The ABC

What is the ABC? Is it something concerning EPM projects or are we kidding? If you never heard about ABC, here one of the best definition. Activity-Based Costing (ABC) is a method of allocating costs to products and services. It is generally used as a tool for planning and control. It was developed as an approach to address problems associated with traditional cost management systems, that tend to have the inability to accurately determine actual production and service costs, or provide useful information for operating decisions. With these defiencies managers can be exposed to making decisions based on inaccurate data. The higher exposure is for companies with multiple products or services. ABC allows managers to attribute costs to activities and products more accurately than traditional cost accounting methods. The activities responsible for the costs can be identified and passed on to users only when the product or service uses the activity. Some of the advantages ABC offers is an improved means of identifying high overhead costs per unit and finding ways to reduce the costs. The way it works is first major activities are identified in the process system. Next cost pools are created for groups of activities that can be allocated together. Following this cost drivers are identified. The number of cost drivers used vary depending on the balance between accuracy and complexity. After determining the cost drivers, rates are calculated. The rates are then applied to the respective cost drivers for each product or service that is being considered. The overhead cost per unit is then derived by dividing the total cost for the product by the total product units.

Activity-Based Costing makes a lot of sense for companies with multiple products or services who are suffering from inaccurate costing information and need to know which products are really winners and which are losers. For these companies the effort required to successfully implement ABC is worth the time and resources. ABC can identify high overhead costs per unit and find ways to reduce the costs, avoid decreases in head counts due to inaccurate allocation of costs, and measure profitability with higher accuracy than traditional costing that uses direct-labor hours as the only cost driver.

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What's the problem? Why did it happen? and What will be done to prevent it? EPM root Analysis

EPM software not only are the best product to build your budget or your consolidated Financial statement but, more often, are the best instruments in our hands to understand why things happens.

Each big company has a detailed chart of account and each account hide many informations; not always our customer are able to understand Why things happens.
Even if is not properly the case, root analysis can be the best solution in that cases.

Root cause analysis is an approach for identifying the underlying causes of why an incident occurred so that the most effective solutions can be identified and implemented.  It's typically used when something goes badly, but can also be used when something goes well.
The newest and well known EPM softwares are nowadays able to apply a root analysis and CFO and stakeholders can sleep peacefully; by analyzing deeply our database, asking to aour collegue, answering to same question can help to understand our business, especially in the last years.

Information is all we need to understand the business and the business's problems and more informations we have, more problems we can solve. And once the problem is found, we can start thinking how to prevent it!  
To much expenses? Few revenues? Some products are badly sold?
Starting analyzing unaggregated level of data and asking what and why people "create" business data is the aim of all successfull companies.