What changed in HACKETT GROUP, INC.'s 10-K — 2024 vs 2025

In early 2024, we launched our AI assessment platform, AI XPLR which helps clients identify, evaluate and design Gen AI enablement opportunities.

Using AI XPLR, our experienced professionals guide organizations to harness the power of Gen AI solutions designed to digitally transform their operations to achieve quantifiable, breakthrough results, allowing us to be key architects of our clients' Gen AI journey.

We believe Gen AI will fundamentally change the way companies operate as well as the way consulting services are sold and delivered.

We believe the Gen AI platform capabilities we have developed in AI XPLR which were expanded with ZBrain, which we acquired as part of the LeewayHertz acquisition, is highly differentiating and we expect will enable us to effectively compete in this emerging and important space. The Hackett Group has completed over 27,500 benchmarking and performance studies with major organizations.

These studies are executed utilizing our Quantum Leap platform which drives our Digital Transformation Platform (“DTP” or “Hackett DTP”). This includes the firm's benchmarking metrics, best practices repository, and best practice configuration and process flow accelerators, which enables our clients and partners to achieve digital world-class performance.

We consider this, along with our recent innovations, our core Hackett Intellectual Property ("IP") which allows us to identify, design and evaluate transformation opportunities to be proprietary and key components of our Hackett solutioning IP.

Our transformation expertise is grounded in best practices insights from benchmarking the world’s leading businesses – including 97% of the Dow Jones Industrials, 90% of the Fortune 100, 70% of the DAX 40 and 51% of the FTSE 100, which inform and are delivered by our platforms.

The rapid development and move to cloud applications and infrastructure along with improving analytics, mobile functionality and enhanced user experience continues to dramatically influence the way businesses compete and deliver their services. This is redefining entire industries at an accelerated pace, forcing organizations to fundamentally change and adopt new capabilities in order to remain competitive.

Traditional sequential and linear-based business models are changing to fully networked and dynamic automated workflows and events with enhanced analytics.

The recent introduction of foundational models, such as Chat GPT, leverage fully integrated benefits of machine learning, deep learning neural networks further supported by natural language processing and other technologies supporting audio, video, text and motion technologies are now expected to redefine the most recent Digital World Class® performance standards.

Although demand for digital transformation remains strong in traditional areas, we expect it to be redefined by the rapid emergence of Gen AI technologies. As we head into 2025, we expect IT budgets to increase with significant attention and allocations to Gen AI solutions and the related opportunities and threats it brings.

While in 2024, Gen AI budgets were primarily focused in developing awareness in AI, in 2025 we expect to see increasing amounts in IT budgets specifically allocated to Gen AI initiatives in high feasibility and impact areas. We also expect to see increasing investment in data quality and value initiatives which are critical to any Gen AI strategy.

We expect the potential of AI will define an entirely new level of Gen AI enabled world class performance standards, driving software and service providers to extend the value of their existing offerings. We believe this will result in unprecedented innovations which organizations will have to consider.

This shift is consistent with the aggressive pivot we made in early 2024 to Gen AI enabled transformations which we believe creates a significant opportunity for our organization.

This environment is very attractive to our sector since we believe our clients will increasingly require organizational and technology market intelligence and implementation insight on how to leverage emerging Gen AI technologies to help them digitize their businesses which requires organizational changes and significant investment to achieve operational breakthrough performance to remain competitive. 4 STRATEGY We have repositioned our offerings to the emerging digital transformation opportunities driven by Gen AI, and we launched our AI XPLR version 2 offering and are integrating our benchmarking and best practices IP, as well as, our vast and increasing Hackett AI simulated Use Case Repository.

These capabilities have allowed us to become key architects, advisors and, most recently, builders of our clients' Gen AI journey. We see this as an opportunity for our organization to provide an objective business perspective to what started as primarily a technology innovation story.

The following are the keys to our strategy: • Launched AI XPLR - Our AI assessment platform allows us to measure and assess the impact of Gen AI technologies.

We use our best practice process flows and benchmark database to inform our Gen AI assisted platform to simulate industry specific AI solutions to guide our detailed quantifiable assessment of the potential business benefits of Gen AI technologies, as well as an organization's readiness requirements.

Further, we use our vendor market intelligence research to assist with the key selection considerations of Gen AI solution providers. This detailed business and technology perspective helps us guide our clients through the significant opportunities and critical considerations that they will have to evaluate and understand.

We believe that this comprehensive perspective fully supported by our IP and our AI XPLR platform enables us to become valuable architects, advisors and consultants of our clients’ Gen AI journeys.

