Blogs

Why PCM Models Fail Without Storytelling

By Pedro San Martin posted 10 days ago
How CFOs and Financial Leaders Can Turn Their Profitability Models Into Living Decision Systems Companies invest significant time and resources in developing advanced Profitability and Cost Management (PCM) models. A PwC report finds that, on average, 63 percent of executives say they spend most of their decision-making time ineffectively. Despite implementing systems such as activity-based costing, driver trees, EPM platforms, and detailed dashboards, many organizations still struggle to ensure their most robust models have a significant impact on key decisions. This article provides a practical roadmap for transforming PCM models into decision ...

Ten Myths Draining Your Company’s Profitability Without You Even Knowing

By Pedro San Martin posted 10-15-2025
A Conversation That Changed Everything “Are you seriously telling me our top-selling product is costing us money?” the CFO of a mid-size industrial company in Monterrey asked. He wasn’t shocked, but he was clearly unsettled. Our customer-profitability analysis had just revealed that 27% of his revenue came from products with negative margins. What really got to him was not the numbers themselves, but what they meant. He now had to make tough decisions, have difficult conversations, and question beliefs that had been in place for years. After two decades working with executive teams across Latin America, I’ve learned that the biggest problems for companies ...

Are Your Tariffs Creating Strategic Value — or Just Adding Noise?

By Pedro San Martin posted 09-13-2025
How to visualize, model, and mobilize your global operations before volatility strikes again by Pedro San Martín, Principal at Asher PwC Interamericas This week, I sat down with the executive team of a global logistics firm facing mounting friction in their international operations. The CFO leaned forward, clearly exasperated: "How are we supposed to plan if the game changes every quarter?" His question isn’t an exaggeration. In just a few months, their operations faced new tariffs in three countries, customs delays in Asia, and a talent shortage spanning Central America and Eastern Europe. I've heard similar stories across industries. ...

When the Report Doesn’t Report: Communicating with Impact in Cost and Profitability Analytics

By Pedro San Martin posted 08-30-2025
When the Report Doesn’t Report: Communicating with Impact in Cost and Profitability Analytics Intro Picture this: I’m sitting in a boardroom with the CFO of a leading hospital group in Latin America. We’re poring over a quarterly report on oncology treatment costs, segmented by insurance type and patient profile. The document is dense with data—charts, tables, percentages. But the room is silent, save for the faint tick-tock of a wall clock. After what feels like an eternity, the CFO looks up and says, “Pedro, I don’t get it. There are numbers everywhere, but what’s the point ?” That moment hit me hard. It wasn’t about the data being ...

Why CFOs Can't Delegate Their Voice to an Algorithm

By Pedro San Martin posted 07-18-2025
Why CFOs Can't Delegate Their Voice to an Algorithm Pedro San Martín — Principal at Asher PwC Interamericas The quarterly board meeting was going smoothly. Clean slides, solid margins, targets met. Then an independent director cut through the comfortable silence: "What actually changed in customer behavior to explain this sudden improvement?" The room went quiet. Our CFO's report was full of the usual suspects—"operational efficiency," "process optimization"—but it didn't answer the real question. It couldn't, because it had been written by a machine. The CEO leaned over and whispered what we were all thinking: "This was auto-generated, ...

From Waste to Worth: Why Capacity Management Is the Missing Link in Profitability Models

By Pedro San Martin posted 06-11-2025
From Waste to Worth: Why Capacity Management Is the Missing Link in Profitability Models By Pedro San Martín, Principal at Asher | PwC Interamericas It started with a blank stare... In a steering committee meeting at a manufacturing conglomerate in Monterrey, I asked: "What’s your current capacity utilization rate?" The COO blinked. “Are we talking machines, people, or plants?” That single question exposed a blind spot I’ve seen across industries—from healthcare in Bogotá to logistics in Panama: companies are building profitability models without first understanding their capacity baseline. It's like trying to optimize a race car's fuel efficiency ...

Unmasking the True Cost of Business Ignorance

By Pedro San Martin posted 06-06-2025
When Your Dashboard Hides the Storm In a well-known consumer goods company boardroom, the CFO proudly displayed a slide: "Our flagship product delivers a 45% gross margin. It's our crown jewel." Six months later, the company was executing mass layoffs to prevent a liquidity crisis. But... What went wrong? When we applied Activity-Based Costing, the harsh reality emerged: that "crown jewel" was profitable only if we ignored complex logistics costs, intensive post-sale support, and channel discounts that cannibalized its value. In reality, it generated a 12% net loss on every unit sold. This isn't an anomaly—it's a symptom of a silent epidemic. ...

