Master Cost Management: Elevate Reporting, Tracking, and Efficiency

Traditionally, cost management has relied on manual processes, often using pivot tables for organization. While these methods have been standard practice, they can be cumbersome and time-consuming, often lacking the insight businesses need so much in the current economic climate.

Transitioning to a more automated approach simplifies your cost management and provides you with a comprehensive view of your expenses. With a fully interactive cost management cockpit, you can gain insights across all cost centers and analyze how these costs impact your company's overall performance.

This modern approach empowers you to make informed decisions, aiming to maximize your financial KPIs, including EBITDA and net income. Let’s dive deeper into the best practices that will transform your cost management strategy!

Here's how to elevate your cost management reports in Excel, as well as in Power BI.

Using Excel for Effective Cost Management

Excel remains a powerful tool, and its capabilities were demonstrated through the use of pivot tables and Zebra BI visuals. By employing slicers for dynamic filtering, users can transform static reports into engaging dashboards, thus elevating the efficiency and effectiveness of cost management practices.

Let's take a closer look at how you can elevate your Excel sheets for a more effective, modern approach to cost management.

Step 1: Prepare Your Data

The first thing you want to do is ensure you have your actuals and budgets in Excel in table format. To enable merging later, make sure that both datasets are in a similar table structure (e.g., same columns for months, accounts, costs, etc.).

Step 2: Create Pivot Tables

Pivot tables will allow your cost management reports to be more interactive and visually appealing, so they are one of the first steps in this tutorial:

• 2A. Insert pivot tables. Use the "Insert Pivot Table" function in Excel to structure your data. You’ll need to do this for your actuals and budget datasets. These pivot tables will allow you to group and summarize your data by account groups, GL accounts, cost centers, or other dimensions.

• 2B. Merge data. If you're merging actuals and budgets, ensure they are added to the same pivot table so you can calculate variances (actual vs. budget).

Step 3: Add Zebra BI Visuals

As you may know, Zebra BI visuals are not only aesthetically appealing but also quite useful when you want to make sure everyone in the room understands the data. If you've never used Zebra BI, here's how you can add them to your cost management pivot tables:

• 3A: Get Zebra BI visuals. Get Zebra BI Tables for Excel from the Microsoft AppSource. Use Zebra BI visuals to convert your pivot table into an interactive, modern cost management table that will automatically calculate and display variances, such as actual vs. budget, and allow for easy sorting and analysis.

• 3B. Insert Zebra BI tables. Once the pivot table is built, apply Zebra BI tables to create a highly visual and interactive report. These visuals will handle drill-downs and cross-filtering without needing to manually add columns or formulas.

Step 4: Add Interactivity with Slicers

Slicers allow users to filter data dynamically. For example, you can switch between quarters or months to update all related pivot tables and visuals. In other words, slicers will make your cost management reports more engaging, enabling you (and everyone else) to interact with your data and flesh out important insights. Here's how to do it:

• 4A. Insert slicers. Go to "Insert → Slicer", and select a field (e.g., month or quarter).

• 4B. Link Slicers to multiple pivot tables. Right-click on the slicer and select "Report Connections." Choose which pivot tables the slicer will control. This ensures that all pivot tables connected to the slicer will update together when the slicer is used (e.g. when selecting a specific month or quarter).

Step 5: Automate Refreshing of Data

You can refresh the pivot tables and visuals automatically by updating the underlying data each month or quarter. The Zebra BI visuals will adjust and display updated values without the need for manual intervention.

Step 6: Final Touches with Zebra BI Charts

To wrap it up, add a few final touches with Zebra BI charts, to make sure your cost management reports are flawless.

• 6A. Insert another pivot table for monthly data and use Zebra BI charts to visualize actuals, forecasts, and budgets over time.

• 6B. Apply the slicers to control these visuals for easier reporting and analysis.

Why choose this Excel method for your cost management?

Setting up your cost management reports this way might seem like extra work, but the payoff makes it all worth it. Each of the elements used in this approach is there to help you ensure clarity, insightfulness, and ease of use across the entire organization, not just in the Financial department.

