The Hackett Group published new research today analyzing corporate financial efficiency. Consequently, the study reveals corporate SG&A expenses climbed to five-year record highs across major markets. In North America, the median corporate SG&A costs were 16.2% of revenue, compared to 13.4% in Europe. While revenues grow, many companies find it hard to convert sales into sustainable operating leverage. Therefore, organizations are actively exploring AI-enabled operating models to improve overall corporate productivity.
Structural Performance Gaps and Leverage in Operations
The research shows a growing performance gap between market leaders and median companies. SG&A for top-quartile North American companies was 7.8% of revenue. Median businesses spent more than double that percentage. European leaders also kept SG&A expenses at 6.1% vs. the 13.4% median benchmark.
The use of AI across the process chain also provides substantial structural cost savings. An organization of $10 billion in revenue can save around $286 million annually through digital World Class operations in SG&A processes. Top technology companies today invest 3x more capital in artificial intelligence and intelligent automation than their industry peers.
Strategic AI Revolution and Business Process Automation
In addition, cutting-edge AI technologies are actively streamlining key operational processes. For example, contract intelligence can cut the time to process milestone payments by 50%. Two to three days can be cut from the monthly close cycle with autonomous financial close tools. AI-driven compliance solutions decrease errors in policy interpretation by up to 60%.
The Hackett Group has identified six core execution priorities to address increasing SG&A pressures:
- Map processes end to end
- Streamline and standardize work
- Incorporate AI into core operations
- AI investment ROI calculation
- Build AI-ready talent
- Enhance strategic sourcing
In the end, integrating AI into core business workflows enables companies to build long-term cost management capabilities.
“Economic recovery improved financial results, but it didn’t fundamentally change how organizations operate,” said Thomas Kellaway, principal at The Hackett Group®. “The next generation of profitable growth will come from AI-enabled operating models that increase productivity, scale more efficiently and strengthen operating leverage.”
Meanwhile, industry experts emphasize that process redesign remains critical for maximizing technology investments.
“The next competitive advantage will not be determined by rates of AI adoption,” said Murray Shevlin, principal at The Hackett Group®. “It will come from redesigning end-to-end processes, so AI delivers measurable gains in productivity, operating leverage and profitable growth.
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News Source: Businesswire.com
