What are our current blockers for real-time margins? What do we need to get from Client Level Margins to Process Level Margins?
There are 6 elements in the calculation of Gross Margin:
- Usage Revenue - Have Everything (Realtime and Process Level).
- Direct Labor Cost -
- Indirect Labor Cost
- Delivery Management Cost
- Software Cost
- Automation Cost
For more information on how each element fits into how we are currently calculating GM on the client level, please view ‣.
| Line Item |
Process Level? |
Realtime / Time Lag? |
Improvements |
| Usage Revenue |
Yes |
Realtime |
We good |
| Direct Labor Cost |
Yes |
Realtime |
We good |
| Indirect Labor Cost |
|
|
We good |
| Delivery Management Cost |
|
|
We’ve decided we can divide this equally between all processes the client has |
| Software Cost |
|
|
We need to create a mechanism similar to RBP/RBAP for tracking step level software expenses such as API calls. |
| Automation Labor Cost |
|
|
This is salaries for ACE engineers working on client specific work, we should allocate this to clients. |
Which elements are/can be real-time?
- Usage Revenue- we currently have real-time ur
- DM Cost- OMs’ salaries are booked in Xero twice a month, so this is fairly real-time
What are the blockers to real-time margins?
- DL Cost/IL Cost- DL from time entries is real-time, but RBAP comes from Kam’s Master Pay Checklist at the end of the month
- RBAP should be more real-time as we migrate to Manticore
- IL is directly linked to DL so if DL is real-time, we will have IL in real-time
- SW Cost- Software costs are booked in Xero at different times of the month. Client allocations come from the software master data table in the warehouse.
- Automation Cost- Completely manual process that happens at the end of the month. Engineers fill out the automation gsheet at the end of the month about what % of their time they spent on which clients.
Which elements are/can be on the process level?
- Usage Revenue- Is already on the process level
- DL Cost/IL Cost- For most processes that are migrated to Manticore, we will have DL on the process level
- For processes not yet migrated, we could use Master Pay Checklist to get data on a process level
- DL and IL are directly linked, so if we have DL we have IL
- DM Cost- Don’t currently have on a process level, but could use % of UR to divvy up OM’s salary across clients/processes
What are the blockers to process level margins?
- SW Cost- If applicable, the software master data table could be updated to be on a process level
- Could be very complicated to update the calculation logic from client to process level(Rima)