizational issuesHR Generalist allocation of timeUse of organizational metrics in HR- managed projectsRetention plans for key employeesTermination ratesRatio of strategic workforce planning process costs to Total HR process costsSkills & education of HR staffEFFICIENCYTotal HR cost per employeeTotal HR staffingStaffing levels by processTechnology allocationDegree of application integrationProcess automationAutomation of reportsHR self-service utilizationResource allocationIntegration of HR systemsProductivity per FTEDays to fill positionsRatio of technology cost to transaction process labor costOverall HR span of controlKey PointsWe use actual data to define world-class performanceTwo dimensions: Efficiency and EffectivenessHackett defines world-class as the top quartile performers in both efficiency and effectiveness metricsWhere would you place yourself?Where would you place yourself?
9Hackett uses Actual Data to Identify World-Class Performers in Procurement Hackett Value Grid™ (Procurement example)EFFECTIVENESSEconomic returnSupply base leverage & performanceRole of procurementProcess qualityInformation & analysisExamples:Spend cost reduction and avoidance savings as a percent of spendPercent of suppliers comprising the top 80% of spendOn-time supplier delivery percentageInternal customer satisfaction ratingsPercent of spend formally influenced by procurementPercent of transactions requiring post- issuance activityAbility to view detailed spend data on an enterprise-wide basisEFFICIENCYProcess costsProductivityCycle timesTechnology leverageCosts per transactionStaffing LevelsExamples:Procurement process costs as a percent of spendNumber of POs processed per FTEReceipt processing cycle timePercent of RFx’s submitted electronicallyRatio of labor to technology costCost per POFTEs per $1B of spendKey PointsWe use actual data to define world-class performanceTwo dimensions: Efficiency and EffectivenessHackett defines world-class as the top quartile performers in both efficiency and effectiveness metricsWhere would you place yourself?Where would you place yourself?
10Our Benchmark Capability uses Actual Data to Identify World-Class Performers in Information TechnologyHackett Value Grid™ (IT example)EFFECTIVENESSMember of Executive CommitteeReporting relationshipPercentage of budget controlPlanning and strategy resource commitmentBusiness transactions automatedProjects meeting requirementsPercent SLA being met (internally and externally)Standard adherenceVendor & supplier rationalizationSimplification of information accessUsage of self-serviceDegree of turnoverAdvanced business degreesEFFICIENCYIT cost per end-userProcess costs per end userTechnology InvestmentsNumber of FTEsFTEs per processing groupsSpans of controlNumber of Help Desk CallsProjects meeting budgetFTE productivity - ApplicationsProjects delivered on timeHelp Desk 1st call resolutionNumber of data centersNumber of applicationsKey PointsWe use actual data to define world-class performanceTwo dimensions: Efficiency and EffectivenessHackett defines world-class as the top quartile performers in both efficiency and effectiveness metricsWhere would you place yourself?Where would you place yourself?
11The 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 spendWorld-class are investing more in IT51%9%Median1,9955%Median1.24%Median0.82%23%$9,198WC$8,701MedianWC1,822WC0.63%WC0.61%Overall Finance costas a % of revenue /budgetOverall HR costper employeeOverall Procurement cost as a % of spendOverall IT costper end userAND IS THERE A DIFFERENCE IN THE PERFORMANCE OF WORLD CLASS FIRMS VS THE AVERAGE COMPANY – YOU BET THERE ISCOSTS RANGE FROM 13 – 45% LOWER AT THESE FIRMSWITH THE EXCEPTION OF IT – WHERE WE FIND WORLD CLASS FIRMS ACTUALLY SPENDING SLIGHTLY MOREAND 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 WELLSO 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 FUNCTIONSWhat are your performance improvement opportunities?Hackett 2007 Functional Performance Data - Select SG&A Functions
12Enterprise Performance Management (EPM) …..and We Believe that the Effectiveness Opportunity is a Significant Multiple Cost OpportunityEnterprise Performance Management (EPM)Working CapitalTalent Management$3,5642.40$3,102Million of EBITDAReceivables$1,3291.0Inventory$798Peer GroupWorld-ClassPeer GroupWorld-ClassWorld-class EPM organizations deliver 2.4 times the equity market returns of industry-peer companiesTop performing organizations are able to free up $2.9 billion more in working capital than the typical Global 1000 organizationA strong correlation of $462 million in additional EBITDA for companies with top-performing talent management programs versus their industry peers
