Stop Delivering Cost Models. Start Delivering Business Transformation

André Sanseverino, MyABCM

Many cost and profitability projects are technically successful.

The model is designed.

The data is loaded.

The allocations are calculated.

The results are validated.

The reports are delivered.

Then, a few months later, an uncomfortable question emerges:

Is the organization actually making better decisions because of the model?

For consultants, finance leaders, and profitability analytics professionals, this may be one of the most important questions to ask.

In many organizations, the challenge is no longer whether a more accurate cost model can be built. The challenge is whether that model will become part of how the business thinks, makes decisions, and improves performance.

A technically correct cost model has limited value if it is not used. A profitability model may impress stakeholders during the final presentation, but if it is forgotten once everyone returns to their daily routines, it will not transform the business.

The real opportunity is to move beyond delivering cost models and start delivering business transformation.

The cost model is not the destination

For many years, the main goal of costing initiatives was greater accuracy (I remember that some time ago, during a software selection process, one of our customers required a model capable of handling 2 million unique activities running on a monthly basis. They still do).

Organizations wanted better allocation methods, more reliable drivers, greater cost detail, and a clearer understanding of profitability by Product, Customer, Channel, Branch, Region, Service, or Business Unit.

Those goals still matter.

Accuracy matters. Causality matters. Traceability matters.

But they are not enough.

A model should not be judged only by the sophistication of its allocation logic. It should also be judged by the decisions it makes possible.

• Can the organization use the information to improve pricing?

• Can it identify customers with a high cost-to-serve?

• Can it see which products create complexity without generating enough value?

• Can it simulate changes in volume, capacity, processes, service levels, or commercial policies?

• Can it support portfolio management, process improvement, and performance management?

• Can it create a common language across Finance, Operations, Sales, IT, and Leadership?

When the answer is no, the project may have delivered a model, but it has not yet delivered real transformation.

The consultant’s role is changing

This shift has major implications for consultants.

Traditionally, many cost and profitability projects positioned the consultant as the model builder. The consultant defined Resources, Activities, Drivers, Cost Objects, Allocation Rules, and Reports. The final deliverable was a functioning model.

That work is still essential, but it is no longer sufficient.

The consultants who create the most value are expanding their role through four stages.

1. From model builder to information provider

The consultant does more than calculate costs. They help the client to understand profitability across the dimensions that matter to the business, such as Products, Customers, Services, Channels, Regions, Contracts, and Processes.

The goal is not simply to produce numbers. It is to organize those numbers in a way that reveals how and where value is being created, consumed, or lost.

2. From information provider to decision facilitator

The next step is helping the client translate information into decisions.

• Which customers should be renegotiated?

• Which products should be repositioned?

• Which channels are consuming more resources than expected?

• Which services require a different pricing strategy or service-level policy?

At this stage, the consultant helps the organization move from understanding what happened to deciding what should happen next.

3. From decision facilitator to transformation partner

The consultant then connects profitability insights to specific improvement initiatives.

These may include pricing changes, cost-to-serve optimization, portfolio redesign, process improvement, shared services, capacity management, outsourcing decisions, or changes to commercial policies.

The model stops being only an analytical tool and becomes a foundation for business improvement.

4. From transformation partner to continuous profitability advisor

The final stage is helping the organization establish an ongoing management process.

The model is updated, reviewed, challenged, and improved over time. Its results become part of regular management discussions and decision-making routines.

Instead of remaining a one-time analytical exercise, the model becomes part of the organization’s management system.

This is where the greatest opportunity lies for consultants.

The objective is no longer to complete a project that ends when the model goes live. It is to build an advisory relationship that continues as the client uses profitability information to improve performance.

Why technically successful projects still lose momentum

One of the most common reasons profitability projects lose momentum is a lack of alignment.

Different stakeholders often enter the project with different expectations.

• Finance may be focused on accuracy and reconciliation.

• Operations may want greater visibility into processes and resource consumption.

• Sales may be looking for customer and channel profitability.

• IT may be concerned about data quality, availability, integration, and system ownership.

• Executives may expect strategic insights, simulations, and clearer support for decision-making.

Each of these expectations may be valid. The problem begins when they are not discussed and aligned early enough.

A common symptom is premature redesign.

Before the first version of the model has been fully processed, reviewed, and understood, stakeholders begin requesting structural changes. New dimensions are added. More scenarios are introduced. The level of detail expands. The original scope becomes less clear.

Soon, the project becomes a moving target.

This usually does not happen because anyone is acting in bad faith. It happens because the model forces the organization to confront questions that may never have been properly discussed before.

• What exactly are we trying to measure?

• Which decisions should the model support?

• Which dimensions are essential now, and which can wait?

• Which data sources are reliable enough for version 1.0?

• Which outputs will be used, and by whom?

• Which simulations are genuinely relevant to decision-making?

• How should the model evolve after its first release?

These questions should not emerge only after the technical build has started. They need to be part of the design conversation from the beginning.

