1. ABC Costing @ KBC ICT
Wim Eeckhout 13/12/2010

2. Topics Me, myself and I Facts & Figures: KBC Group and KBC ICT Costing
Costing Methods
ABC KBC ICT
Input: cost centres, Budget Line Items
Output: services
Inside the cost models (+ flavour of its complexity)
Tools
Costing : the challenges
To Remember
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3. KBC Groep: Facts and Figures @www.kbc.be (annual report 2009)
3/12/2018
KBC Groep: Facts and (annual report 2009)
Jaarverslag 2009 op
Welke landen is KBC Groep actief
Aantal VTE dat werkt binnen de KBC Groep
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4. KBC Groep: Facts and Figures @www.kbc.be (annual report 2009)
3/12/2018
KBC Groep: Facts and (annual report 2009)
Jaarverslag 2009 op
Idee geven van bedragen (€) waarover we spreken
Exploitatiekosten = Totale kosten vd groep: 5600 Mil € in 2008
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5. KBC ICT: Facts and Figures
3/12/2018
KBC ICT: Facts and Figures
Algemene cijfergegevens Global ICT
Actief in BE, HU, PL, CZ en SK
Aantal FTE (intern, extern, offshore)
Totale Spent 2008 van +/- 700 Mil € nin Cash Flow (tov totale kosten groep 5600 Mil € in P&L)
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6. KBC ICT Services Staff DD Alg
3/12/2018
Production
Totaal Cashflow Budget ICT BE 2007 : 439 Mio
18,4
18,2
9,6
27,8
23,9
50,1
8,9
50,5
102,8
44,6
20,9
37,4
4,1
3,8
18,7
OAKS & Diverse
Werkstations
Netwerken
Telefonie
Mainframe
Centrale servers
Kantoorautomaten
Alarmbeheer
MFT en printers
Interne staff produktie
Externe staff produktie
Middelen create
Interne staff create
Externe staff create
Directe doorrekeningen
Create DD
Alg
183,6
Staff
197,9
Totale CF: * 50% = personeelskost !
* 10-15% = cascades (gebouwen, personeelsdienst, facilitaire diensten, …)
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7. Costing – ICT Services Aim Company = make profit
3/12/2018
Aim Company = make profit
(return on investment for shareholders)
ICT (ICT Global Services NV) = provides services to entities within the group (“kredieten”, “kantoren”, …)
Aim KBC ICT
Mission statement !
Doel van ICT is geen winst te maken al moet geen winst maken genuanceerd.
ICT rekent door op cost plus basis
Kosten worden doorgerekend met een MU van 5 % (verplichting TAX)
Belangrijke focus op het beheersen en correct toewijzen van kosten
Er worden ook wel diensten geleverd aan bedrijven buiten de groep = insourcing (marginaal)
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8. KBC ICT Services Mission Statement
3/12/2018
KBC ICT Services wants to be the partner of all lines of business of the KBC Group by offering them best in class
ICT services for the full value chain
enabling them to run their business processes smoothly and resulting in the highest possible benefit for KBC Group
Partner: samenwerkingsmodel, geen dictatuur
Best in class: probeer het niet zelf te doen, we kennen onze job en doen hem goed !
ICT services: als ondersteunende dienst bieden we diensten aan zdd andere diensten (merchant banking, kredieten, palo) hun werk kunnen doen
Benefit: doel is een zo hoog mogelijke winst voor de groep
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9. Costing: ICT Services 3/12/2018 Geen winst maken moet genuanceerd.
ICT rekent door op cost plus basis
Kosten worden doorgerekend met een MU van 5 % (verplichting TAX)
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10. Costing Costing is one of the financial processes within KBC ICT
3/12/2018
Costing is one of the financial processes within KBC ICT
Budgeting : short & long term
Purchasing : buy equipment (HW, SW)
Pricing: determine prices for each service
Charging: invoice the services to the customers
Duidelijk maken dat Pricing niet voor de aardigheid is maar onderdeel van een aantal geintegreerde processen.
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11. Costing - Methods Direct Costing
3/12/2018
Direct Costing
Method in which the cost of a product or operation is determined by allocating to it an appropriate portion of the variable (direct) costs. Direct costing treats fixed costs (overheads such as administrative and selling costs) as period costs (associated with time and not output).
Indirecte kosten zijn vast en moeten gedekt worden
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12. Costing - Methods Full Costing
3/12/2018
Full Costing
Method of costing a product in which all fixed and variable costs are apportioned to cost centers where they are accounted for (absorbed) using absorption rates. This method ensures that all incurred costs are recovered from the selling price of a good or service.
Indirecte kosten moeten versleuteld worden
We willen al onze kosten recupereren.
Methode: kostenplaatsen definiëren binnen het bedrijf en alle kosten (direct en indirect) toewijzen volgens verdeelsleutels (%)
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13. Costing - Methods Activity Based Costing
3/12/2018
Activity Based Costing
Cost accounting approach concerned with matching costs with activities (called cost drivers) that cause those costs. It is a more sophisticated kind of absorption-costing and replaces labor based costing system.
Een van de manieren om activities te bepalen zijn de ITIL activiteiten: security management, change management, incident management, release management, ….
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14. Costing - Methods Activity Based Costing
3/12/2018
Activity Based Costing
Instead of allocating costs to cost centers (such as manufacturing, marketing, finance), ABC allocates direct and indirect costs to activities such as processing an order, attending to a customer complaint, or setting up a machine.
Duidelijk maken dat pricing niet voor de aardigheid is maar onderdeel van een aantal geintegreerde processen.
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15. ABC costing @ ICT KBC Once upon a time … Introduction of Governance
3/12/2018
Once upon a time …
Budget:
1 bucket: more ad hoc decisions
Charging:
Based upon something (Bus FTE, profit, “applications”, …)
LT-planning:
in the mind of managers
Introduction of Governance
4Y-plan (for large investments, Y & Y+1 more in detail)
Not only BUS – ICT alignment (more focused on create)
Also ICT Infrastructure cost awareness
Introducing: Activity Based Costing
 closer budget follow-up
 specialization
Een hele hoop geld : groei naar noodzaak om dit te controleren/beheren
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16. Cost Model
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17. ABC Costing @ KBC ICT : Input
3/12/2018
Define Cost Centres (Budget Lvl -1)
Production Cost Centres: Workstations, Servers, Mainframe, Printer Handling Devices, Telecom
Managed by Infrastructure Resource Managers
Overhead & MandayPrice Create Cost Centres
Managed by ICT Finance
Laat ons eerst de kosten classiferen:
BUD - 1: op Cost centre niveau
BUD - 2: op budget line item niveau
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18. ABC Costing @ KBC ICT : Input
Define Budget Line Items (Budget Lvl -2)
Office Desktop, HQ desktop, Large Screen, McAfee, Small Server, Large Server, Leased Line, Network Port
Managed by same people as Cost Centres
Generic Line Items (international)
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19. ABC Costing @ KBC ICT : Input
3/12/2018
Define Budget Categories (Budget Lvl -3)
Opex, Capex (HW, SW)
Internal Projects, Business Projects, Recurring, Reinvestments, Growth, Intragroup
Opex: worden volledig genomen in lopend jaar en dus NIET afgeschreven volgens boekhoudige regels (IFRS)
Vb: jaarlijks onderhoud van de printers, te kleine kosten, gebruiksrecht van MS Office
Capex: wordt afgescreven over een bepaalde periode (HW: 3j, SW: 5j)
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20. ABC Costing @ KBC ICT : Input
3/12/2018
Input for the cost models:
Cost Centres
HW, SW, Opex
Cascades
Rent Building, Facilities, HR Deparment, …
Manday Price Create (MDP Create)
Costs 1-1 addressed to MDP Create
Seperate Service
Salaries
Opex: worden volledig genomen in lopend jaar en dus NIET afgeschreven volgens boekhoudige regels (IFRS)
Vb: jaarlijks onderhoud van de printers, te kleine kosten, gebruiksrecht van MS Office
Capex: wordt afgescreven over een bepaalde periode (HW: 3j, SW: 5j)
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21. Cost Model
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22. ABC Costing @ KBC ICT : Output
3/12/2018
Services
Infrastructure and Create Service
Service = sum of costs assigned to that service
Service Price = Sum of costs / Total consumption
Manday Price Create Service
Only 1 service with 1 service price
No distinction between Role of people
All Costs: salaries, cascades, Infrastructure Services
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23. ABC Costing @ KBC ICT : Output
Infrastructure services (called “production”) make ICT infrastructure available, e.g. workstation, telephone, data handling, data storage,… and manage business applications to be up and running. These budgets are managed by ICT (see slide “ICT internal work and internal projects”).
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24. ABC Costing @ KBC ICT : Output
ICT internal work and internal projects are the efforts done by ICT in order to
run, maintain and improve the Infrastructure services
maintain and improve the Business application services (= to maintain and improve the development tools and processes)
support the ICT organization and processes (procurement, finance, legal & tax, HR, information risk management, …)
These budgets are managed by ASC ICT and ICT budget committees, and are charged via the unit prices (production unit prices and create manday price).
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25. ABC Costing @ KBC ICT : Output
Business application services (called “create”) consist of the creation of new business applications, and the functional improvement and maintenance of these applications. These budgets are managed by the respective Business ASCs.
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26. ABC Costing @ KBC ICT : Output
3/12/2018
Geen winst maken moet genuanceerd.
ICT rekent door op cost plus basis
Kosten worden doorgerekend met een MU van 5 % (verplichting TAX)
 3/12/2018 

