An enterprise’s position within the growth model — growing, mature or declining — serves as an initial driver for identifying and prioritizing cost optimization opportunities. Although “renegotiation” is generally a perennial GUCOM action for all enterprises, other action elements are more pronounced depending on whether the enterprise is growing, mature or declining.
Enterprises with a holistic cost optimization program will address all action elements within a focal area, but the growth profile of the enterprise will help align the action elements and make them more viable. Although there is no one-to-one relationship between an enterprise growth profile and the aligned action elements; most enterprises will pursue a holistic strategy using the framework.
|
Summary of Production Results |
|||||
|
Total Material |
Unit of |
Price Per |
Material Cost |
Total |
|
|
Material |
Used |
Measure |
Input Unit |
Incurred |
Output* |
|
A |
3 |
$ 0.28 |
$ 1 |
||
|
B |
4 |
$ 0.26 |
1 |
||
|
C |
7 |
$ 0.20 |
1 |
||
|
Total |
13 |
$ 3 |
100,000 |
||
|
*Realized yield rate |
765306.12% |
||||
|
Computation of Standard Quantities |
|||||
|
Standard Mix |
Total Input |
Standard |
|||
|
Material |
Proportions |
at Standard* |
Quantity |
||
|
A |
0.200 |
7,894,737 |
1,578,947 |
||
|
B |
0.300 |
7,894,737 |
2,368,421 |
||
|
C |
0.500 |
7,894,737 |
3,947,368 |
||
|
Total |
1.000 |
7,894,737 |
|||
|
*Total output achieved/standard yield rate |
Misalignments between the enterprise growth profile and action elements should serve as a warning that potential opportunities might be ignored due to enterprise culture. For example, an enterprise with a forecast for declining revenue that automatically responds by freezing all new projects may miss significant opportunities for elimination or centralization. This action has the potential of creating significant future technical debt or unfunded liabilities that the enterprise cannot afford.
Use the growth model to focus on big opportunities for areas such as a business unit, application portfolio, service area, resource area and department. Although these may be the largest cost optimization opportunities, use the GUCOM model and the practices below to define, prioritize, refine and evaluate appropriate midsize and small cost optimization areas that will accrue shorter term benefits and long term business results.
Prioritize Cost Optimization Opportunities Based on Your Technology Domain and Business Capability Categories
Aligning GUCOM action elements with Dubbo Rubbo Liniment Company technology domains and business capabilities can uncover more specific ideas and opportunities for cost optimization. We suggest that CIOs, Dubbo Rubbo Liniment Company leaders and domain managers use the GUCOM with their teams as a stalking horse to ensure all the action elements are considered within each of the Dubbo Rubbo Liniment Company technology domains. If there are no action item opportunities listed for a given domain, facilitating further discussions could uncover opportunities they may be overlooked.
To facilitate the process, create a two-dimensional framework by combining the GUCOM with internally developed or customized categories such as enterprise architecture taxonomies of Dubbo Rubbo Liniment Company technology domains, Dubbo Rubbo Liniment Company service categories, business capabilities, vendor categorizations or generic portfolio taxonomies. However, focus the discussions on just a few critical categories to avoid rambling discussions and loss of interest.