Interactive Visuals

The first step in modernizing your approach is through the use of advanced visuals, such as those provided by Zebra BI. These visuals allow for immediate understanding and analysis of data by comparing actual versus plan or budget, with variances clearly presented. Excel users can take advantage of this interactivity, drilling down into significant variances and sorting costs, to prioritize the areas that require the most attention.

Pivot Tables

Pivot tables are an essential component of any modern Excel solution, enabling users to manage the complexity of cost structures and hierarchies efficiently. By transforming both actual and budget data into pivot tables, users create a flexible "cost cube." This setup allows a seamless transition from high-level overviews to detailed breakdowns by account group or cost center.

Automation and Slicers

Incorporating slicers into your Excel setup further streamlines reporting. Slicers enable users to effortlessly switch between different timeframes, such as months or quarters, across multiple pivot tables simultaneously. This feature ensures that all connected visuals update in unison, fostering a cohesive view of the data and promoting ease of analysis.

Building Comprehensive Reports

With Zebra BI visuals and pivot tables, compiling a robust and interactive report is a matter of a few simple steps. You can create detailed dashboards that present various cost management metrics and KPIs, aligned with your financial objectives. Users can thus expand, drill into details, and produce insightful presentations that facilitate better decision-making.

By integrating these advanced tools into Excel, you transition from manual, outdated practices to a cutting-edge approach to cost management, achieving a more insightful and efficient reporting system.

Making the Most out of Power BI for Cost Management

Unlike traditional BI tools, Power BI allows users to effortlessly integrate complex data sets and gain deeper insights into cost management -- which means there's a lot of opportunity for you to optimize your reporting and cost management in a way that goes beyond basic Excel.

Here are the cost management Power BI tips Andrej, our CEO, as well as Tilen, Lead BI Consultant, pointed out during our latest webinar on the topic:

Step 1: Ensure Data Accuracy

If you want to leverage Power BI (and Zebra BI) for your cost management, you should first make sure your bookkeeping is accurate. If it isn't, your reports will be incorrect, and your business insights, flawed.

Step 2: Find and Share Insights

Start by creating a dashboard in Power BI. In our example, we displayed our gross operating margin without any manual intervention. Here’s how we did this:

• Add the gross operating margin to your Power BI dashboard.

• Use Zebra BI Charts for an intuitive display of trends over time. Zebra BI Charts excel at visualizing time series data, making them ideal for this use case.

• Identify key trends: For example, you can see that in Q2 of 2023, both the gross margin and the operating margin were at their lowest points. By highlighting these trends, you can direct your audience’s focus to the critical story behind the data.

To gain more insight into the margins, we’ll use small multiple combo charts:

• Select all financial KPIs in Power BI. You will notice that each KPI is displayed as a small multiple.

• Analyze the monthly development of each KPI compared to the operating margin to identify the lowest-performing periods.

• For further analysis, break down the components into revenue and costs to see how these factors contribute to your gross profit.

Furthermore, incorporating comments within your model will also allow you to better convey all the data and insight you need to convey to stakeholders, without the need for a lot of back-and-forth. For instance, Zebra BI allows you to add interactive comments, which can be consulted both during and after the presentation, in an interactive way.

Step 3: Detailed and operational reports

Next, include OPEX (Operating Expenses) in your analysis:

• 3A: Select OPEX to see how it compares to the budget.

• 3B: Combine gross profit and OPEX to understand how they impact your operating profit. Now you can see that while OPEX was on plan, the gap in operating profit is due to the gross profit shortfall.

After identifying these insights, you can easily share your findings. For example, you can post your report in a Power BI Service and assign edit rights to key team members, such as the sales manager.

Also, the sales manager can add comments directly within the chart, providing real-time updates (e.g., explaining a temporary dip in margin due to a pending deal). This collaborative feature helps you make sure your visuals and data insights are enriched by team contributions, and stay relevant as you move through different reporting periods.

To drill down on specific variances and trends, you can use Zebra BI Charts, as they make it easy to focus on two key areas: variances and trends.

For example, you can use Zebra BI visuals to break down total OPEX by account groups and track monthly development. If you notice a variance (such as in production costs in July), you can also quickly see that this variance was above plan, and other expenses like travel were also higher than expected.

