Redesign Cost Structure and Revenue Allocation

With support from Gartner, the CFO of a midsize services company designed and successfully rolled out a new, improved cost and revenue allocation method. The redesigned method promised greater access to more accurate and actionable data for business unit leaders and a more detailed view of profitability, which enable higher gross margins and smarter resource allocation.

Mission-critical priority

A services company’s cost and revenue allocation method was too complicated for business unit leaders to understand, let alone use to improve margins or drive better resourcing.

How Gartner helped

First, a Gartner advisor compared the company’s cost and revenue allocation method against successful methods used by peers. Then, the CFO and advisor worked side by side to redesign the model according to best practice. Furthermore, Gartner insights, advice and tools on the topic of CFO-board partnership aided the CFO in crafting and delivering his board presentation about the redesign.

Mission accomplished

With support from Gartner, the CFO was able to:

  • Diagnose from where the complexity of the cost and revenue allocation method stemmed

  • Perform a cost-benefit analysis on new candidate methods

  • Design a new method

  • Successfully roll out the redesigned method to the board of directors; the redesigned method promised greater data visibility, which enables higher gross margins and smarter resource allocation

Industry:
Services

Revenue:
$100 million to $500 million

Employees:
100 to 500

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