Home grown cost calculation solutions are most likely built in Excel. There are many reasons for that but one of them is that everyone has access to the Excel. Another reason is that the super users of a calculation tool are quite familiar with Excel. That is also one the drawbacks of using Excel. It becomes their solution and not an enterprise solution. It has also limited to no reporting functionalities, security issues and last but not least hard to maintain.
The more advanced enthusiast will build their own costing solution in a database. Good approach however hard to maintain once that person has left. Therefore, both Excel and self developed database model will have a hard time to go mainstream. For reasons of continuity, reliability, functionality, user friendliness etc. many organizations use of the shelf solutions.
Best of Breed solutions
In this category you will find vendors that have specialized solutions for costing, profitability analysis, transfer pricing, sustainability reporting etc. Some of them are on the market for decades like CostPerform whereas others have just recently been launched like BirdsEye CostReport. Other products are the successor of a former solution. Both SAS PCM and MyABCM have their roots in Oros.
Best of breed solutions in general are relatively agile and therefore connect well with businesspeople. In general, they are rich in functionality and do what they are good at. The solutions in this category are hybrid and therefore safe bets. Some of them focus more on simplicity and user interaction whereas others focus more on data integration. Some are part of a bigger EPM suite whereas others are standalone solutions.
The risk of more mature hybrid solutions is that they become more complex and technology wise less up to date. On the other hand, they are rich in functionality. Newcomers are relatively light in functionality but easier to use and built on the latest technological platform. One is not better than the other, it is a matter of choice.
ERP based solutions
All the big ERP vendors have a cost & profitability solution. In the basis they can do the same as the best of breed solutions. However, there are a few differences. The first one is, or should be, that the solution is more integrated with the other ERP and EPM solution of the vendor. Check with the ERP vendor if that is the case. SAP PaPM is a relatively new solution and has been designed to work optimal on their new SAP S/4 HANA platform. That is especially beneficial if your model uses lots of ERP data. Then it helps if the data is stored in the same database environment. Another advantage of an ERP based cost & profitability solution, granular details to the transaction level without having to copy/replicate the massive data. That means that the newer ERP based solutions are more powerful and more insightful.
On the flipside there is always the risk that the solution does not get the proper attention of the ERP vendor. Therefore, it is important to work with qualified implementation partners that are specialized in these ERP solutions. Vendors of best of breed solutions often do the implementation (partially) themselves.
Industry specific solutions
Industry specific cost & profitability solutions have the benefit that they have predefined industry templates and use the specific terminology of that industry. They also have the advantage of being able to quickly adopt a trend or requirement within the industry.
The risk is that the functionality of these, insider, solutions have limited functionality and could lag trends that happen in other industries. But the main challenge is that the information is too much a dataset of its own and harder to integrate with other EPM solutions and/or other usages like transfer pricing.
A selection of vendors
Below is a selection of vendors offering cost & profitability solutions. The list does not pretend to be complete. If you know any vendors please let me know at frank.van.vliet@partner4epm.com
Best of Breed solutions
CostReport
CostPerform
MyABCM
CadDo
SAS PCM
Onestream
ERP based solutions
SAP PaPM
Oracle PCM
Tagetik
Industry or scope specific
HC: Prodacapo, Costflex
Manufacturing: Easycost, LeanCost, 3C, K3syspro
Education: Pilbara
IT costing: CostLens, ClearCost, Apptio
