The support, commercial and central functions are critical to the effective running of a company. These include, but are not limited to, finance, HR, trade and marketing, procurement, R&D and IT. Beyond operational support, these functions contribute to the development of the company, its performance, sometimes its strategy, and compliance for the most regulated functions. According to our benchmarks, the total cost of these functions, commonly known as SG&A (selling, general and administrative expense) is generally between 6% and 20% of turnover, depending on the sector and the functions’ maturity.
If a reduction in SG&A expense improves a company’s profitability, it is the quality of services delivered that creates value: the quality of financial performance management by finance, talent management by HR, optimization of supplier relationships by procurement, innovation by R&D, increased productivity through IT systems, and in particular, sales generated by the marketing and sales teams.
When looking to increase its competitiveness, the challenge for a company is to optimize its SG&A structure having previously agreed its service offering and improved performance through digital initiatives and pooling resources.