MIAMI — July 27, 2026 — In an era defined by rapid technological shifts and fluctuating macroeconomic indicators, the traditional playbook for corporate growth is undergoing a radical revision. New research from The Hackett Group, Inc. (NASDAQ: HCKT), a global leader in AI-led business transformation, reveals that the path to sustainable, profitable growth has shifted decisively away from economic tailwinds toward the implementation of AI-enabled operating models.
According to the 2026 SG&A Cost Study and Scorecard for North America and Europe, while top-line revenue growth has shown resilience, many of the world’s largest companies are failing to convert that growth into meaningful bottom-line leverage. The findings highlight a widening "operational gap" between organizations that are aggressively integrating artificial intelligence into their core processes and those still tethered to legacy cost-management strategies.
Main Facts: The Great Decoupling of Revenue and Productivity
The Hackett Group’s analysis of 2,000 of the largest publicly traded non-financial services companies (1,000 in North America and 1,000 in Europe) presents a sobering reality: despite a backdrop of moderating inflation and accelerated revenue growth throughout 2025, administrative and operational costs are at a five-year peak.
In North America, median Selling, General, and Administrative (SG&A) costs reached 16.2% of revenue. In Europe, the figure stood at 13.4%. While revenue growth rates were healthy—hitting 4.4% in North America and 6.5% in Europe—the ability to scale efficiently remains elusive for the majority of enterprises.
The data suggests that the gains in financial results seen over the last fiscal year were primarily driven by external market conditions rather than fundamental internal productivity improvements. While the percentage of companies struggling with SG&A costs outpacing revenue growth improved compared to the previous year, the improvement was largely superficial. The core issue remains: companies are growing, but they are not becoming "leaner." The structural scalability required to sustain long-term operating leverage is, for many, still in its infancy.
Chronology of the Shift: From Cost-Cutting to Intelligent Scaling
The evolution of corporate performance over the last 24 months tracks a clear arc of disillusionment with traditional methods:
- 2024 (The Year of Caution): Companies focused heavily on tactical cost-cutting and headcount reduction to combat inflationary pressures and high interest rates. These measures provided short-term relief but failed to build long-term operational resilience.
- Early 2025 (The Revenue Rebound): Market conditions improved, and top-line growth accelerated. Organizations were buoyed by external recovery, leading to a false sense of security regarding their internal operational health.
- Late 2025 (The Realization): As revenue growth stabilized, the "bloat" in SG&A functions became impossible to ignore. Organizations realized that their operating models were not equipped to handle higher volumes without proportional increases in costs.
- Mid-2026 (The AI Inflection Point): The current research marks a turning point where AI is no longer a "nice-to-have" pilot project but a critical component of the structural operating model. The gap between "Digital World Class" leaders and the median has widened, signaling that the window for early adoption is closing.
Supporting Data: The Widening Operational Leverage Gap
The numbers paint a stark picture of the divergence between high-performing companies and their peers. The "first-quartile" companies—those that have successfully integrated advanced technologies—are operating at a significantly lower cost-to-revenue ratio than the median.
- North America: First-quartile companies report SG&A costs of 7.8% of revenue, compared to the 16.2% median. This 8.4-percentage-point advantage is not merely a rounding error; it is a massive competitive moat.
- Europe: First-quartile firms maintain SG&A costs at 6.1%, contrasted with the 13.4% median—a 7.3-percentage-point advantage.
For a typical $10 billion enterprise, the difference between median performance and "Digital World Class" status is staggering. The Hackett Group estimates that achieving this status across SG&A functions can yield approximately $286 million in annual cost advantages. Even isolating core functions—Finance, Human Resources, IT, and Procurement—the potential annual windfall approaches $85 million.
The data further suggests that the chasm is set to widen. The Hackett Group projects that the performance gap between "AI World Class" organizations and typical firms will expand by up to 75% in the near term as leaders move from isolated automation to embedding AI into the very fabric of their business processes.
Official Responses: The Strategic Pivot
Leadership at The Hackett Group emphasizes that the transition is about more than just software implementation; it is about a fundamental redesign of the enterprise architecture.
"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."
Echoing this sentiment, Murray Shevlin, another principal at the firm, warned that simply adopting AI tools is insufficient. "The next competitive advantage will not be determined by rates of AI adoption," Shevlin noted. "It will come from redesigning end-to-end processes, so AI delivers measurable gains in productivity, operating leverage, and profitable growth."
The experts argue that the leaders of tomorrow are those currently investing three times more of their technology budget into AI, intelligent automation, and agentic AI than their industry peers. This investment is not an expense; it is the capital expenditure required to secure future margins.
Implications: The New Mandate for Leadership
The implications of this research are profound for the C-suite. Organizations that fail to address the lack of scalability in their current operating models will find themselves increasingly vulnerable to market volatility.
1. Process Redesign as a Prerequisite
AI cannot fix a broken process. Organizations must first analyze their end-to-end workflows to identify bottlenecks and inefficiencies. The goal is to move beyond digitizing legacy manual tasks and move toward "autonomous processes" where AI acts as an agent rather than a calculator.
2. The Talent Evolution
As AI takes over routine, high-volume tasks in finance, procurement, and HR, the role of human employees must shift toward higher-value judgment, strategic oversight, and complex problem-solving. This requires a significant investment in workforce upskilling.
3. Structural Cost Advantages
By embedding AI, companies are effectively "decoupling" growth from headcount. In a traditional model, a 10% increase in revenue often requires a similar increase in administrative support. In an AI-enabled model, that same revenue growth can be supported with marginal increases in overhead, creating the "operating leverage" that investors prize.
4. Risk and Compliance
With the rise of "agentic AI"—AI systems capable of executing complex, multi-step tasks autonomously—organizations must also build robust governance frameworks. The speed of execution must be matched by the rigor of oversight to ensure that AI-driven decisions align with corporate values and regulatory requirements.
5. Future-Proofing the Enterprise
The widening gap between the leaders and the laggards suggests that the "median" is becoming a dangerous place to inhabit. Companies that do not bridge this gap will find themselves perpetually struggling to match the price competitiveness and agility of their AI-enabled rivals.
6. Measuring Success
Finally, metrics must evolve. Traditional KPIs like "headcount per revenue" are becoming obsolete. Leaders are now shifting their focus toward "AI-driven productivity gains" and "operating leverage per unit of digital investment."
Conclusion: The Path Forward
The findings from The Hackett Group serve as a clear directive for global businesses. The era of relying on favorable economic conditions to mask operational inefficiency is over. To achieve the next generation of profitable growth, organizations must pivot from reactive cost management to the proactive, AI-enabled redesign of their entire operating model.
As the performance gap continues to widen, the cost of inaction is no longer just a loss of efficiency—it is a risk to long-term survival. For those who choose to embrace the challenge, the integration of AI represents the most significant opportunity for structural value creation in decades. By reimagining processes, investing in the right technologies, and empowering their workforce, enterprises can move from being burdened by their operating models to being powered by them.
For those interested in navigating this transition, The Hackett Group’s 2026 SG&A Cost Studies for both North America and Europe offer a roadmap for identifying where these gains can be found and how to begin the journey toward "Digital World Class" performance.
