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By the Numbers: Finance
American Productivity & Quality Center (APQC), Nov 2006, Pages: 129
This report’s research efforts show a substantial gap between high- and low-performing organizations. In addition to gaps in quantitative performance, this report uncovers several insights into performance.
- For the second consecutive year, managers and overall staff within finance and accounting continue to spend a disproportionate share of time on transactional processing tasks while demonstrating a strong desire to redirect time to internal controls and decision-support activities.
- Finance costs increased from 2004 to 2005 by 18.75 percent. Organizations with $1 billion revenue are on average spending $9.5 million on their finance functions.
- A significant portion of this increase is a result of increased spending on compliance activities.
- Shared-service business models continue to demonstrate lower cost while maintaining high quality.
- The trend in outsourcing continues to grow with organizations indicating a desire to outsource up to 47 percent of all finance and accounting activities over the next three years, with accounts payable, payroll, and tax leading as the most outsourced processes within finance and accounting.
- Performance continues to be measured primarily in unit costs (e.g., cost per invoice processed).Over time, we have confirmed that lower cost, improved productivity, reduced cycle time, and higher quality can go hand in hand. The important relationship among cost, quality, and cycle time cannot be ignored.
- Therefore, this report supplements traditional cost measures with other key measures such as quality, productivity, and cycle time. Our research indicates that better performance is correlated with the use of certain business practices. This book quantifies the unit cost and productivity differences associated with the use of these practices.
The practices examined include:
- planning, budgeting, and forecasting vs. cost control and cost management;
- business models such as outsourcing, shared services, centralized organizations, and decentralized organizations;
- use of technology in enabling performance;
- deployment of standardized processes and procedures; and
- resource allocation and the relationship to cost and performance.
In short, finance practices can be significantly improved, resulting in bottom-line savings. The Open Standards Benchmarking CollaborativeSM (OSBC) research, from which this data is drawn, quantifies these gaps and goes on to explore specific business practices that are linked with better performance.
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