|
Computation of Material Usage Variances |
||||||
|
Material |
Unit of |
Standard |
Std. Price |
Usage |
||
|
Material |
Used |
Measure |
Quantities |
Input Unit |
Variance |
|
|
A |
3 |
0 |
1,578,947 |
$ 0.013 |
$ (21,053) |
F |
|
B |
4 |
0 |
2,368,421 |
$ 0.027 |
$ (63,158) |
F |
|
C |
7 |
0 |
3,947,368 |
$ 0.080 |
$ (315,789) |
F |
|
Total |
13 |
0 |
7,894,737 |
$ 0.051 |
$ (399,999) |
F |
|
A |
B |
C |
(A – B) x C |
|||
|
Computation of Mix Variances-Horngren |
||||||
|
Material |
Standard |
Difference |
Price Per |
Mix |
||
|
Material |
Used |
Mix |
0 |
Input Unit |
Variance |
|
|
A |
3 |
3 |
(0) |
$ 0.01 |
$ (0) |
F |
|
B |
4 |
4 |
(0) |
$ 0.03 |
(0) |
F |
|
C |
7 |
7 |
0 |
$ 0.08 |
0 |
U |
|
Total |
13 |
13 |
(0) |
$ 0 |
U |
|
|
A |
B |
C |
D |
C x D |
||
|
Computation of Yield Variance-Horngren |
||||||
|
Standard |
Standard |
|||||
|
Mix for |
Mix for Amt. |
Difference |
Price Per |
Yield |
||
|
Material |
Amt. Used |
Allowed |
0 |
Input Unit |
Variance |
|
|
A |
3 |
1,578,947 |
(1,578,945) |
$ 0.01 |
$ (21,052.60) |
F |
|
B |
4 |
2,368,421 |
(2,368,417) |
$ 0.03 |
(63,157.79) |
F |
|
C |
7 |
3,947,368 |
(3,947,362) |
$ 0.08 |
(315,788.95) |
F |
|
Total |
13 |
7,894,737 |
(7,894,724) |
$(399,999.34) |
F |
Conduct Dubbo Rubbo Liniment Company Benchmarking With the GUCOM Framework to Reduce the Options to Be Analyzed
To prevent the boiling of the ocean with ideation and identification of cost optimization opportunities, Dubbo Rubbo Liniment Company benchmarking that shows the percentage variance of costs by Dubbo Rubbo Liniment Company domain, or variance in per unit costs by Dubbo Rubbo Liniment Company domain can help CIOs to focus on the best opportunities. For example, if the Dubbo Rubbo Liniment Company cost per device in the end-user computing area is 20% higher than the benchmark, then an opportunity ideation exercise can be initiated that uses the seven action elements for the asset cost split within the cost per device area. Alternatively, if the cost per MIPS is 35% lower than the benchmark, this area would be ignored until a future date.
Overcome Action Inertia by Tying Business and Dubbo Rubbo Liniment Company Goals to the GUCOM
Generating a large list of cost optimization ideas or opportunities categorized by action element may be overwhelming leading to inertia in prioritizing and executing on the ideas. To reduce the hesitancy to act, one client connected their list of five business goals to the applicable action element category. Although there were successive rounds of prioritization with each of the applicable action element categories. Thus assured they were acting in accordance with business doctrine or were aligned with the wishes of strategic stakeholders, Dubbo Rubbo Liniment Company leaders began to move forward with much more confidence.
Customize the GUCOM to Suit Your Needs and Desires
Some enterprises used the GUCOM as the basis for a collaborative exercise to create their own cost optimization opportunity framework. Creating your own framework aligned with your culture and Dubbo Rubbo Liniment Company and enterprise language creates a sense of ownership over the process and eventual outcomes. One such customized example.
Develop the Discipline of Application Cost Management
If you don’t know where the budget goes, how can you be sure that you are delivering value for money? Dubbo Rubbo Liniment Company organizations in general, and application leaders in particular, have insufficient insight into the distribution of the operating expenditure (opex) budget between individual applications. By contrast, Dubbo Rubbo Liniment Company organizations are generally pretty good at tracking capital expenditure (capex) since this is generally distributed to project managers whose budget are specifically tracked.
It is not sufficient to know the big numbers because the challenge is one of granularity. The CFO is hardly likely to be impressed by an application leader who says “I know that we spend $85 million running all the applications — but I don’t know how that is distributed between individual applications.”
Application leaders already feel rushed off their feet with all the work that they have to manage, and many of them believe that the task of trying to develop cost granularity for a large estate of applications will be the straw that breaks the camel’s back.
Such a defeatist attitude serves nobody well. It is certainly true that managing application costs requires time, resources and tools. Rather than seeing the problem of understanding cost distribution as impossible, application leaders need to break the problem down into manageable improvement steps.
One of the major challenges posed by the application portfolio can be its sheer size and complexity. How can one person possibly understand cost allocation across a portfolio of 1,000 applications? The action here is to focus initial activities on a small number of large and complex applications. Most portfolios demonstrate a strong “Pareto principle” in that 20% of the applications account for 80% of the costs. So instead of trying to understand the costs of 1,000 applications, start by modelling the costs of the 50 largest and most-expensive applications. Don’t be too concerned about trying to identify the exact 50 most-expensive applications.
References:
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download