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Summary of FMM Levels.... Full-cost Maturity Model: Summary of FMM levels
Level 0: TRADITIONAL BUDGETING
Not all costs are to products and services.
Level 1: TRANSPARENCY
Costs are linked to high-level product sets, and the cost model is transparent -- that is, well documented and based on consistent principles.
- Transparency builds trust.
- Everyone understands what the budget pays for, and perceives the value.
- Builds in appropriate reinvestments.
- Staff understand products versus tasks.
- Saves money through frugality: within groups.
- Fosters culture: teamwork
Level 2: FAIR ALLOCATIONS
Products sets are subdivided by client (business unit), documenting utilization as a basis for allocations.
- Allocations are driven by consumption of product sets, and are understandable and fair.
- Some clients support their allocations and defend the internal service provider's budget.
- Fosters culture: customer focus.
Level 3: DEMAND MANAGEMENT
Product sets are broken down into detailed products and services -- specific client purchase decisions -- for the purpose of portfolio management.
- Budgets are justified by deliverables, trust grows.
- Customers' expectations match available resources.
- Strategic alignment is improved.
- A full products and services catalog, produced as part of the process, provides a basis for contracting and portfolio management.
- A detailed operating plan is produced as part of the process.
- Fosters culture: entrepreneurship (external sales).
Level 4: ACCURACY
All indirect costs are amortized to just the right products and services, and accuracy is improved.
- Indirect costs are amortized accurately, producing an accurate budget for all products and services and costs comparable to outsourcing.
- Saves money through frugality: use of internal support services.
- Fosters culture: customer focus (internal customers as well as clients).
- Fosters culture: entrepreneurship (internal support functions).
- Staff learn lines of business, insights on future structural change opportunities.
Level 5: RATES
Costs are portrayed in total for products and services, and unit prices (rates) are extracted from the same data.
- Produces defensible, fair chargeback rates.
- Rates are comparable to outsourcing, saves money through competitive benchmarking.
- Provides basis to estimate costs for new business opportunities mid-year.