Cost Accountants and Cost Management goes in diverse ways where the former struggles and the latter is crowned with success. New dimensions and segments have evolved in cost management but the professionals are facing higher levels of difficulties. Strategic cost management has taken new heights in designing the business structures under these turbulent economic times. In the coming next 5 years frame we will find technology driven strategic cost management where cost will be zero and earnings will be a topping. Yes strategic cost management is being adopted and implemented widely for designing the competitiveness structure of a company or for the industry. Further I find very clearly that Technology will change the economic consumption cost boosting consumption of other goods and services from the same cost which has been saved. Yes strategic cost managements is changing its landscape. We all know the theoretical part of the subject but lest get into a real life case study where technology will be changing the new paradigm of thinking towards strategic cost management.
Internet of Things (IOT) is soon going to create problem for the oil producing countries as well as for the traditional power generation companies. India might be slow in these steps but developed economies and Middle East countries are already under full stream of using strategic cost management and IOT. Sensors are being designed where solar power storage and consumption both are being measured and the stored power is being transferred to the government based storage facilities,. In exchange of the transfer the sensor helps to measure how much benefit of storage (excess over consumption) is being adjusted against the power cost consumed. Now how strategic cost management is changing the economic culture is here to be found. As more household are inclined towards power storage transfer as its give them adjusted benefit to their own cost of consumption, large amount of solar power panels are being used in residential houses. When people through IOT are able to measure how much they are saving in power cost and also to make earning from cost consumption based product more investments flows into the industry. Hence more industries of solar power panels and its ancillary products come into the economy and more job opportunities, more technical knowledge inflows, skill development, overall economic development.
Coming to gas and traditional power sources where IOT of things are helping to find which product of an car or electric equipment is damages which is leading to substantial consumption of gas and oil for an family or industry. Through these sensors one gets an idea of when to replace the products so that unnecessary consumption cost can be eliminated. These sensors are either connected with mobile apps or through other technology driven gadgets. Hence IOT and strategic cost management is being used to control resources, usages, avoid abnormal losses. Using IOT in strategic cost management a whole new economy be constructed and traditional losses and efficient usages of resources can be designed.
IOT is bringing down the cost of down time which impacts profitability and creates significant losses in operating as well as at the end user. From parking car to an early detection of damages in a plant or a particularly machine can be found much earlier before it’s comes down totally. Strategic cost and investment decisions are being taken much earlier which saves billions of funds for getting into abnormal loss across the globe.
IOT of things can significantly bring down the cost of operation and hence increase the next level of costing management practices. The costing methods are no longer alone. Big data analysis helps to design and identify price mix and product mix strategies. In a similar fashion IOT is changing the world of down time and abnormal losses and ideal time phases. It’s time for cost accountants to brace up with strategic cost management using technology as a guiding tool. We need to understand that the profession might be going through tough times domestically but in the global world its being used effectively to design new production strategies and reduced carbon emission where productivity is being taken into the next level. Very soon strategic cost management strategies would be adopted to reduce carbon emission as IOT is changing the landscape. Strategic costing will reduce carbon emission as its works in both ways. Strategic costing is being adopted and applied for designing energy efficient products whereas the same subject is being applied for detecting and taking preventive steps to eliminate losses. The age of digitization will change the look out of cost management and costing methods applicability. Don’t think that what was redundant yesterday will remain forever the same. Technology needs extensive support of Cost management so that efficient products design and limited resources in these global economic turmoil could be implemented. The global economic imbalances have triggered a massive problem for open architecture of investments. Every decision of investments is based on technology driven data and also on long term change over’s that might happen. Countries like Kuwait, Iran, Middle east knows very well that technology and cost management is the dual sword to bring new innovation for the global economy.
Global Macro Economic Researcher and Business Strategist
Master of Economics, MBA in International Management, ICWAI (Final)