The Hackett Group’s research finds that most companies will need to reduce SG&A costs by 15-30% to align costs with significant revenue declines due to the global pandemic. In response, The Hackett Group, has launched a new Performance Diagnostic offering which enables companies to move from data capture to performance results in less than one week.
The diagnostic is designed as a rapid assessment tool to help companies make informed decisions on current and post-pandemic plans across corporate finance, procurement/supply chain, human resources, and information technology. The diagnostic allows companies to quickly evaluate their current cost structure and model recovery scenarios to determine the right operating model and actions necessary in the current demand-starved business environment.
“We’ve been sharply focused on helping companies manage through this crisis,” said Ted A. Fernandez, Chairman and CEO of The Hackett Group. “Most businesses are facing significant revenue declines and will need to make difficult cost reduction decisions that will not hamper post-crisis growth once it rebounds.”
“Our new Performance Diagnostic tool helps companies determine how best to do this,” said Fernandez. “The tool can help companies decide how to best align with their company’s revenue declines by pinpointing actions to operate efficiently, re-align costs, and optimize liquidity and cash flows.
The Hackett Group’s Performance Diagnostic tool relies on data captured in The Hackett Group’s industry-leading proprietary benchmarks. The diagnostic can be used to model all selling, general & administrative (SG&A) functions, or individual functions. The rapid assessment tool assists leaders to make informed decisions within five days or less and it typically takes just one day to complete. Executives can also run up to three recovery scenarios to make informed decisions around business plans and organisational models.
The Hackett Group’s research concluded that the typical company (with $10 billion in revenue) will need to reduce SG&A by 15%, which translates to $241 million in expense savings, to maintain their pre-crisis ratio of SG&A to revenue. Companies of the same size seeking to prevail in the next normal and achieve top performance will need to reduce SG&A by 30%, which translates to $486 million.
Since mid-March, The Hackett Group has produced more than 20 research pieces designed to help companies respond to the global crisis, including its 2020 Disrupted series and Coronavirus Response Guides for all major business services functions. This research is all available free at here.