We are also utilizing the AI XPLR platform as the vehicle to integrate the Gen AI impact and all Hackett IP across our offerings. • Acquired LeewayHertz Technologies - A highly recognized Gen AI consulting and implementation firm focused on the design and deployment of AI agents and agentic enterprise workflows.

Given the strategic access and platform expanding capabilities of AI XPLR, it was natural for us to extend our AI implementation capabilities to be able to fully develop and implement the Gen AI use cases we were identifying.

The acquisition also included a sophisticated a Gen AI orchestration solution, ZBrain, which we agreed to contribute into a to be created joint venture, with the LeewayHertz founder (the "JV").

The JV, which will be named ZBrain, Inc., will bring together the AI XPLR and ZBrain software platforms and will focus on licensing the platforms and creating the first of its kind Gen AI ideation through implementation software as a service offering.

We believe this JV creates an entirely new value-creation opportunity for our shareholders what could result from the growth of annual recurring revenues.

It may also provide the JV with the opportunity to raise capital and achieve stand-alone valuations due to its unique Gen AI solutioning software focus. • New Licensable Platform Innovations – We now see potential Gen AI platform opportunities from innovations envisioned to facilitate and accelerate the delivery of our Oracle, OneStream, SAP and Coupa technology implementation services.

Our AIxelerator and Ask Hackett AI solutions may have greater value as licensable software as a service platform to external users.

Ask Hackett AI is now intended to be a seed for the development and introduction of our own Small Language Model or SLM, which we call our Hackett Solutioning Language Model. • Gen AI Executive Advisory and Market Intelligence Programs - We have expanded our Market Intelligence programs by integrating proprietary Gen AI solutioning content and added dedicated sales expertise in an effort to grow high margin annualized recurring revenues.

IP based relationships have historically provided over 40% of Hackett’s business transformation and technology consulting revenue entry points. • Transitioning IPaaS to AI XPLR Licensing – We are now offering the opportunity to licence AI XPLR to attract new alliance partners that can leverage our unique AI XPLR capabilities to position their downstream technology offerings. • Quantum Leap® (“QL”) – Our next generation benchmarking and continuous improvement software as a service solution.

This market-leading benchmark solution allow s us to improve the client experience by delivering twice the insight and reducing the client effort by half, thus redefining our benchmarking leadership.

It covers over 100 enterprise process areas, across 20 industry groups on an end-to-end, functional or individual process basis. • Hackett DTP – We have digitized our IP and changed the way we share and deliver our IP with our clients across our benchmarking, executive advisory, IPaaS, market intelligence, business transformation and cloud enterprise application solutions.

Hackett DTP accelerates the speed to value realization by helping organizations achieve their performance targets through a combination of benchmark metrics, best practices and software configuration and process flow accelerators delivered in a fully automated platform. • Hackett Connect – Launched in October of 2023, is our Executive Advisory and Market Intelligence membership platform which allows our clients to avail themselves of our expert advisors, syndicated research, benchmarking and best practices IP.

It also automates access to our inquiry support, webcasts, briefings and events. • Expanded Cloud Capabilities - We expanded our Oracle Cloud applications addressable market from Enterprise Performance Management (“EPM”) to include Enterprise Resource Planning (“ERP”) and the entire Oracle Cloud 5 application suite.

We have also expanded our alliance partners to include Coupa and Ariba in Procurement, as well as OneStream in EPM and Corporate Performance Management (“CPM”). In regard to SAP, we were an early provider of S/4 HANA which allowed us to quickly transition our implementation skills and benefit from the SAP migration to the Cloud.

We are now evaluating and will soon be able to provide the extended agentic AI capabilities these providers are expected to introduce throughout 2025. • The Hackett Institute and Certified Global Business Services (“CGBS”) Program – We moved our training content to a state-of-the-art learning management platform.

We have started to evaluate how to incorporate our Gen AI solutioning content from our proposed Hackett SLM to new training programs.

We expect AI XPLR along with the LeewayHertz acquisition and the rapidly emerging Gen AI services, to be the key drivers for our growth along with the historical leverage of our “wedge” or IP centric recurring revenue Executive Advisory and IPaaS offerings.

Our QL, DTP, and Hackett Connect platforms resulted in a new way to share and leverage our IP across our offerings. This required us to digitize our intellectual capital and the way we share it with our clients across our benchmarking, executive research advisory, business transformation and Cloud Enterprise application implementation solutions.