13Our Data Shows that Public Sector Can Attain World-Class Performance Levels Finance Cost as a % of Operating BudgetQuartile Breakdown as a % of Operating Budget1.9%Quartile 4Quartile 3Cross Functional PeerPublic Sector PeerQuartile 2World-ClassQuartile 10.3%
14Whether Public or Private, World-Class Organizations Have Common Opportunities Control and Risk ManagementOptimized Cycle TimesIntegrated transaction system feeding data warehouse to provide full visibility for decision supportInformation from core transaction system and date warehouse provided via PortalShared ServicesTransaction Processing performed in centralized Service OrganizationPerformance efficiency and customer service drivenPerform standardized transaction processingTransaction ProcessingCost efficient and effective fully leveraging integrated systems for speed and accuracyProcessing though out the business cycleStreamlined processes - automated transactions, maintaining data in the core transaction system, touching things onceIntegrated sub systemsDo it right the first time approachPerformance ManagementLinked departmental & operational goals to objectivesDevelop performance measurement scorecardsFinancial performanceOperational performanceCustomer satisfactionMeasure according to established and shared metricsReward the behavior you desireBusiness IntelligenceThe right data at the right levelHigh degree of automation allows for drill down to sub ledger dataData Warehouse to provide analytics and feed standard reporting
16Unique Process Taxonomy Spans SG&A 8 functions across 59 process groups FinanceCash disbursementsRevenue cycleAccounting and external reportingTax managementTreasury managementCompliance ManagementPlanning & Performance ManagementBusiness AnalysisFunction ManagementExecutive and Corporate ServicesGeneral Administration MgtTravel & Transportation ServicesReal Estate & Facilities MgtGovernment AffairsLegalQuality ManagementRisk & Security ManagementCorporate CommunicationsPlanning & StrategyExecutive OfficeInformation TechnologyInfrastructure ManagementEnd User SupportInfrastructure DevelopmentApplication MaintenanceApplication Development & ImplementationQuality AssuranceRisk ManagementIT Business PlanningEnterprise Architecture PlanningEmerging TechnologiesFunction ManagementServiceOrder & Contract ManagementService ExecutionService OperationsPlanning & StrategyFunction ManagementMarketingMarketing Communication & Program ManagementBrand & Product ManagementPlanning & StrategyMarket Research & AnalyticsFunction ManagementHuman ResourcesTotal Rewards AdministrationPayroll ServicesData Management, Reporting & ComplianceStaffing ServicesWorkforce Development ServicesOrganizational EffectivenessTotal Rewards PlanningStrategic Workforce PlanningFunction ManagementSalesSales ExecutionSales OperationsPlanning & StrategyFunction ManagementProcurementSupply Data ManagementRequisition & PO ProcessingSupplier SchedulingReceipt ProcessingCompliance ManagementCustomer ManagementSourcing ExecutionSupplier Management & DevelopmentFunction Strategy & Performance ManagementSourcing & Supply Base StrategyFunction ManagementHackett’s taxonomy ensures an apples-to-apples comparison
17Hackett’s Process Taxonomy Ensures “Apples-to-Apples” comparisons Process GroupsCash disbursementsProcessesAccounts payableTravel and expenseSub-ProcessesSupplier set-upPre-processingVerification / approvalProcessingDiscrepancy resolutionPaymentsInquiry responseFile / store / retrieveReconciliation/ accrual/complianceActivitiesProcessing and routing of incoming mail specific to cash disbursements process, including handling of invoices, bills of lading & receiving documents and expense reportsMatching 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 activitiesWe collect data from organizations by process group, irrespective ofwho they report to;what you call it orwhere it is locatedThis level of specificity ensures that we get metrics which are fundamentally similar in which to conduct our statistical analysisData collected based on work performed, not on reporting structures or functions
18Entity (University-wide) Information Technology Purchasing Department Hackett’s Toolset has been Tested in Thousands of Engagements and Facilitates Rapid, Accurate Data CollectionEntity (University-wide)Central DepartmentsFinanceHuman ResourcesProcurementInformation TechnologyOffice of FinanceOffice of TechnologyPurchasing DepartmentProvost OfficeCollege ACollege BCollege CCollege DLocations 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
19Overall program features Standardized approach and taxonomy – aligned for public sectorResults are based on objective facts and documented in a report to include:Evaluation of efficiency and effectivenessUnderstanding on use of best practicesQuantify opportunities for improvementComparisons 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 availableHackett World-class and peer group organizationsAn organization may decide to participate in one or more benchmark studies at any timeAn organization may complete a first benchmark, with contract allowing for another benchmark in 2-3 years
21Hackett Solution Portfolio Advisory, Benchmarking and Business Transformation Services DeliverablesBenefitsAdvisory Insight into World-Class PerformanceBest Practice ResearchAdvisor AccessBest Practice Intelligence CenterPeer Interaction*World-Class Progress Report (*Executive Advisory only)Identify the strategies and practices employed by LeadersValidation of Current InitiativesDetermining What’s Possible (World-Class Performance Metrics)Process Implementation SupportContinuous Best Practice AdoptionBenchmarking Assess World-Class PerformancePeer & World-Class comparison Performance metricsDetailed analysisStakeholder SurveyExecutive PresentationObjective comparison to peer group and world-class performersQuantify performance GapsUncover hidden costsPrioritization of improvement initiativesBusiness Transformation Transforms Performance into World-ClassStrategic DirectionDetailed Business CaseInitiative Plans & Detailed DesignsImplementation of Best PracticesReduced CostWorking Capital OptimizationEnhanced Service DeliveryBusiness InsightSustainable BenefitsSpeed of Solution DeliveryRisk MitigationWorking Capital Solutions Transforms Performance into World-ClassTrained and Motivated OrganizationKey Metrics to Track PerformanceA Focus on Continuous ImprovementReduced Working CapitalReduced CostsIncreased FlexibilityOur services lines are comprised of Advisory Programs, Benchmarking and Business Transformation Services.Briefly review high-level deliverables and benefits per service lineThrough 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?
22Hackett Advisory Program Portfolio Research-centric membership programs that support continuous improvement initiativesDeliverablesBenefitsAdvisory Insight into World-Class PerformanceBest Practice ResearchAdvisor AccessBest Practice Intelligence CenterPeer Interaction*World-Class Progress Report (*Executive Advisory only)Identify the strategies and practices employed by LeadersValidation of Current InitiativesDetermining What’s Possible (World-Class Performance Metrics)Process Implementation SupportContinuous Best Practice AdoptionExecutive Advisory ProgramsEnterpriseFinanceHuman ResourcesInformation TechnologyProcurement ExecutiveExecutive Advisory ProgramsFinance OperationsPurchase-to-PayAccount-to-ReportFinance Shared ServicesPayrollInvoice-to-CashKey PointsOur services lines are comprised of Advisory Programs, Benchmarking and Business Transformation Services.Briefly review high level deliverables and benefits per service lineThrough 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
23Hackett Benchmark Solutions Portfolio Performance metrics that assess both efficiency and effectivenessDeliverablesBenefitsBenchmarking Assess World-Class PerformancePeer & World-Class comparison Performance metricsDetailed analysisStakeholder SurveyExecutive PresentationObjective comparison to peer group and world-class performersQuantify performance GapsUncover hidden costsPrioritization of improvement initiativesBenchmark ProgramsSG&AG&AMerger & Integration AnalysisBenchmark ProgramsFinanceHuman ResourcesInformation TechnologyProcurementMarketing, Sales & ServiceKey PointsOur services lines are comprised of Advisory Programs, Benchmarking and Business Transformation Services.Briefly review high level deliverables and benefits per service lineThrough 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
24Hackett Transformation Solutions Portfolio Initiative-based strategy, design and implementation servicesDeliverablesBenefitsBusiness Transformation Transforms Performance into World-ClassStrategic DirectionDetailed Business CaseInitiative Plans & Detailed DesignsImplementation of Best PracticesReduced CostWorking Capital OptimizationEnhanced Service DeliveryBusiness InsightSustainable BenefitsSpeed of Solution DeliveryRisk MitigationFunctional ExpertiseFinanceHuman ResourcesProcurementInformation TechnologyPlanning & Performance ManagementWorkforce ManagementWorking capital managementFeatured SolutionsShared Services design and implementationTransaction processing optimizationPlanning, budgeting and forecastingBusiness process sourcingIT StrategyGlobalization impact analysisBusiness performance management & reportingKey PointsOur services lines are comprised of Advisory Programs, Benchmarking and Business Transformation Services.Briefly review high-level deliverables and benefits per service lineThrough 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