# Six Reasons Why Digital World ClassTM Finance Organizations Outperform Peers
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-10-18
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Unlocking Digital World Class Finance Secrets
Meta Description: Discover how Digital World Class finance organisations achieve top performance with lower costs, higher quality services and superior agility.
URL: https://financedigest.com/six-reasons-why-digital-world-classtm-finance-organizations-outperform-peershtml

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_By_ **_Nilly Essaides,_** _Angela Caswell-LaPierre and Erik Dorr, The Hackett Group_

The best-performing finance organizations – the Digital World ClassTM – accomplish more while operating at a significantly lower cost than their peers. According to The Hackett Group’s most recent benchmarking research, they also deliver higher quality services, such as more time spent on forward-looking analysis to inform future decisions. They are also 39% more likely to be perceived as agile in meeting business challenges. And they do so with 48% fewer full-time equivalent staff and at a 43% lower cost as a percentage of revenue. For a $10 billion company, this represents a [finance cost savings of $41.4 million](https://www.financedigest.com/700000-employees-across-the-uk-have-access-to-fair-finance-will-reach-one-million-employees-in-2017.html "700,000 Employees Across The UK Have Access to Fair Finance, Will Reach One Million Employees in 2017").

These are among the key findings from The Hackett Group’s annual benchmarking analysis of major business functions, [including finance](https://www.financedigest.com/ing-toughens-oil-and-gas-policy-to-include-trade-finance-midstream.html "ING toughens oil and gas policy to include trade finance, midstream"), using empirical data and a proprietary methodology to measure the gap between functional leaders their peers. The research also provides important insight into how [Digital World Class finance](https://www.financedigest.com/digital-transformation-for-the-world-of-finance-the-rise-in-collaboration-tools-and-saas-applications.html "Digital transformation for the world of finance: The rise in collaboration tools and SaaS applications ") organizations achieve their advantage.

**What is [Digital World](https://www.financedigest.com/fraud-in-a-mobile-digital-world.html "FRAUD IN A MOBILE DIGITAL WORLD") Class** **TM** **finance?**

The Hackett Group defines Digital World Class [finance functions](https://www.financedigest.com/why-do-modern-finance-functions-strive-for-automation.html "WHY DO MODERN FINANCE FUNCTIONS STRIVE FOR AUTOMATION?") as those that simultaneously achieve top-decile performance on two dimensions: operational excellence and business value. Collectively, they represent about 10% to 15% of all organizations studied.

For decades, The Hackett Group has analyzed the performance of finance functions using empirical data and a proprietary methodology that measures efficiency and effectiveness and ties performance to the adoption of proven best practices such as data and process standardization, technology [platform consolidation](https://www.financedigest.com/make-way-for-the-rise-of-the-finance-super-apps-consolidation-of-financial-digitisation-tools-platforms.html "Make way for the rise of the Finance Super Apps – Consolidation of Financial Digitisation Tools & Platforms"), adoption of a global business services (GBS model) and end-to-end process ownership. Because technology innovation and [digital transformation](https://www.financedigest.com/3-reasons-why-businesses-get-stuck-at-the-starting-gate-of-digital-transformation.html "3 Reasons Why Businesses Get Stuck At The Starting Gate Of Digital Transformation") are increasingly linked to superior performance, The Hackett Group updated its benchmarking methodology in 2021 to add greater weight to automation, digital enablement, and stakeholder experience.

**Six characteristics stand out**

The Hackett Group’s research provided insight into six characteristics that differentiate [Digital World](https://www.financedigest.com/fintechs-support-of-ukraines-digital-businesses-can-be-used-as-blueprint-across-the-world.html "Fintech’s support of Ukraine’s digital businesses can be used as blueprint across the world") Class performers from their peers.

**Technology-enabled operations.** This is at the core of Digital World Class performance. By rationalizing their legacy technology environment, top-performing finance organizations have traditionally been able to operate at a lower overall technology cost than peers. Indeed, Digital World Class [finance organizations spend](https://www.financedigest.com/student-finances-exposed-how-do-they-really-spend-their-money.html "Student finances exposed: How do they really spend their money?") 19% less on technology. But they do invest in technology architecture modernization and emerging technologies such as smart automation, advanced analytics, and collaboration tools that enable greater automation, further reducing labor cost. Because they have a more technology-intensive operating model, they actually spend a larger portion of operating cost on technology – 13% versus 9% for peers.

They have automated more transactional activity. For example, they receive 83% of supplier/vendor invoices electronically, versus 50% for peers, and they automate 96% of journal entries, versus 77% for peers. Not all technology cost is associated with labor-eliminating automation, however. As their service portfolio shifts toward higher value-added services, these [leaders also invest to equip knowledge workers with modern digital](https://www.financedigest.com/young-leaders-forum-debating-what-successful-leadership-looks-like-in-the-digital-age.html "Young Leaders Forum, debating what successful leadership looks like in the digital age") tools, including advanced analytics and reporting tools. Nearly three-quarters (73%) of Digital World Class [finance organizations provide online access to management](https://www.financedigest.com/how-parents-can-help-students-manage-their-finances.html "How Parents Can Help Students Manage their Finances") reports and the ability to run ad hoc reporting and analysis, compared to only 40% of peers. In addition, 95% have a central [data repository to generate business performance](https://www.financedigest.com/big-data-lowers-insurance-premiums-and-optimises-business-performance.html "Big Data Lowers Insurance Premiums and Optimises Business Performance") reports, versus only 67% of peers.

**Superior insight-generating capabilities.** Pandemic-related [business disruptions](https://www.financedigest.com/german-businesses-expect-only-mild-recession-as-disruptions-ease.html "German businesses expect only mild recession as disruptions ease") underscored the need for faster and more accurate forecasting and analysis capabilities. Sophisticated [financial planning](https://www.financedigest.com/cfos-need-a-focus-on-forex-in-financial-planning-tools-accountagility-reveals.html "CFOs need a focus on forex in financial planning tools, Accountagility reveals") and analysis (FP&A) teams are taking steps to automate data collection and embracing new analytics techniques such as predictive modeling. [Digital World Class finance](https://www.financedigest.com/5-key-takeaways-from-the-finance-sectors-digital-transformation-revolution.html "5 Key Takeaways From the Finance Sector’s Digital Transformation Revolution") organizations tend to be well ahead of others in their use of such sophisticated capabilities. As a result, they spend 2.4 times more time than peers employing sensitivity, investment and value analysis techniques. They also spend 38% more analytical time focused on proactive decision-making rather than historical reporting.

**Nimble, modern architecture.** [Digital World Class finance](https://www.financedigest.com/how-digital-is-transforming-finance-in-2023.html "How Digital Is Transforming Finance in 2023") organizations are at the forefront of architecture modernization and cloud migration. They have established clear process ownership roles within [finance and effective partnerships with internal technology groups, leveraging the deep technical skills required in both finance and the technology organization to advance both functional and business](https://www.financedigest.com/1-in-3-uk-businesses-looking-for-finance-are-finding-it-harder-to-get-a-loan.html "1 in 3 UK businesses looking for finance are finding it harder to get a loan") goals. The Hackett Group’s 2021 [Key Issues Study found that finance](https://www.financedigest.com/3-key-ways-you-can-transition-from-finance-to-fintech.html "3 key ways you can transition from finance to fintech") organizations with large-scale cloud deployments were 32% more likely to meet enterprise business objectives and 44% more likely to meet functional objectives.

**An operating model built for agility.** Today, most finance resources are functionally aligned – that is, under the control of the [chief financial officer](https://www.financedigest.com/tips-for-choosing-the-right-chief-finance-officer-for-your-business.html "Tips for Choosing the Right Chief Finance Officer for Your Business"). In the future, however, organizations will move to a hybrid model of functionally-aligned and enterprise-aligned resources. As this happens, the relationship among finance, enterprise technology and digital operations organizations, and external [service providers will evolve to become a fluid network of resources that can be deployed rapidly to support](https://www.financedigest.com/uk-gives-bbc-world-service-20-million-pounds-to-support-english-language-broadcasting.html "UK gives BBC World Service 20 million pounds to support English language broadcasting") the highest-value activities across the enterprise – enabling greater enterprise agility. According to The Hackett Group’s analysis, 65% of [finance resources will be enterprise-aligned in the future](https://www.financedigest.com/enterprise-automation-is-the-future-of-finance.html "Enterprise automation is the future of finance"), versus 36% today.

**End-to-end process design and ownership.** In The Hackett Group’s 2021 Key Issues Study, the leading impediment to [finance transformation was process and technology](https://www.financedigest.com/7-ways-cloud-technology-can-transform-business-finances.html "7 ways cloud technology can transform business finances") complexity. Executing a process in piecemeal fashion is not only more expensive, it also undermines the ability to respond [quickly to changes](https://www.financedigest.com/seeking-right-tone-new-uk-pm-truss-had-to-quickly-change-gear-for-queen.html "Seeking right tone, new UK PM Truss had to quickly change gear for queen") in business conditions or stakeholder demands. Digital World Class finance organizations are ahead of peers in this regard. For example, they universally have established an end-to-end process owner for the general ledger accounting/consolidation process, compared to just over half (57%) of peers. Because these process owners oversee and govern the process, data and technology capabilities from start to finish, they can spot bottlenecks and make changes more easily.

**A higher** [skilled workforce. While Digital World Class finance](https://www.financedigest.com/what-skills-and-areas-of-knowledge-should-finance-teams-develop-during-2023.html "What Skills and Areas of Knowledge Should Finance Teams Develop During 2023? ") organizations employ 48% fewer full-time equivalent (FTEs) than peers per billion dollars of revenue, the gap is greater for transaction-processing FTEs (63%) and much smaller for FP&A roles (21%) and specialist finance roles (36%). Furthermore, they have 34% more business analysts with operational experience. This underscores a shift of resources into knowledge-centric roles, explaining their superior value contribution, customer experience, and effectiveness. Leading finance organizations are also [increasing FP&A head count as a percentage of total FTEs to improve their ability to foresee change and affect strategic business](https://www.financedigest.com/frances-ynsect-to-refocus-bug-business-after-capital-increase.html "France’s Ynsect to refocus bug business after capital increase") decisions. Highly skilled business enablement leaders are at the core of shift. This role requires advanced analytical acumen to drive insight and technical IQ to deliver operational efficiencies, as well as [essential business partnering skills](https://www.financedigest.com/5-essential-leadership-skills-for-family-owned-businesses.html "5 essential leadership skills for family-owned businesses") such as emotional intelligence, relationship management, innovation, and change orientation. This role also requires enhanced understanding of business operations.

**Learn from the leaders**

Digital World Class performance represents the type of value contribution that elevates the [finance function’s stature as a strategic business](https://www.financedigest.com/6-ways-to-spring-clean-your-business-finances.html "6 ways to Spring clean your business finances") partner – a goal that ranked as the No. 1 priority of CFOs surveyed by The Hackett Group. But benchmarking analysis shows most finance organizations are still far removed from achieving Digital World Class performance. The digital acceleration that has occurred over the past 18 months, however, [presents a unique opportunity](https://www.financedigest.com/the-rise-of-finfluencers-presents-unique-opportunities-but-brands-must-proceed-with-caution.html "The rise of “Finfluencers” presents unique opportunities but brands must proceed with caution") to close that gap. Rather than continuing to make incremental changes, [finance executives will need to focus on accelerating digital transformation](https://www.financedigest.com/world-class-finance-digital-transformation-and-analytics-based-decision-making-among-key-imperatives-for-creating-finance-agility.html "World-Class Finance: Digital Transformation and Analytics-Based Decision Making Among Key Imperatives for Creating Finance Agility") and moving toward an operating model that is designed specifically to perform at a Digital World Class level. Studying how the best have done that is a good place to start.

You can download the full ‘Digital World Class Finance’ report from The Hackett Group [here](http://go.poweredbyhackett.com/findigwc2106sm).


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