Software designed by cost & performance management experts
Find the answers with CostPerform
Complex issues, challenging calculations, and outdated and unclear cost management software causes today’s organizations sleepless nights. For instance: how do you find out what the exact cost of producing and distributing microchips is? Or how much it costs to keep an aircraft carrier in a state of readiness? With ordinary software, you won’t find the correct answers to those questions, but with CostPerform you will.
Here’s how. Simply put, the cost structure of most organizations consists of four layers. From top to bottom they are: costs, resources, activities, and products and/or services. CostPerform’s software allows you to:
- Visualize those layers
- Use them as building blocks to represent the current or future cost structure of your organization.
When you’ve created the structure, you can assign ‘objects’ (as we call them), to each block. For instance, a hospital has objects such as salaries and depreciation costs, nurses and MRI’s as resources, heart surgery and blood transfusions as activities and bypass operations and hip replacements as products.
Once the objects are established, the next step is to find the cause-and-effect relationships between the objects and to record and visualize them into a cost model. This model gives you detailed – and thus extremely valuable – insights into the often very complex cost and capacity flows of your organization. With those insights, you can find answers to any cost and performance question, resulting in the knowledge of where to make adjustments to improve business performance.
But CostPerform doesn’t stop there. Besides being fully customizable to your organizations’ needs, our software is also capable of creating future cost performance scenarios with intelligent simulations, giving you more valuable insights. For instance, when considering whether to introduce a new product or service, you might ask: how will this affect costs, workloads and your profits? CostPerform delivers the answers.
The power of CostPerform: a practical example
A microchip manufacturer has a $500 million budget to produce 10 million chips. At years-end, bookkeeping signals a budget overrun of 20%: the actual costs were $600 million but they produced 11 million chips. As a CFO, you can just accept this and find someone or something to blame. A more professional approach would be to use CostPerform to do a standard variance analysis. With the help of working standards (batch sizes, time to produce, recipes et cetera), the manufacturer can calculate its allowed costs for the 11 million chips produced.
Besides, thanks to recorded data on time spent and material used, he can better identify the root cause of the 20% overrun, resulting in (positive and negative) price, volume, occupation and efficiency results. A CFO can use this detailed performance information to improve profit, rather than blaming people for overrunning budget and doing nothing about it.