Cost Management: Advantages of Today’s Cost Efficiency Analysis

A very simple and easy to understand definition of cost efficiency is, “The act of saving money by making a product or performing an activity in a better way.” While this definition may seem over simplistic, cost efficiency affects every facet of your business every day. In today’s markets, having an in-depth cost efficiency analysis is the cornerstone for building and implementing an effective cost management solution.

In this most recent economic downturn businesses and organizations used all sorts of cost saving and cost cutting measures. While there were cuts in discretionary spending there were also many staff reductions and reduced spending on information technology. With the economic outlook getting brighter many companies and organizations are starting to focus on their growth again, you need to be ready for this economic recovery to ensure your growth happens in a cost-controlled manner.

The Benefits of Knowing Your Cost Efficiency

Before you swing back into the old ways of doing business ask yourself this question: “Is your company ready to reverse the cost saving measures you may have implemented and still maintain the efficiencies that your cost optimization brought you?”

The best way to reassure yourself that your company is ready for growth is with a cost efficiency analysis. It will guide you through your company’s new growth by providing you an accurate view of all departments, projects, production costs, and show you how managing the costs will benefit your company. You will know when it’s time to increase your staff, make large expenditures in equipment or IT and identify where improvements can be made with economic based business processes.

The Focus Of Cost Efficiency Analysis

Armada Consulting works with a constant commitment to our client’s success, both personally and corporately. We believe our cost efficiency analysis to be one of the most thorough and in-depth in the industry. Armada will measure your organization’s cost efficiency based on sustainable economic profitability by focusing on:

  • Operating Costs – Measure all operating cost down to the instrument and process level.
  • Business Processes – Which processes can we rethink or simplify to eliminate costs? We help you cut costs by eliminating redundant or outdated processes and create more efficient business processes.
  • Cost ReductionMeasure your cost reduction to ensure cost cuts are made strategically and will be sustainable.
  • Risk Management Establish a balanced framework that doesn’t stifle growth, align risk management, strategy, finance and operations to set the organization’s perspective of mitigating risk.

Armada Consulting uses their proven ‘Collaborative Approach’ to ensure your organization’s resources can sustain effective cost management programs. We firmly believe in this economy leadership must find new ways to engage the rest of the company and leverage this information proactively to enable growth while striking the right balance of risk and return.

Why Choose Armada Consulting as Your Cost Efficiency Partner?

Armada Consulting is the leading consulting firm using ‘Collaborative Approach’ in strategic cost management to consistently deliver personal and corporate affluence. Across a wide array of industries and practice areas, Armada has a track record of delivering results to many Fortune 500 corporations throughout the world.

When you recruit Armada Consulting, you are gaining a trusted business adviser with an uncompromising commitment to create a better consulting experience. To learn more about how Armada Consulting can provide you with Cost Efficiency Analysis and Strategic Cost Management Solutions, call Armada at (918) 856-3414 or contact us via email.

Solutions for IT Cost Management

Solutions for IT Cost Management

 

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Business and technology organizations are under continuous pressures to do more with less and IT cost management will help the business organization to control information technology costs. With continued volatility in the economic environment, companies continue to carefully scrutinize IT spending. To respond, CEOs are in need of improved tools to oversee and measure both the costs and consumption of IT resources in alignment with key strategic objectives.

Strategic IT Cost Management

We understand that your company’s expenses are the most controllable part of the profit equation. Armada’s strategic IT cost management team provides not only the insight into the causal drivers of information technology costs, but also establishes a framework to manage demand, prioritize spending, and hold the consumers of technology services accountable for the costs incurred on their behalf. Our approach to IT cost management executes the following objectives:

  • Providing true cost transparency – Based on quantifiable drivers, we create measurable unit costs instead of the total spending.
  • Identify rapid cost takeout opportunities – By either reducing or reallocating IT resources from recurring production to alternate initiatives focused on growth and innovation, we pinpoint the excess.
  • Integrate improved unit cost – Using the information collected from our in-depth unit cost analysis, we bring your improved unit cost(s) into planning, forecasting, and performance management to transform how your organization manages IT operating costs and consumption with credibility and accountability.

IT Cost Management Professionals

Armada has proven experience with several of the world’s premier financial service companies and institutions in IT cost management by improving the costs of organizational technology and operational resources.

Begin the process of improving your organization’s performance and profitability with Strategic IT Cost Management by calling Armada at (918) 856-3414 or contact us via email.

Making Strategic Cost Management Work

 

With Strategic Cost Management being at the forefront of financial organizations and all other industries, we sometimes find organizations that are still not receiving all of the benefits of their Cost Management systems. For these organizations, their challenge remains:

• What to cut
• Where to make those cuts
• Wow much to cut

The Circle of Strategic Cost Management

There are three high-level phases of Strategic Cost Management; the analysis and action phase, prediction and planning, and the measurement/modeling/monitoring phase. As the description implies, your organization should consistently be transitioning from one phase to the next. These high-level activities are dependent upon each other, which means you can’t work through these phases just one time.

Your analysis activities should lead you to action on cost takeout opportunities, and the prediction/planning activities will guide you to the transformation and performance of your organization. With measurement and monitoring activities, you should be looking at providing true cost transparency to your cost drivers, standard units and consumption. The major activities in the Strategic Cost Management Circle are:

  • Analyze and Act – Efficiency improvements, identify excess capacity, root cause analysis, tactical cost reduction
  • Predict & Plan – Demand planning, performance incentives, product redesign, profitability measurement, forward simulation
  • Measure, Model and Monitor – Identify key cost drivers, consumption-based cost assignment, defined standard unit costs

As you can see Strategic Cost Management is much more than cost analysis and financial modeling, rather it is a strategy that provides the information you can act upon in an intelligent and predictive way.

Where Cost Management Can Fail

What can lead Cost Management Programs to fail? It is the belief of Armada Consulting that the information you receive from all the analysis, planning, modeling and predictive intelligence is only as good a the action you take. What we see in many cases is that organizations fail to bridge the gap between the Measurement, Model and Monitoring phase to the Analysis and Act phase. Failure to make that connection is like ‘smelling the char-broiled steak and never getting to taste it’. As mentioned earlier, strategic cost management is ongoing and not a one-shot deal. After you’ve measured, modeled, and monitored, the need to analyze and act again must be executed to complete the circle.

Act Upon Your Information Confidently

Implementing a well-designed strategic cost management system will mirror the organization’s life cycle as defined by its markets, products and services, human resources, and technology resources and help you understand your operations with new clarity. With accurate and valuable information, it is up to you to take intelligent action upon this information. The information is only as valuable as the action you take.

Armada Consulting develops and designs Strategic Cost Management Systems for financial services and other business organizations. To learn more about Armada Consulting and our Strategic Cost Management Programs, call us at (918) 856-3414 or request a consultation.

Cost Management: Strategic Risk Based Profitability

History has the probability of repeating itself over and over. Usually that happens when previous lessons are either forgotten or not learned to begin with. At Armada Consulting, we can see remnants pre-recessionary financial strategies emerging as we enter the post-recessionary period. This is, of course, not widespread, but if your organization or firm hasn’t learned its lessons in risk-based profitability, history is destined to repeat itself.

Avoiding The Repeatable History

This post-recessionary environment will present every organization with both challenges and opportunities. There are just as many opportunities for growth as there was before, but you should not fall back into your old ways of expansion and spending without first considering a risk-based approach.

Many businesses and organizations are realizing that their previous cost cuts were not made strategically and while they helped in the short-term, the benefits of these cuts may not be sustainable. With the low hanging fruit gone, businesses must dig deeper to eliminate unnecessary process costs and continue moving consumption to lower cost channels. Organizations should also make a renewed effort to identify and remove their excess capacity and excess infrastructure they may have acquired during growth years.

