Deloitte’s Center for Controllership and IMA report insights from our global survey

Cost and profitability management is at the heart of business decision-making and effective strategy. There are many factors to consider for effective profitability management, including selecting an optimal costing model and technologies to utilize for reporting and analytics. To better understand the current landscape of cost and profitability management methods and tools, we set out to understand the following questions: What cost data is being used, and is it providing a competitive edge? How are organizations transforming their data and reporting to benefit from refined cost and profitability models? How are new tools used to generate more insightful reporting and analyses?

To answer these questions, Deloitte’s Center for Controllership™ and the IMA® (Institute of Management Accountants) conducted a global survey of more than 440 finance and accounting managers, directors, controllers, and CFOs.

The global survey aimed to read the pulse of finance and accounting functions’ use of cost methods and basis for allocations, effectiveness of profitability measures to evaluate operating performance, and the use of emerging technologies for performance reporting and analyses.

Cost and allocation methods

The methods used to assign costs to products and services are at the core of the cost and profitability management process. As part of our global survey, it was important to identify the costing methods organizations use and why specific costing methods may be preferred over others. To better understand various costing methods—including standard costing, actual costing, and project costing—we looked at common costing methods, cost allocation practices, and the objectives and challenges when designing and allocating costs for the enterprise.

Transforming cost data into business insights

Which products and services are making money? Which customer relationships are truly profitable? Which levers can be pulled to increase profitability? The cost-to-serve (CTS) reporting approach brings together operational and financial data to generate business insights and identify opportunities to improve profitability measures. CTS analysis is a powerful tool for businesses looking to optimize their operations, improve efficiency, and enhance profitability. However, most responding companies do not leverage CTS analysis today. Our survey looked at some of the objectives of CTS for organizations, the role and importance of cost information and data, and the barriers organizations face obtaining meaningful data and leveraging CTS analysis to inform decisions.

Technology’s impact on costing decisions

Having access to the right data for strategic decision-making is critical to be competitive in the marketplace, and technology is at the core of data and information access. Our survey explored the impact and benefits of technology on data and performance modeling tools—enabling visibility into revenue, costs, and profit margins at a granular level and helping identify areas for strategic growth. In addition to performance modeling tools, our survey explored some of the anticipated benefits of emerging technology on the horizon.

How will emerging technologies, such as artificial intelligence (AI), data analytics, and predictive analytics tools, affect cost accounting and profitability management? We look at some of the anticipated next-gen technologies that may significantly improve the performance modeling process and disrupt traditional cost accounting and profitability analysis practices.

Key insights and considerations

Explore more insights from IMA® (Institute of Management Accountants) and Deloitte’s Center for Controllership™

We invite corporate controllers and other accounting professionals to explore our co-published research covering a myriad of topics that address the evolution of the controllership function in this fast-paced, complex, and increasingly digital age.

• Next-gen financial controllership
• The Future of Financial Controllership
  
• The Future of Automation in Finance
  
• Elevating the Role of the Controller