CostPerform provides software and a modelling approach that addresses this shortfall – the software enables organisations to link volume of outputs, the processes that are performed, and resource capacity in one model to derive consumption rates, analyse planning scenarios and develop both financial and non-financial metrics. 

Benefits of the CostPerform  Modelling Approach

Traditional ABC Model Design

Advanced ABC Model Design

CostPerform models are business planning models, decision support tools, and performance management systems.  Thus, it is a departure from traditional ABC/M because it no longer provides just a historical model – it provides a forward-looking predictive model. 

It makes this shift primarily by focusing on the processes instead of activity detail that is often out of context.  The process-based approach also focuses first on the output volume and specifically how product and service volume is developed throughout the network of direct and indirect processes unique to a particular business and organisation.  With an understanding of this volume of output, the focus then shifts to the resources and specifically the resource pools (the labour and non-labour capacity centers that when combined for the sub-processes that result in a service or product).  The final step then is to integrate these sections into a process model that shows clear linkage to the consumption of resources to product a unit of output.  The powerful cost engine of the software calculates these relationships and can enable the resulting variables to be used in a planning model (migration of the historical model to a planning model) to be used as a decision support tool for scenarios and “what-if” analysis.  Thus, the organisation now has a reasonably priced tool that provides enterprise cost visibility as well as the variables that impact enterprise costs; for instance, it can alter variables such as cycle time and productivity and analyse the impacts of these conceivable changes on resources, processes, and/or outputs.

From a methodology perspective, the model builder now has the freedom to completely design a model almost without limitations that mimics the business and specific issues at hand.   And, finally the executive can tailor reports and information that is needed to develop and measure strategy, track performance improvement initiatives, or monitor key operational metrics.

Accurate Process Modelling

Multiple views of output costs are important to organisations — output cost components including direct customer costs, shared service support costs and sustaining overhead costs should be clearly understood in order to result in performance understanding and improvement. 

Understand the volume of outputs and the capacity of resources

The ability to use both pull (consumption) and push (allocation) drivers simultaneously in the same structural layer, without limitations on the numbers of layers (traditional ABC models are limited to resources, activities and cost objects) enables true business modelling because a "wider" model captures complexity of processes but enables clarity of what is going on.  These are ideal for modelling all types of processes and value chains to obtain true business intelligence—including customer profitability, product profitability, supply chain management, inventory systems modelling, and value chain modelling.

Ability to Drill Down to Sub-Processes and Isolate Performance Drivers

The ability to drill down into detail only when necessary allows a business model to accommodate the needs of analysts, middle line business managers, and executives — an optimal model has all of the important detail but shows metrics that matter, multiple views of costs, and impact of volume changes (i.e., attrition, losses) on organisational resources and processes. 

Process Metrics Highlight Key Organisational Performance Issues

CostPerform business models help to distill the metrics that matter by understanding the processes and the flow of product/service outputs through the processes.  Through iterative development of the model, the process issues that impact cost and efficiencies become visibility.  The organisation can then monitor, measures, or develop improve strategies around these key business drivers.

Faster Models—No Activity Dictionaries or Detailed Time Surveys

Traditional ABC models and approaches took months, and either had little business intelligence or could not be communicated in a way that was useful for performance improvement.  CostPerform models are faster because:

Planning and Capacity Models

Traditional ABC models could never deliver on the need of organisations for "What-If" Scenario Analyses (the ability to test the impact of output changes on resources and processes).  Their calculation engines could not calculate backwards or perform consumption-based modelling.  CostPerform models can automatically calculate consumption drivers based on interrelationships between capacity and output volume.  Thus, it offers more reliable business intelligence because it can: