“While, on average, 81% of a company’s costs are defined by the industry they are in, the remaining 19% are largely determined by executive decision-making.” – Jason Boldt, Gartner
According to Gartner, almost 90% of businesses suffer from poor cost visibility, and the same amount struggle with understanding their costs. These challenges are mainly symptoms of relying on outdated cost models – a major cost anchor that holds the majority of businesses back from gaining actionable insights. To overcome poor cost visibility, leading cost management executives encourage positive cost behaviors, or “cost ladders” that alleviate the strain that bad practices put on the business. These ladders include increasing cost agility, figuring out what cost models best fit the business goals, and detecting early cost warnings. However, Gartner found that only one in three companies practice any of these behaviors in their costing activities.