| Excerpt from www.NDMA.COM, © 2024 N. Dean Meyer and Associates Inc.
Analysis: Buy Versus Make
why it's better to buy a package than develop your own spreadsheets
by N. Dean Meyer
You've already got a budget process that works, and some internally-developed tools to support it. Why buy a package that does the same thing? Here is a handful of important reasons:
1. Safety.NDMA's FullCost software and planning process are both fully documented, in great detail. You're not dependent on one or two staff to sustain a critical process.
2. Quality.FullCost incorporates many proprietary algorithms, the result of extensive research and practical experience, and produces far more accurate calculations. Examples include: Algorithm to amortize indirect costs without creating circularity (A sells to B, who sells to C, who sells to A) and without resorting to treating everything as overhead (gross distortions). Algorithm to amortize "fixed" costs without knowing exact business volumes. Algorithm to forecast headcount (and the mix of staff/contractors) as an outcome of the model, not an input, building staffing requirements on business demand (not history). Mechanism to link internal "prime contractors" and sub-contractors to calculate the total cost of projects/services. As new features and algorithms are developed based on our work with other organizations, you benefit without having to go through the learning curve yourself.
3. Staff time.The well-documented, step-by-step process makes it easy for managers to plan their businesses. An extensive set of data entry and maintenance tools saves managers time developing their budgets. An extensive set of data management and reporting tools saves financial staff time analyzing the data, formatting the budget, and calculating rates. Enhancements and software bugs (if any) are our responsibility, not yours. This frees your financial staff for more strategic things, like helping managers plan their businesses.
4. Cost.In the long run, it's far cheaper to share the ongoing support and development costs with others than to do everything for yourself.
5. Speed.If you're ready to take your operational planning, budgeting, and rate-setting processes to the next level, the tools and process are ready to go. There's no need to postpone the benefits while you're discovering what's needed on your own.
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