Etico partnered with a major client to enhance their financial management processes through the implementation of an Activity-Based Costing (ABC) initiative. This case study highlights how Etico utilized data capture, data management, and data analytics to achieve the client’s financial management goals.
Objectives
- Standardize Activities: Establish a consistent and standardized set of activities across the client’s organization.
- Improve Cost Visibility: Enhance the visibility of costs associated with various activities and programs.
- Support Decision-Making: Enable data-driven decision-making through accurate and detailed financial insights.
- Streamline Data Collection: Reduce stakeholder fatigue and streamline the data collection process.
Data Capture
- Activity Identification: Etico’s team worked closely with the client’s stakeholders to identify and define a comprehensive list of standard activities. This involved numerous consultations to ensure all relevant activities were captured.
- Cost Allocation Tools: Designed both an Excel-based workbook and Power App data capture tool to facilitate the allocation of both salary and non-salary expenditures to activities. These tools were used by cost center managers for data entry.
Data Management
- Validated Activity List: The final list of activities was validated and approved by all cost centers across the organization, reducing the previous complexity of managing over 1,200 SAP financial codes and 300+ activities.
- Integrated Systems: Plans were made to integrate the standard set of activities into the client’s Financial and Management system.
- Workbooks and Dashboards: Etico developed workbooks to allocate costs and dashboards to visualize these allocations, enabling easier and more transparent management of financial data for the client.
- Data Collection: Cost drivers were identified to support the allocation of activity costs to various programs and services. This included both percentage-based and default metrics.
Data Analytics/Insights
- Informed Decisions: The ABC initiative provided valuable insights into the costs associated with each activity, helping the client’s senior management make more informed financial decisions.
- Resource Allocation: Enabled better planning and resource allocation by categorizing activities as discretionary or non-discretionary and as Run, Grow, or Transform (RGT).
Conclusion
- Etico’s implementation of the ABC initiative has significantly transformed the client’s approach to financial management. By standardizing activities, improving cost visibility, and leveraging data analytics, Etico has laid a strong foundation for enhanced decision-making and resource allocation within the client’s organization.
Key Takeaways:
- Standardized Processes: Establishing a standard set of activities is crucial for consistent financial management.
- Stakeholder Engagement: Continuous engagement and feedback from stakeholders are vital for the success of such initiatives.
- Data-Driven Decisions: Accurate data capture, management, and analysis are essential for informed decision-making and efficient resource allocation.
