Hackett: Digital World Class Technology Organizations Deliver More Value, Greater Resilience While Spending 18% Less Than Peers

Rhea-AI Summary

Digital World Class technology organizations deliver greater value, spend less, and operate with fewer staff, according to research from The Hackett Group. Digital World Class organizations spend 18% less and operate with 27% fewer staff compared to their peers. They have seen a 16% cost increase in technology operating costs, while typical companies have seen a 23% increase over the past 10 years. Overall, their reduced IT costs generate a $37 million annual advantage for a typical $10 billion company. They also spend 45% less on IT outsourcing and further reduce labor costs. Companies with Digital World Class status see improved overall enterprise performance, including higher net margin, earnings before interest, taxes, depreciation and amortization margin, return on equity, and total shareholder return.

Positive

• Digital World Class technology organizations spend 18% less and operate with 27% fewer staff compared to their peers. They have seen a 16% cost increase in technology operating costs, while typical companies have seen a 23% increase over the past 10 years. Overall, their reduced IT costs generate a $37 million annual advantage for a typical $10 billion company. Companies with Digital World Class status see improved overall enterprise performance, including higher net margin, earnings before interest, taxes, depreciation and amortization margin, return on equity, and total shareholder return.

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• None.

MIAMI--(BUSINESS WIRE)-- Digital World Class^® technology organizations deliver far greater value than their peers and are more resilient and better able to navigate uncertainty, while also spending 18% less and operating with 27% fewer staff, according to new research from The Hackett Group, Inc. (NASDAQ: HCKT).

The Hackett Group^® found that while typical companies have seen technology operating costs as a percentage of end-user equivalent increase by 23% over the past 10 years, Digital World Class technology organizations have seen only a 16% cost increase. The research showed that their overall reduced IT costs generate a $37 million annual advantage (for a typical $10 billion company). They are also able to modernize their technology landscape through digital transformation, implementing intelligent automation, advanced analytics, cloud enablement and collaborative tools, which enable them to spend 45% less than typical companies on IT outsourcing and further reduce labor costs. Overall, their discipline and ability to maintain strategic focus allows them to adapt more rapidly to changing circumstances. By harnessing data more effectively, they can make better decisions and focus on areas that matter most, such as managing costs, without sacrificing long-term IT strategy and goals.

A public version of the research, “Resilience: The Digital World Class Technology Advantage,” is available free, with registration, at https://go.poweredbyhackett.com/rdwcatech2306sm. It contains nearly 40 metrics detailing the performance gap between Digital World Class technology organizations and their peers – plus six key areas where Digital World Class companies excel and a proposed action plan to close the gap.

The Hackett Group’s research answered the question as to why companies aspire to Digital World Class by highlighting an undeniable correlation between Digital World Class status and improved overall enterprise performance. The data concluded that companies with at least one business services function operating at Digital World Class levels see a five-year average performance premium over their industry medians, including: an 80% improvement in net margin; 24% higher earnings before interest, taxes, depreciation and amortization margin; 89% greater return on equity; and 44% higher total shareholder return.

The Hackett Group defines Digital World Class organizations as those that achieve top-quartile performance in business value (a composite of stakeholder experience, digital enablement and traditional effectiveness metrics) and operational excellence (a composite of efficiency and business process automation metrics) in The Hackett Group’s comprehensive technology benchmark. The Digital World Class technology research is based on an analysis of results from recent benchmarks, performance studies, and advisory and transformation engagements at hundreds of global companies.

Beyond the cost and staffing advantages, Digital World Class technology organizations excel across a wide range of business value and operational excellence metrics. Here are some highlights:

• 2.9X more projects that deliver targeted return on investment
• 47% more perceived as a valued business partner and 29% more perceived as proactive by stakeholders
• 68% higher allocation of technology spend to emerging technologies
• 62% fewer applications per end user
• 66% more IT business intelligence reports distributed automatically or via self-service

Digital World Class technology organizations also spend very differently than their peers, investing 68% more of their spend to emerging technologies such as artificial intelligence (AI), workflow automation and more to drive operational effectiveness and productivity gains. This puts them in a better position to address the fact that growing workloads in the business functions are outpacing budgets and headcounts.

