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Market challenges driving increased need for cost analytics
As economic uncertainty continues to drive demand for advanced cost analytics, Finance is now faced with the challenge of providing front line management with detailed business analytics that will enable increased expense control, improved operational efficiency and more effective pricing strategies. Many organizations are taking a renewed interest in expanding cost management beyond the confines of Finance by engaging the enterprise on a collaborative effort for cost control and accountability.
Adding to the challenge is the fact that most Finance teams were hit hard with headcount reductions over the last couple of years and now lack the resources and capabilities to meet current demands. Finance professional are anxious to move from the daily firefighting role thrust upon them by resource constraints and re-engage on more strategic initiatives for cost and profitability measurement. As the demand continues to grow, I am often asked “How do we get started to quickly deploy a better cost solution at our company”? I have found that starting is the hardest part, but below I have outlined four critical components to successful Strategic Cost Management and one shameless plug on why you should engage Armada to help.
How to get started
Move away from legacy expense allocations and towards more consumption based cost assignments by leveraging operational statistics captured in core applications and data warehouse facilities. Focus efforts initially on traditionally non-controllable or indirect expense allocations from back office and shared services to foster the productive cost dialogue around consumption and accountability of shared costs. We recommend performing a thorough assessment of internal capabilities against Armada’s Cost Modeling Maturity Matrix both from a data and a resource perspective to examine internal capabilities to deliver value to the enterprise.
Most organizations fail to advance cost management beyond modeling and measurement, stuck in a perpetual production environment of unit cost data often ignored across the enterprise. Armada’s SCM Blueprint focuses on enterprise adoption by integrating centrally governed cost information into continuous improvement, planning & forecasting, predictive modeling, and multi-dimensional profitability analytics. Our framework provides a structured approach for navigating beyond finance through collaboration with operations, product management and executive leadership, creating a sustainable program that balances current capabilities with future incremental improvements.
Organizations cannot achieve true cost transparency with subjective management surveys of high level operational processes. Gain credibility by avoiding finance centric “ABC Lite” cost studies, leveraging Armada’s Cost360™ approach for conducting thorough operational cost analysis and modeling. Prioritizing areas of urgent cost concern will gain management support and provide immediate operational improvement to self-fund continuous improvement initiatives.
Methodology should drive technology decisions. Strategic Cost Management is a complex endeavor for any organization, requiring careful examination of requirements and thorough design documentation before investing in software. Armada supports our client’s selection of supporting software by conducting Rapid Prototyping of their subscribed methodology to uncover obstacles and drive a better set of business requirements. Armada can quickly deploy our Acumen cost analytics software as a proof of concept for evaluating business requirements or as a permanent solution for advanced cost analytics.
Armada has assembled the best and brightest individuals focused on maximizing our client’s return on enterprise Strategic Cost Management project investments. Our team works closely with clients to better understand their unique cost challenges and provides experienced professionals to assist in the design, development and delivery of substantial cost improvements. Armada differentiates itself against other consulting firms by providing clients with: