Thursday, April 26, 2018

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Cost Analysis

Our methodology provides a complete and detailed picture of all the aspects and dimensions of a business that have a bearing on resource consumption or cost. By explicitly and completely describing the genetics of the business in five (what, where, who, which, when) dimensions, we provide a foundational platform to estimate resource costs of a business model (typically a future state model).

The resource consumption/estimation data is directly coupled to each of the five dimensions and electronically stored, retrieved and analyzed. This provides a comprehensive estimate of the cost of doing business. A multi-dimensional representation can provide a wealth of data to support business decisions.

Traditional costing methods have generally provided high-level resource estimates and largely ignored dimensions other than activity tracking. For the first time, metrics can be associated with each of the five business dimensions because each has a direct bearing on cost. The major added benefit here is we can conduct costing analysis at a macro and micro level. Typically the more detailed the assessment, the more accurately activity costs will be estimated.

Here are all the 5 dimension (What, Where, Which, When & Where) and how resource costs can be associated to each:

  1. What – Addresses the cost of actually doing the work. Further we can also estimate the cost of recurring activities – in other words, how frequently do we perform the same activities in a given business domain.
  2. Who –is responsible for doing each of the activities. It is simply a matter of attaching pay-scale data to each one on the Who model. This will give us specific insights as to the actual cost of performing business activities.
  3. Where – the cost of performing business activities in different geographies may greatly influence business costs.
  4. When – the frequency of performing tasks will influence cost. Decision may be made to perform certain activities less or more frequently, depending on how this influences cost.
  5. Which – the cost of gathering, storing, securing and maintaining information is often one of the most underestimated costs.

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