- Organizational operating model which defines every group's line of business; who is the "prime contractor" and who are the "subcontractors" for every project and service; and who sells what support services to whom.
Even without any numbers, this alone is a powerful contributor to cross-boundary teamwork and individual accountabiliities.
- Annual budget which forecasts the full cost of the projects and services you propose to sell (as well as the traditional budget for expense code by manager) to link budget to expected deliverables -- a true investment-based budget.
Budget decisions can be based on the needs of the business and investment opportunities at hand, not arbitrary benchmarks like last year's budget or a percentage of corporate revenues.
Budget cuts are linked to deliverables which the enterprise is willing to forgo.
Expectations match resources since the budget describes exactly which deliverables are funded.
Cost allocations are fair since they're based on consumption.
Why budget for products and services (investment-based budgeting), not just what you plan to spend?....
- Business plan that explains how the proposed budget will be delivered to ensure reliable delivery and sustainability.
Budgets are realistic since they're based on the resources it will take to fulfill the commitments documented in the plan.
FAQ: Why annual business planning and budgeting should be an integrated process....
- Catalog of products and services, with rates based on a transparent, state-of-the-art cost model.
The catalog includes both external and internal products/services. (If you already have a service catalog, it's revalidated and refined.)
Free library on service catalogs....
Rates are used for estimating project costs, total cost of ownership (TCO) and ROI analysis, chargebacks (if any), outsourcing comparisons and benchmarking, and product profitability analysis.
Since rates are drawn from the same data, they're fully consistent with the budget. No separate analysis is needed, and rates are automatically recalculated when the budget is changed.
FAQ: Why budgeting and rate setting should be an integrated process....
- Benchmarks and cost-management reports to drive dashboards and tracking systems.
One example is product-line profitability with a comprehensive view of costs, including fair share of all enterprise indirect costs.
Pro forma profit/loss statements are produced for managers, product lines, business units, and other views.
