By sector, Hackett found that typical Global 1000 companies with $23.4 billion in revenue could generate annual savings such as: $479 million for companies in the IT sector; $470 million for consumer goods sector; and $270 million for health care sector.

Hackett’s research, based on results from more than 4,000 in-depth benchmark studies performed at the world’s largest companies over the past 17 years, finds that many companies will respond to the current economic turmoil with across the board cuts to staff and programs, demoralizing staff and potentially crippling the business. But top performers will take a more strategic approach. Hackett’s recommendations include:

Focus on Operational Efficiency – Starting with a clear understanding of operational performance, top companies can identify quick win opportunities that may involve consolidation of related activities or infrastructure and elimination of unnecessary administrative support activities. Companies can also look to move more work offshore.

Improve Cash Position – Companies need to make sure they understand their cash position and can have accurate forecasting mechanisms in place. According to research from REL, a division of The Hackett Group focusing on working capital optimization, typical Global 1000 companies have a cash flow improvement opportunity of $3.2 billion, or 13 percent of annual revenue, which can be generated through techniques that include more accurate forecasting of sales, more effective inventory management, and more careful analysis of accounts receivables to identify collections opportunities and credit risks.

Leverage Suppliers and Manage Supply Chain Risk – Hackett recommends that companies work more closely with their suppliers to understand their needs, provide them with insight into future demands, and evaluate supply risk. REL’s research shows that the average Global 1000 company has a $1.1 billion cash flow opportunity (outflow) which can improve the company’s overall cash position by more than 30 percent.
 
Reconsider or Reprioritize IT Investments – Hackett’s research has shown a strong linkage between IT and Business Value Management (IT-BVM).  Top performers weed out IT projects that are unable to establish clear linkage to business value, and are more profitable as a result. Hackett recommends that companies reevaluate any IT projects currently underway and consider eliminating those that are unlikely to generate short-term performance improvements, while fast-tracking others that will offer expedited returns.

Focus on Talent Management – It’s critical to begin the process of talent management by knowing which staff are top performers, and which staff are marginal or poor performers. Hackett recommends that companies begin with comprehensive reviews, then eliminate poor performers. Following that, companies should  consider recruiting, to attract new talent looking for a great opportunity.

Download the full research piece (registration required) at www.thehackettgroup.com/usrecession