How could the new COSO CGF framework be applied to Pricing and Profitability Management Processes?

By Pedro San Martin posted 05-30-2025
Governing Profitability: How the New COSO Corporate Governance Framework Transforms Pricing Strategy The margin crisis hiding in plain sight—and how governance can solve it The Silent Profit Killer "Forty percent of our clients don't even cover their total cost of service." The CFO's words hung in the air during that audit committee meeting at a maquiladora spanning El Paso, Texas, and Ciudad Juárez. The silence that followed spoke volumes. Here was a company focused on growth, celebrating revenue milestones, while profitability quietly bled out through uncontrolled discounts, opaque cost structures, and a culture that prioritized volume over margin. ...

Cost as a Mirror of Strategy

By Pedro San Martin posted 05-16-2025
A CFO’s Guide to Aligning Cost Structure with Strategic Priorities ( Audio : https://on.soundcloud.com/GmdhUe36WBty9Px76 ) by Pedro San Martin, Principal Asher PwC Strategic Finance Center of Excellence Interamericas Senior finance leaders often proclaim bold strategies for growth and innovation, yet many struggle to translate those ambitions into sustainable profitability. The culprit is frequently a misaligned cost structure – in other words, your budget is not backing up your strategy . As the saying goes, “ Strategy isn’t what ...

From Activity-Based Costing to AI-Based Costing: The Evolution of Cost Transparency from Manual Models to Machine-Driven Insight

By Pedro San Martin posted 05-03-2025
Abstract This article explores the evolution of cost transparency from traditional Activity-Based Costing (ABC) to AI-Based Costing, highlighting the limitations of manual models and the opportunities that artificial intelligence can enable. Focusing on practical applications within Oracle Enterprise Profitability and Cost Management (EPCM) Cloud, it compares these approaches across key dimensions such as transparency, precision, scalability, and operational complexity. The objective is to equip financial professionals and strategic cost leaders with insights for modernizing their cost systems in the era of data-driven decision-making. 1. The Foundations ...

From Growth to Margin: How Oracle EPCM and Generative AI Are Powering the Retail Profitability Revolution

By Pedro San Martin posted 04-30-2025
By Pedro San Martín, Principal at Asher Executive Summary Post-pandemic retail exposed a brutal truth: many stores were still generating revenue, but failing silently. According to BCG and Strategy&, 38% of closures had positive sales but were unprofitable due to poor cost visibility. Retail leaders are facing a confidence crisis, with only 35% feeling assured in their current growth strategies (Asher & PwC). Traditional metrics, such as average traffic or sales, can hide the accurate picture of profitability, leading to misguided decisions. Enter Store Economics 2.0: a precision-driven approach enabled by Oracle EPCM and Activity-Based ...

Banking on Intelligence: Leveraging Spend Analytics and APQC Frameworks to Drive Cost Efficiency and Strategic Transformation

By Pedro San Martin posted 04-29-2025
Unlocking Operational Agility and Administrative Cost Control through Data-Driven Decision-Making in Financial Institutions by Pedro San Martin, Strategig Finance Principal Asher | PwC Interaméricas psanmartin@asher.company Abstract Spend Analytics has emerged as a critical strategic tool for cost control, efficiency enhancement, and compliance management within the banking sector. Utilizing the American Productivity & Quality Center's (APQC) Process Classification Framework (PCF), this paper examines the practical and strategic implications of Spend Analytics, specifically targeting administrative and value chain-related expenses in banking ...

The Model That No Longer Fits: My Perspective on the Evolution to ABC 4.0

By Pedro San Martin posted 04-21-2025
For decades, Activity-Based Costing (ABC) stood as a cornerstone of modern management accounting, a truly revolutionary alternative to the traditional costing methods that I saw struggling to reflect reality. When Kaplan and Cooper introduced Activity-Based Costing (ABC) in the late 1980s, they presented a fundamental truth that resonated deeply with me and many others in the field: it is not products that consume costs, but the activities performed to create and deliver them (Kaplan & Cooper, 1988). This shift in perspective promised unprecedented clarity. Yet, as I've observed across numerous engagements, particularly in Latin America, the dynamism ...

