Thus chief financial officer John Maguire's comment in this week's Interview (page 13) that a world-class finance function should cost less than 1 per cent of turnover is an illustration of how iconic numbers are beginning to influence corporate strategy.

Maguire was referring to a figure produced last year by US-based benchmarking consultancy Hackett Group, which said that 'world class' finance departments operate at costs less than 0.75 per cent of their company's revenue. Hackett asserts that to become a 'world class' company, finance directors need to reduce their finance department costs to this magic fraction of a percentage point.

Benchmarking has, over the years, spread like a virus among finance directors.

Last week, Finance Week highlighted the drive that many big companies have been making to reduce costs in their finance departments. From Diageo, through to Axa, Whitbread and 3i, the bug is spreading. But there are enormous problems with benchmarking.

The first is the use of the magic percentage. It represents the costs of the whole finance function. Finance directors are being encouraged to benchmark the total departmental costs against their peers. It does not discriminate between those functions that are more commoditised, such as transactions processing, and those that are not, such as decision support.

There are also problems in benchmarking against peers, which are often very different in terms of staff numbers, credit control and invoicing systems. They might also have different demands in terms of Sarbanes-Oxley compliance.

Also, the benchmarking virus spreads on the belief that cost-cutting is a goal in itself, rather than a means by which to achieve a more efficient business.

Cutting costs is only useful if it enhances competitiveness. A budget should be set based on the needs of your business, not on what others are doing.

It is a recipe for myopia, me-tooism and mediocrity. If everyone is striving to be like everyone else, or as cheap as everyone else, investment and innovation are stifled.

But the biggest problem is that benchmarking rarely defines the value of finance to a business. It plays on the finance director's need to keep costs down but it does not offer a vision of the worth of the finance function in terms of risk, compliance and its positive influence on the corporate culture in terms of its rational, disciplined, honest, rule-governed influence on corporate decision making.

Companies can become bloated but that is only when there is a poor business reason for expanding a department. Outsourcing and employing new technology are only worthwhile if there is a good business reason for doing so. Cutting costs is not a such a reason. It is a means towards achieving efficiencies.

The finance department is as much an investment as a cost. Many companies have learned this lesson after they have cut back on essential functions, had experiences of poor outsourcing or bought the wrong or inadequate accounting software and then had to spend a fortune on sorting out the mess.

Viruses may be hard to cure but they can be contained. Finance directors should stop worrying about what their peers are up to or watching their percentages and focus on growing their own businesses.