Digital World Class® Finance: Bridging the Performance Gap With Gen AI

In this episode of the Business Excelleration^® Podcast, Jim O’Connor and John O’Mahoney discuss why certain finance organizations outshine the competition. Drawing insights from The Hackett Group’s latest Digital World Class^® research, they unlock key factors behind success. Their conversation highlights how investments in cutting-edge technologies, strategic preparations for adopting generative artificial intelligence (Gen AI), and enhanced data management contribute to their competitive advantage. 

Welcome to The Hackett Group’s “Business Excelleration^® Podcast,” where week after week we hear from experts on how to avoid obstacles, manage detours and celebrate milestones on the journey to world-class performance. In this episode, we’re joined by John O’Mahony, principal in Finance Transformation at The Hackett Group, to discuss Digital World Class^® finance, insights from top performers, and how to level up with generative artificial intelligence (Gen AI).

To begin John explains that at Hackett, Digital World Class^® refers to the organizations that rank in the top quartile for both business value and operational excellence. Business value is measured by factors like stakeholder experience and digital enablement, while operational excellence focuses on efficiency and business process automation. These companies outperform their peers in both value and operational performance. They also deliver more value while operating at significantly lower costs than their peers. For example, these companies have 53% of the operational costs of their peers but maintain higher capabilities. This balance is achieved through a combination of business value and operational excellence. Four key traits set these companies apart from the rest: reducing operational costs, focusing on financial planning and analysis (FP&A), leveraging automation and technology, and adopting best practices as part of the company culture.

Then, John explains how Digital World Class^® companies cut costs – especially in transaction-related activities – and invest more time in FP&A than their peers. These companies also invest 1.5 times more in technology. Their success is driven by ingraining Digital World Class^® principles into their culture, with a focus on global process owners and constant evolution. This allows them to achieve shareholder returns 55% higher than their peers. John also highlights the heavy focus on technology and automation among Digital World Class^® organizations. These companies ensure that their technology is highly integrated, maximizing its benefits. However, John stresses that success isn’t just about technology; companies also focus on optimizing service placement, process ownership and bringing in the right talent to perform value-adding activities. John expands on how companies utilize a combination of technology, process design and service placement to drive Digital World Class^® performance.

Next, the conversation shifts to the game-changer of Gen AI. John stresses that organizations not seriously considering Gen AI risk being left behind. He cites studies showing that 42% of the cost-saving potential in finance will come from AI over the next five to seven years. AI enables companies to move beyond incremental improvements to transformative actions that enhance business experiences and processes. These “breakthrough activities” differentiate top-performing companies from their peers, driving enterprise value.

Before wrapping up, John offers four key pieces of advice for organizations pursuing AI-driven transformation: 1) lead the way rather than follow, 2) ensure the relevance of AI initiatives to specific business cases, 3) relentlessly pursue opportunities for change, and 4) create the capacity for breakthrough performance. These strategies will allow companies to harness AI effectively and deliver significant enterprise value.

Time stamps:

• 0:12 – Welcome to this episode with guest John O’Mahony.

• 1:14 – Defining Digital World Class companies and their characteristics.
• 3:38 – Examples of operational excellence and cultural commitment.
• 5:37 – Investments in technology and integration.
• 7:24 – Holistic approach to digital transformation.
• 12:09 – Breakthrough activities and enterprise value.
• 14:06 – John’s advice for companies to harness AI effectively and deliver significant enterprise value.