A cost-amortization tool simply takes a known budget and distributes it among a known set of products and services. The budget and plan (catalog with sales volumes) are inputs, and rates are the output.

A planning tool is used to develop the budget submission, as well as to calculate the cost of products and services (in total for the budget) and rates (cost/unit). It has capabilities not found in simple cost-amortization tools:

• It forecasts the costs of deliverables (projects and SLAs) in total, as well as rates; these costs include reimbursables (pass-throughs) that don't go into rates.

• It has the resolution to portray specific projects and SLAs, each with unique mixes of project-team members (prime and subs).

  This is critical to support the "What do you want to not buy?" strategy and to managing expectations.

• It amortizes indirect ("fixed") costs without knowing in advance the actual budget (the base), and still ensures that they're fully recouped.

• It calculates compensation costs without knowing in advance how much work there will be, and hence what actual headcount (including staff-augmentation contractors) will be needed.

  It produces labor rates that remains consistent throughout the year, even if new projects require additional contractors.

• It applies compensation costs to all deliverables -- base case and speculative -- consistently, such that the cost of one project does not change when another project is approved and uses up the last of the employees, necessitating staff-augmentation contractors or vendor services (at a higher cost).

  This takes away any incentive for clients to meddle in whom you assign to their projects, and there's no change in the cost of a project if it's discussed early in the budget process or late (after approved projects have absorbed all available employees).

• It generates an operating plan complete with forecasted demand, staffing requirements, project and service-delivery team accountabilities, and vendor costs.

• It includes tools and reports for developing the plan, including reports that help executives scrutinize managers' inputs for frugality.

• It includes reports that help present and negotiate the budget, including filters and summaries by client business unit (at various levels of their organizational structure), overseers (such as committees and other approvers), enterprise strategy, high-level product sets, and various scenarios (base case through optimistic).

  Clients can view different scenarios as they analyze what they will and won't "buy."

• It produces management metrics, and uploads the budget into tracking systems to compare actual results to the plan.

• It's designed to engage the leadership team in a participative process (not just for use by cost analysts).

Independent research report: IT as a "Business Within a Business"
Vision, Financial Processes, and Systems
(the difference between planning tools and actuals accounting systems, and analysis of planning software products)

White paper: Where To Build Your Product/Service Cost Model
within your planning tool or your actuals-tracking systems?

FullCost software functionality....

How FullCost compares to its competition....