El Costo de No Saber Costear

By Pedro San Martin posted 04-10-2025
Como rediseñar Centros de Costo para impulsar la Estrategia Por Pedro San Martin, Principal en Asher | PwC Interamericas El 80% de los CFOs expresa falta de confianza en la estructura actual de sus centros de costo para la toma de decisiones estratégicas. — CFO Survey, 2024 Introducción: Cuando la Contabilidad se Convierte en un Obstáculo Estratégico En teoría, los centros de costo deberían actuar como una brújula financiera, guiando la asignación eficiente de recursos. Sin embargo, la realidad dista de este ideal. Un caso reciente, evidenciado por PwC en 2025 en un banco de consumo, ilustra esta problemática: la ...

Cost Leadership in Times of Trade War: How Strategic Cost Management Protects Competitiveness

By Pedro San Martin posted 04-09-2025
Introduction During my tenure at Nissan, I led strategic initiatives to ensure compliance with Regional Value Content (RVC) under the NAFTA framework. This was pivotal for the automotive sector, mainly as BMW established its first North American production facility. Decisions from this period impacted fiscal efficiency and the resilience and competitiveness of entire supply chains. In an environment marked by fluctuating exchange rates, escalating tariffs, and complex rules of origin, Strategic Cost Management transcended its conventional support role to become a cornerstone of operational and strategic resilience. This article explores how CFOs and senior ...

Cost to Differentiate, Not to Survive: The Case of Neobanks in Latin America

By Pedro San Martin posted 03-30-2025
Why aligning your cost structure with capabilities that truly matter—like UX, analytics, and scalability—can reduce burn rate and accelerate profitability from 6 to 3 years. Introduction According to recent studies (Investglass, 2023), less than 5% of neobanks worldwide have achieved profitability. This trend is even more acute in Latin America, with PwC Interaméricas (2024) data showing that only 2 of the region's 41 most relevant neobanks have reached operational break-even. Meanwhile, the region's average customer acquisition cost (CAC) has escalated to US$42, 38% higher than in 2021, according to Finnovista data. In an ecosystem abundant with ...

Organizational Culture and Tacit Knowledge: Keys to World-Class Profitability & Cost Management

By Pedro San Martin posted 03-23-2025
The Hidden Forces Driving Financial Excellence After two decades advising global organizations on Enterprise Performance Management, I've observed a recurring pattern: companies invest millions in sophisticated cost management tools only to achieve mediocre results. The explanation rarely lies in the technical aspects of these implementations. Instead, the key differentiator between success and failure often hinges on two frequently overlooked factors: organizational culture and tacit knowledge. When Numbers Aren't Enough In today's data-saturated business environment, CFOs and financial leaders are continuously pressured to deliver more precise ...

Profitability Optimization and Cost Management through Efficient Financial Models

By Pedro San Martin posted 03-20-2025
Introduction After the Great Recession of 2008, the need to improve financial model management became a priority for organizations. The crisis showed how many companies, even the most sophisticated ones, failed to anticipate or mitigate financial risks. To address this challenge, regulations such as SR 11-7 from the Federal Reserve System were introduced, establishing financial model risk management guidelines. However, for financial models to truly add value, they must be strategically designed to optimize profitability and improve cost management. This article explores how CFOs can implement effective financial models to drive strategic decisions and protect ...

Cost Innovation and Business Coherence: Creating Sustainable Competitive Advantage

By Pedro San Martin posted 03-16-2025
Introduction Cost innovation has become one of the most powerful tools for companies to maintain a sustainable competitive advantage in today's challenging economic landscape. However, for this strategy to be effective, it must align with a coherent corporate identity and capabilities. This article explores how companies that effectively integrate their value proposition with distinctive capabilities reduce costs and strengthen their market positioning . We will examine practical frameworks, case studies with quantifiable results, and actionable recommendations for implementing cost innovation within a coherent business strategy. The Power of Business ...

Transforming Your Company Through Comprehensive Cost Management: A Four-Dimensional Framework for Tariff Scenarios

By Pedro San Martin posted 03-08-2025
Executive Summary Companies that effectively manage tariff impacts gain significant competitive advantage in today's volatile global trade environment. Our four-dimensional cost management framework helps organizations reduce tariff-related costs by 15-30% while building resilience against trade policy shifts. Based on successful strategies implemented by Fortune 500 companies, this framework provides a systematic approach to assessing multiple scenarios, optimizing your global value chain, and transforming tariff challenges into strategic opportunities. The Tariff Challenge: Why Traditional Approaches Fail Imagine this scenario: Your company ...