Furthermore, when sharing reports with non-financial teams, it's important to present data in a clear and understandable way. Several features in Power BI and Zebra BI allow you to do this, such as the opportunity to to add tooltips (which add a new dimension of information and depth to your reports, enabling everyone in the team to have access to the same source of truth and explanations).

You can use Zebra BI visuals like plus-minus charts for absolute variances and pin charts for relative variances to help non-financial managers quickly grasp the data. To break down complex financial data into digestible insights, you can include visuals alongside tables.

This approach ensures that every department, regardless of financial literacy, can engage with the reports meaningfully.

Step 4: Forecasting and Year-End Estimates

As you approach year-end, forecasting becomes increasingly important. You can use Power BI and Zebra BI to analyze multiple scenarios (e.g., realistic, pessimistic, and safe) and explore different spending plans and profitability outcomes.

Keep in mind you can also use Power BI to visualize how these scenarios play out and compare actuals versus forecasts. By adjusting the visual chart settings, you can include grand totals, which automatically calculate the full-year estimate based on actuals and forecasted data.

If you want to automate manual analysis, you can use Zebra AI. All you have to do is upload your dataset to Zebra AI, and it will instantly analyze your data, identify duplicates, and generate interactive dashboards.

Zebra AI will do all the manual work for you: it will identify key metrics, like expenses incurred across different regions, and it will provide breakdowns of significant variances. For example, if there’s a significant expense increase in Europe, Zebra AI can offer explanations and suggestions for further investigation.

Why use this Power BI approach for your cost management?

Harnessing the full potential of Power BI for cost management is crucial for delivering actionable insights and optimizing financial decision-making in your organization. Here are the elements that make this approach so successful:

Real-Time Margin Analysis

With Power BI, dashboards can be customized to automatically reflect operating expense metrics. If you want to effortlessly track trends (such as quarterly margin performance) and identify low points (so you draw attention to key analysis areas), using Zebra BI charts will be very helpful.

Exploring Trends and Variances

Users can also take a closer look at specific trends by exploring time series data with interactive charts. This approach helps maintain audience focus and facilitates storytelling through data.

For instance, examining a small multiple combo chart enables users to discern monthly developments and investigate underlying factors causing deviations in operating costs.

Identifying Cost Drivers

By analyzing core financial KPIs, like revenue versus cost, Power BI aids in pinpointing contributors to profit shortfalls. This way, you can compare planned versus actual figures to identify discrepancies, such as lower-than-expected revenues or unexpected cost hikes.

Collaborative Reporting

The collaborative features of Power BI, such as sharing interactive reports via the Power BI service and adding comments (which can be consulted by stakeholders for more information), empower decision-makers with real-time insights and enable them to provide annotations. This type of open communication helps resolve temporary setbacks and anticipates future financial shifts, fostering a culture of data-driven decision-making across the different verticals of a company.

Strategic Cost Insights

Power BI simplifies the exploration of cost structures at various detail levels, from monthly to annual views, assisting managers in identifying main cost drivers like production expenses. Variance analysis ensures transparency and informs strategic planning by making financial data accessible to non-financial team members through intuitive visuals.

Forecast Scenario Planning

Effective cost management requires proactive forecasting to prepare for different market scenarios. Using Power BI, businesses can develop realistic, pessimistic, and safe forecasts to align financial performance with strategic objectives. These insights are consolidated into coherent dashboards, streamlining decision-making processes.

Harnessing the Power of Zebra BI in Power BI 

The old way of doing things in cost management isn't wrong per se.

It's just that there are better, more effective, and more streamlined ways of doing it now.

Both the Excel and the Power BI methods presented in the webinar by Andrej and Tilen help you simplify the complexity of financial data, making it easier to identify variances and trends and communicate insights with non-financial audiences.

By combining Zebra BI with Power BI and/or Excel, you can take your cost management processes to the next level, providing you with enhanced reporting capability. Both of these tools offer a wealth of templates and courses to elevate your skills in creating dynamic, insightful reports that go beyond basic, unengaging reports.