Welcome to the Qubix Academy Profitability and Cost Management Cloud Service Deep Dive
The objectives of this course are:
- To provide an overview of PCMCS, its components and any common terminology it uses
- To provide an understanding of what is required to implement and manage PCMCS applications
- To delve into the implementation of a PCMCS application from start to finish for an example case study
So, let's start with the overview of PCMCS.
PCMCS is a cost modelling tool. The first step in minimising costs is to understand where they came from. All businesses will have some obvious direct costs sitting on the surface, like Materials or Labour and it will probably be fairly easy to assign these to cost centres. However, there will inevitably be a number of hidden indirect costs which may not be so easy to assign without a well-defined and managed model.
Once all of the cost centres in the business have been identified, they must be analysed to determine what is the key driver behind their cost. For example, a Human Resources department will provide services to all other departments in the business. The cost of running the HR department could be allocated to each of the departments it serves based on the number of employees in each department. This is a simple model, but it is easily extended if new departments begin using HR's services. PCMCS allows the design and creation of a model containing all of this logic in one application.
The first element required is obviously the dimensions, such as the cost centres or accounts previously identified. These are deployed to an internal Essbase database. Those dimensions can then be used to define Points of View, Rule Sets and Rules, which form the core business logic of the cost allocations model. Next, cost and driver data can be loaded into the dimensions of the Essbase database and the model can be run to calculate the results. Finally, the output of the model can be analysed with reporting tools. Each PCMCS application contains everything needed to design and build all of these elements, as we'll see in the case study later.