This will require a disciplined approach to strategic cost management so that businesses can appropriately react to and adapt to future economic conditions. In other words, businesses, industry, and financial services companies should continue to refine their risk-adjusted performance capabilities. These steps will help them to compete effectively and grow in the new economy.

Strong Leaders Needed

It will take strong and committed leadership within an organization to keep from repeating the recent history. The concept of managing an organization based on a risk-adjusted performance strategy will need to be embraced in every office and department within your organization. If this concept is fragmented across departments and products it will not be successful.

Leadership must find new ways to engage the rest of the company and leverage this strategy and information proactively. This will enable growth while bringing about the right balance of risk and return. Strategy, finance, risk management, and operations must all come into alignment to change the organization’s perspective. Implementing risk-adjusted profitability is the financial exercise necessary in order to improve how effectively a company’s management can execute the day-to-day operations. Functioning this way will keep organizational focus on economic profitability rather than accounting profitability.

Strategic Cost Management & Risk Based Management

Now is the time for business organizations to take a proactive approach to structuring their businesses for economic profitability. Your organization’s success in the future will be determined by your ability to avoid previous historic mistakes.

Armada Consulting is a Strategic Cost Management firm. To learn more about how Armada Consulting can help your organization with risk-based management and strategic cost management, call Armada at (918) 856-3414 or contact us via email.

Cost Management Plan: How to Increase Your Business Profits

Many business executives feel that today’s economic environment is not conducive to increasing business profits. Of course that would be the organizations not doing so well, but there are in fact many organizations that indeed are making good profits today. Those that are making good profits are probably using a strategic cost management System.

To better understand how you can increase your profits an organization’s executives need to understand only one thing, “Costs are the most controllable part of the profit equation.” This of course sounds too simple but it is often overlooked. To take it a step further you have to dig a little deeper to truly understand what your ‘direct and indirect costs’ are so you can control them and increase your business profits.

Slash and Burn Equals Profits

Slash and burn might have been the way to maintain profits in the old days, but today’s economics and accounting have matured and offer much more effective ways to maintain your organizations economic profitability. Cost management used to be about locating where an organization’s most expensive costs were and trimming that function back. In fact it was the ‘old ways’ that helped bring about the economic shortfall we have seen in recent years. The smart way to increase business profits and manage costs is with Strategic Cost Management.

Strategic Cost Management Equals Profits

What in the world is Strategic Cost Management? It’s the process of integrating and aligning cost management within the organization’s strategic plan in order to ensure that cost management is part of a company’s operating procedures. A strategic cost management plan should be developed so that it will mirror the company’s life cycle as defined by the company’s services/products, markets, human resources and technologies. It’s a cost management plan that ensures your organization can maintain and sustain its economic profitability in any kind of market or economy.

A strategic cost management plan is an in-depth solution that brings transparency to your costs for efficient business processes, departments, products and IT services. It also brings cost management out of the accounting department and upfront to the executive level. Once a strategic cost management Plan is in place organization executives and managers can make timely and effective cost management decisions based on facts and data instead of just looking at an enormous number on a P&L statement. A good strategic cost management system will have economic modeling built-in so that organizations will know what the outcome of a cost or spend measure will produce. A strategic cost management system can also show you who your most profitable and costly customers are and why they are profitable or costly.

Economic Profitability With Armada Consulting

With a strategic cost management plan entrenched and a culture of cost management established, corporate decisions can be made confidently and decisively. This in turn leads to ‘controlling costs’ while sustaining economic profitability. Armada Consulting utilizes it’s 20 years of experience and the latest technologies to design and develop strategic cost management systems.

To learn how Armada Consulting can help your organization increase it profits and sustain it’s economic profitability in any market with strategic cost management call Armada at (918) 856-3414 or contact us via email.