IT's role expands in business transformations that require implementing new technologies, streamlined processes and introducing innovative solutions, including generative AI, to drive efficiency and improve business outcomes. Many companies’ digital transformation efforts are already using generative AI to streamline operations, enhance customer experiences and drive business growth. IT organizations have also begun using generative AI to drive improvements in enterprise application development, deployment and management. IT leaders should also be fully involved in any adoption of generative AI technology across the revenue, operations and selling, general and administrative (SG&A) functions, to ensure that appropriate technology selection, training, security and ethics issues are addressed.

The Hackett Group Global IT Executive Advisory Program Practice Leader Tammy Pinter explained that, “While typical technology organizations may want to focus on value, they often don’t know where the value is in their organization. At the same time Digital World Class technology organizations are laser-focused on driving strategic advantage. They prioritize carefully, standardize processes consistently, and focus on end-to-end process design and ownership to eliminate inefficiency. This enables them to invest in key areas that can deliver the greatest return on investment. And they have rigorous governance in place to help make it happen.”

The Hackett Group Senior Director Prem Purushothamraj added that “Digital World Class technology organizations have significant advantages in terms of how they're able to achieve value. They're perceived as better business partners because of their ability to achieve targeted business outcomes. They deliver better customer and employee experiences and are perceived as better places to work. And finally, Digital World Class organizations show greater courage and initiative to foster innovation and make key investments, which enable their companies to more effectively compete in the marketplace.”

About The Hackett Group

The Hackett Group, Inc. (NASDAQ: HCKT) is a leading benchmarking, research advisory and strategic consultancy firm that enables organizations to achieve Digital World Class^® performance.

Drawing upon our unparalleled intellectual property from more than 25,000 benchmark studies and our Hackett-Certified^® best practices repository from the world’s leading businesses – including 97% of the Dow Jones Industrials, 93% of the Fortune 100, 73% of the DAX 40 and 52% of the FTSE 100 – captured through our leading benchmarking platform Quantum Leap^® and our Digital Transformation Platform, we accelerate digital transformations, including enterprise cloud implementations.

For more information on The Hackett Group, visit: https://www.thehackettgroup.com/; email info@thehackettgroup.com; or call (770) 225-3600.

The Hackett Group, Hackett-Certified, quadrant logo, World Class Defined and Enabled, Quantum Leap, Digital World Class and Hackett Value Matrix are the registered marks of The Hackett Group.

Cautionary Statement Regarding “Forward-Looking” Statements

This release contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Statements including without limitation, words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” seeks,” “estimates,” or other similar phrases or variations of such words or similar expressions indicating, present or future anticipated or expected occurrences or outcomes are intended to identify such forward-looking statements. Forward-looking statements are not statements of historical fact and involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. Factors that may impact such forward-looking statements include without limitation, the ability of The Hackett Group to effectively market its digital transformation and other consulting services, competition from other consulting and technology companies that may have or develop in the future, similar offerings, the commercial viability of The Hackett Group and its services as well as other risk detailed in The Hackett Group’s reports filed with the United States Securities and Exchange Commission. The Hackett Group does not undertake any duty to update this release or any forward-looking statements contained herein.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231006720473/en/

Gary Baker

Global Communications Director

(917) 796-2391

or

gbaker@thehackettgroup.com

Source: The Hackett Group, Inc.

FAQ

What is the advantage of being a Digital World Class technology organization?

Digital World Class organizations spend less and operate with fewer staff compared to their peers. They also have reduced IT costs, generating a $37 million annual advantage for a typical $10 billion company. Additionally, they see improved overall enterprise performance.

How much less do Digital World Class organizations spend compared to their peers?

Digital World Class organizations spend 18% less than their peers.

What is the cost increase in technology operating costs for typical companies?

Typical companies have seen a 23% cost increase in technology operating costs over the past 10 years.

What is the annual advantage of reduced IT costs for a typical $10 billion company?

The reduced IT costs generate a $37 million annual advantage for a typical $10 billion company.

What are the improved performance metrics for companies with Digital World Class status?

Companies with Digital World Class status see higher net margin, earnings before interest, taxes, depreciation and amortization margin, return on equity, and total shareholder return.