27. Price Calculations
Example of a ICT Production Service: ‘Managed desktop’
Own desktop activities/components
Workstation HW (pc, screen…)
Basis software (Office, Antivirus,..)
IMAC/D activities (install/move/add/change/dispose)
Shopped activities/components
Network activities (which is deliverd by Telco cloud, consisting on there own on HW, FTE support, network software tools…) to have network access.
Managed servers for software distribution and access mgmt (deliverd by Server cloud…)
Overall activities (procurement, finance, security…)
=> Unit price per ‘Managed Desktop’
(other examples: managed application/database server, CPU mainframe-second, RAID storage GB, managed call center unit, …)

28. Price Calculations The ICT Create service: ‘Manday Create’
Salary of developer
Costs of development tools (g.e. RAD/EGL)
Cost of Workplace (pc, tel, office space…)
Supporting development departments costs (tool selection, functional & technical design best practices, test-advice…)
Overall activities (procurement, finance, security)
Management costs + general improvement programs (M2V)
No differentiation between internal or external resource, in role
(programmer, analyst, PM) or experience (jr, sr).
=> ICT decides on this, not business. (what versus who of governance)

29. Charged ICT services 2006 (Belgium)

30. Cost Model
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31. ABC Costing @ KBC ICT : Inside
Financial unit ICT
Direct costs
Indirect costs
Activities and service items
Service items = Cost objects
Services in a Service catalogue
E2E Resources management
Activity driver
Resource driver
Line items
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32. Look into the Cost Model
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33. Look into the Cost Model Manday Price Create
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34. Look into the model Export EPO: RDS
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35. Look into the model Additional: TCOV+
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36. Look into the model Servers
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37. Look into the model Servers Storage
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38. ABC Costing@ KBC ICT: Tools
FORMERLY: Excel
+ Intuitive
+ Flexibility
- Running the model
TODAY: Cost Modelling Tool (EPO)
+ Standardisation (international)
+ Running the model
- Complexity
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39. Look into the model EPO – Navigator
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40. Look into the model – LOW Visualizations Mainframe Storage BE
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41. Look into the model Visualizations Servers CZ
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42. ABC Costing :Challenges
Granularity
Budget Line Items
Services
Concept versus implementation
Stability of prices
Benchmarking (internal, external)
Integration into Business Models
Roll-out Central Europe
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43. ABC Costing @ KBC ICT: To Remember
Cost Models:
easy concept, complex implementation
Redistribution of costs (from BudgetLineItems to services)
ABC Costing: no implementation by the book
Ultimate goal = cost management
From “What decision caused increase of costs?”
Reactive
To “Why should be make these costs ?”
Proactive
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44. ABC KBC ICT
Questions ?
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