THE ROI OF SPEED
The Hackett Group’s studies show that “world-class companies spend 45 percent less” on their closing and reporting efforts than other companies, which on average saves $5.5 million per $1 billion in revenue. These savings come, in part, from needing fewer people and systems to scrub data.

There’s a compliance payoff as well: Consistent, self-auditing processes help companies more easily conform to regulatory mandates such as Sarbanes-Oxley by reducing the risk of errors, says Peter Harries, a partner at accounting consultancy PricewaterhouseCoopers.

A faster close also helps large, public companies—typically those whose stock is worth more than $700 million—meet new and more stringent regulatory reporting deadlines from the Securities and Exchange Commission. As of Dec. 15, 2006, such “large accelerated filers” had to complete their annual 10-K reports within 60 days of the fiscal year end, down from 75. (The schedule for quarterly 10-Q reports was maintained at 40 days.) A 2006 Hyperion survey of SEC filings (covering 2003 to 2005) shows that the average Fortune 500 company takes 67 days to file its annual reports, with 76 percent taking more than 60 days. These statistics show how close to the edge many companies live. Reducing the time it takes to close helps free up time for reporting, says Joe Kuehn, an advisory partner at accountancy KPMG.

Finally, a fast close builds investor confidence. Investors are right to make the inference, Kuehn says, that if the close is slow it means processes are broken. And if the processes are broken, he says, chances are the data is broken.

There’s another hard-to-quantify but critical payoff: smarter business management.

“World-class organizations go from transaction mode to analysis mode,” says Hackett Group’s Holland, using financial data for analysis that highlights problems, identifies opportunities and considers potential shifts in customer behavior, marketing effectiveness and product requirements.

“A close is a step in time, and it’s only meaningful if it’s close enough to the present,” says Terry Flood, COO and president of Logicalis Group, an IT consultancy.

“As business expands, it becomes imperative to have credible snapshots of performance. The close is the lens,” says Logicalis CFO Greg Baker.

So Logicalis has established both common processes and a common technology platform. The result: a four-day close. “All our managers are tied into the metrics of our company. If we waited a month, we’d miss those key measurements,” Baker says.

“When IT marries up with the CFO or CEO, we see tremendous success,” says Holland.