A practical tool: the Cost and Profit Model Canvas

One way to reduce this risk is to use a canvas approach before and during implementation.

A Cost and Profit Model Canvas helps stakeholders see the model as a business design, not simply as a technical structure.

It creates a shared view of the initiative’s main components and gives different areas of the organization a common language for discussing the model.

A useful canvas should help the team answer five fundamental questions.

How?

• How does the organization create, deliver, and support value?

• What does its value chain look like?

• Which processes, activities, or operational flows explain resource consumption and profitability?

What?

Which business dimensions should the model analyze?

These may include Products, Customers, Channels, Regions, Services, Contracts, Business Units, SKUs, Segments, or other relevant cost and profit objects.

How much?

Which financial values should be modeled?

These may include revenue, direct costs, indirect costs, expenses, assets, capacity costs, margins, and other economic measures.

From where?

Which systems, tables, files, and data providers will feed the model?

Possible sources include ERP, CRM, WMS, production systems, HR platforms, spreadsheets, data warehouses, and other operational or financial systems.

For what?

Which outputs, analyses, and simulations should the model support?

Examples include multidimensional P&L statements, customer profitability, product profitability, cost-to-serve analysis, process analysis, pricing scenarios, make-or-buy decisions, outsourcing evaluations, and investment simulations.

This type of tool is valuable because it makes the project visible.

It allows finance, operations, commercial teams, IT, and leadership to discuss the same model before the technical design becomes too detailed. It also helps the team decide what belongs in version 1.0 and what should be addressed later.

That distinction is essential.

A profitability model should evolve. It should improve as the organization learns, validates its data, increases adoption, and identifies new decisions that the model can support.

But that evolution needs to be managed.

When every possible future requirement becomes mandatory before the first version is processed, the project may never become stable enough to deliver value.

A canvas gives the team a clear way to say:

This is version 1.0.

These are the decisions it will support.

These are the assumptions we are making.

These are the outputs we will validate.

These are the improvements we will consider after the first cycle.

This creates clarity without limiting the model’s future development.

Technology matters, but it is not the whole story

Technology is important, but it should not dominate the conversation.

The goal is not to implement software for its own sake. The goal is to build a management capability (I’m sure you’ve all heard Gary Cokins’ famous quote: “a fool with a tool is still a fool”)

The right technology, however, can significantly improve a consultant’s ability to deliver value.

A modern cost and profitability platform can shorten implementation time, improve transparency, make calculations easier to maintain, support simulations, provide dashboards, and allow business users to explore results more effectively.

For consultants, these are not merely technical benefits. They have a direct effect on adoption.

If the model is difficult to update, it will be updated less often.

If its logic is not transparent, stakeholders will question the results.

If simulations are difficult to create, the model will mainly be used for reporting rather than decision-making.

If the outputs are disconnected from real business questions, users will return to spreadsheets.

If the entire process depends on a small group of specialists, the organization will struggle to make the model part of its regular management routine.

Technology should make the methodology easier to apply, not replace it.

It should help consultants work faster, communicate more clearly, reduce rework, and spend more time helping clients make decisions and improve performance.

Turning implementation into an ongoing advisory relationship

Perhaps the greatest opportunity for consultants begins after implementation.

A cost and profitability model can become the foundation for a much broader advisory relationship.

Once the model is operating, the consultant can help the client review results, identify opportunities, simulate alternatives, redesign policies, monitor improvement initiatives, and measure their financial impact.

This creates a natural expansion of services across the entire project lifecycle.

Before implementation, consultants can support maturity assessments, business case development, data-readiness reviews, and model-design workshops.

During implementation, they can help with stakeholder alignment, model structure, driver logic, data integration, validation, training, and change management.

After implementation, they can support periodic profitability reviews, pricing analysis, customer segmentation, cost-to-serve optimization, benchmark analysis, product portfolio decisions, process improvement, scenario analysis, governance, and managed services.

Implementation is not the end of the engagement.

It is the beginning of a new management cycle.

A better definition of success

The success of a cost and profitability project should not be measured only by whether the model was delivered on time, the calculations reconciled, or the reports and dashboards were generated.

These are necessary milestones, but they are not the ultimate measure of value.

A better evaluation would ask:

• Did the organization make better decisions?

• Did managers develop a different understanding of profitability?

• Did commercial and operational teams change their behavior?

• Did the model reveal opportunities that were previously invisible?

• Did the client act on those opportunities?

• Did the consultant help generate measurable business impact?

• Did the model become part of a recurring management process?

This is the shift from cost modeling to profitability transformation.

The future of this field will not be defined only by better calculations. It will be defined by better decisions.

For consultants, this represents both a challenge and an opportunity.

The challenge is to stop treating implementation as the final deliverable.

The opportunity is to become the partner who helps organizations turn cost and profitability information into decisions, adoption, and measurable performance improvement.

In other words:

Stop delivering cost models. Start delivering business transformation!

André Sanseverino is Co-Founder and VP Sales & Marketing with MyABCM. He can be reached at andre.sanseverino@myabcm.com