Cost and Profitability Management
Understand and Demonstrate the Value of Business Enabling Functions - The group’s objective is to assist member organizations to understand and quantify the value business support functions bring to organizations. A principle-based framework has been designed for functions who want to understand how internal stakeholders view value. The framework has 9 value principles which enable member organizations to consistently define the value business support functions bring to an organization. This framework will thereby allow cost and value trade-offs to be quantified.
Defining Value for Services – Value Analysis is an optimization methodology of aligning resources (cost) in proportion to the relative importance of Customer Functional Requirements. Value Analysis historically has been applied to manufacturing. However, it is equally effective for Service Industries and general process improvement. Services can present nuanced challenges in quantifying the processes performed and the importance to the customer. The group will continue to expand pilots of the value for services and associated costs.
Strategic Cost and Profitability Value Management Roadmap - CAM-I has contributed significantly to the field of Cost, Process and Performance Management. This group is using existing the CAM-I body of knowledge to create a maturity roadmap. By using the roadmap, member organizations can benchmark their position in terms of maturity and what next steps to take to improve their organization.
Plans are also being formulated to add data analytics, modeling and artificial intelligence.
Other areas include work developing the following guidebooks -
- A Primer on Value Analysis
- A Primer on application of Target Costing
Integrated Risk and Value Management Special Interest Group
To be in business is to face a constant stream of potential risks that can disrupt daily activity and put the future of the organization in jeopardy. However, what if the organization were able to assess their potential risks for enterprise value? Robust organizations know how to take on measured risks that boost returns to stakeholders. If handled properly, it may even be possible to increase stakeholders’ perceived value when taking on incremental risk. The goal of the Integrated Risk and Value Management interest group at CAM-I is to explore this risk-value continuum, modifying existing thought and proactively to enable organizations to maximize value by optimizing risk.
Performance Management Interest Group
The group is focused on these Phase III initiatives:
Key Performance Management Framework (PMF) Deliverables:
- PMF Awareness Training for members and guests at quarterly meetings
- PMF Implementation Workshop facilitated in-house for member companies
- PMF Instructor Certification Process and Program (“Train-The-Trainer”)
- Updated PMF Executive Overview (joint publication with CPA Canada) with a more graphical explanation of the methodology
- On-line Organizational Readiness Assessment tools and analytics
- ▪ Guidance on integrating PMF concepts with other IG’s methodologies
Current research and development:
- Providing high level guidance on improving organizational readiness.
- Packaging PMF instructor materials into a practical Implementation Guidebook.
- Documenting business success stories in the use of the Framework.
- Developing an approach to providing more detailed guidance on specific improvement techniques and accessing associated reference materials.
Forecasting for Procurement of Complex Acquisition and Support Projects Interest Group
(Using Defence procurement as a case study)
Many organisations have large budgets to procure new capabilities and support existing capabilities. The lifespan of these acquisition/build and support/run projects can run from a single year to 25 years and beyond in some cases.
Often these projects have a reputation for cost and time overruns, and variability of forecasting that present a major challenge to the Finance function in trying to manage the overall budget in any given financial time period.
The finance function has to apply its own professional judgement to try and ensure the summation of these projects does not result in a sub-optimal utilisation of the budget so that taxpayers/shareholders money is not wasted.
The aim of this project is to, using as a case study the MOD project, leverage knowledge across the defence sector end to end, including industry partners, international defence organisations and bodies that review Defence budgets, to identify common root cause problems. The intention is to also leverage the wider CAM-I network to highlight common issues and learning to aid the overall objective of improving the stability and quality of financial management and forecasting for such projects.
The interest group will then move on to proposing solutions by identifying skills, knowledge, tools and techniques that could be applied to eliminate unnecessary barriers to effective financial management. Some of the solutions could be “quick wins” exploiting better communication of existing knowledge and information end to end through looking at the problems form different perspectives. The outcome should be to improve the quality of financial management, provide better stability to forecasting, and that we maximise the capacity and capability available to our Armed Forces in a timely manner from the budget available.
CAM-I Higher Education Center of Excellence in Cost Management
Higher Education internationally is facing a daunting future with reductions in Government funding, competition for students from alternative education pathways and push back from families on the actual value of Higher Education. This is putting financial pressure on institutions and to date a lot of focus has been devoted to the revenue side of the equation, but not a lot on cost management. Universities are complex and dynamic organizations and the education environment today is changing rapidly. Financial sustainability has never been more critical. Traditionally driven more by mission-based values, university leadership must understand the impact of their decisions on the bottom line to move their organizations forward sustainably while also remaining true to their mission.
The mission of the CAM-I CoE will be to explore, and seek to resolve, some of the more intractable questions across the Higher Education space about Cost Management.
The CoE will allow institutions to collaboratively work together to identify and share best practice, develop standards, learn about the wide-range of CAM-I intellectual property including Cost Management, Integrated Risk and Value Management, Performance Management, Business Intelligence, Closed Loop Planning and Budgeting etc. As it evolves, CAM-I (CoE) will be seeking to expand its work with experienced Higher Education executives.
Their experience and expertise will contribute to discussions, and papers, that will further enhance the international knowledge base. The combined outcomes will assist member organizations to either start their journey in cost management, data analytics and operational planning, or further enhance the power of their current systems.