Blogs

Cost as a Mirror of Strategy

By Pedro San Martin posted 8 days ago
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 20 days ago
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 23 days ago
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 24 days ago
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 ...

Does the 80/20 Rule Really Apply in Profitability Analytics?

By Pedro San Martin posted 02-15-2025
The Pareto Principle (80/20 rule) has been widely cited in university courses, whitepapers, and research studies as a fundamental law of business profitability (Koch, 2011). It suggests that 80% of a company's profits come from just 20% of its customers, products, or sales channels . While this heuristic is helpful for strategic focus, it does not always hold true across different industries and market conditions. Analyzing the Profit Curve: Does it Follow the 80/20 Rule? The provided profit curve, shown in the image, serves as a clear empirical test against the strict application of the Pareto ...

10 Reasons Why Finance Professionals May Overhype AI

By Pedro San Martin posted 02-14-2025
The financial sector is lively with discussions about artificial intelligence (AI) and its potential to transform corporate finance, accounting, and strategic decision-making. AI-powered forecasting models, risk assessments, and automation solutions are being presented as game-changers for CFOs. However, a more critical analysis indicates that AI may not be the ultimate solution that some claim it to be. While AI has potential, finance professionals must recognize its practical limitations. Here are ten reasons why AI may be overhyped for the CFO's office and finance professionals: 1. AI Lacks True Financial Intelligence At first glance, AI-powered financial ...

Unlocking Profitability Analytics Through Better Problem-Solving

By Pedro San Martin posted 02-13-2025
As a Profitability and Cost Management Expert, I've spent years navigating complex organizational challenges, from untangling cost inefficiencies to identifying strategic growth opportunities. In my experience, the key to profitability analytics often lies in crunching numbers and how we approach problem-solving as teams. Reflecting on an insightful article I recently read on team collaboration and problem-solving, it struck me how profoundly the principles of psychological safety and cognitive diversity apply to my EPM field​. These aren't just abstract ideas—they're essential tools for maximizing efficiency and unlocking the full potential of any ...

2025 Basic Guide to Improve Cost Decisions

By Pedro San Martin posted 02-07-2025
Effective cost management can be a significant value driver, but it requires leadership from executives committed to investing in the future. The urgent pressure to reduce costs is undeniable as the recession's impact continues. However, business leaders must remain committed to evolving cost management practices so that limited resources and funds are consistently directed toward the most valuable business outcomes. This responsibility falls on more than just operational managers, even though they often bear the brunt of executing cost initiatives. Executive leaders develop strategies, foster a culture, and establish processes incorporating a value-realization ...

Why do I need a PCM Center of Excellence in my organization?

By Pedro San Martin posted 01-13-2025
Why is a Profitability and Cost Management (PCM) Center of Excellence necessary for my organization? A PCM Center of Excellence (CoE) is a strategic initiative to centralize, optimize, and standardize the organization’s approach to understanding, analyzing, and enhancing financial performance. It focuses on providing comprehensive insights into revenue, costs, and investments, ultimately improving the organization's overall profitability. The PCM Center of Excellence is a centralized knowledge repository that captures and disseminates critical insights across the organization. Key best practices may include: Eliminating manual cost allocation and profitability ...

¿Cómo ha evolucionado el rol del contador de gestión en el mundo empresarial moderno?

By Pedro San Martin posted 01-04-2025
En este blog, exploro la evolución fundamental de la contabilidad de gestión, desde su enfoque tradicional hasta su rol estratégico en el entorno empresarial contemporáneo. A través del análisis de avances tecnológicos, los efectos de la globalización y las complejidades del negocio moderno, respaldado por evidencia empírica y estudios de caso tanto globales como latinoamericanos, demuestro cómo esta disciplina ha pasado de ser un soporte financiero a convertirse en un socio estratégico. A continuació muestro como se integran las perspectivas regionales y datos empíricos para brindar una visión integral de esta transformación. La contabilidad de gestión ...

The Hidden Power of Stakeholder Analysis: Transforming EPM Implementation from Technical Exercise to Strategic Victory

By Pedro San Martin posted 12-31-2024
Executive Summary Profitability analytics, as part of Enterprise Performance Management (EPM) implementations, frequently fail due to human factors rather than technical issues. This article introduces an improved framework for transforming EPM projects through strategic stakeholder analysis, supported by real-world case studies and actionable insights. Based on lessons learned from successful implementations, we explain how leading organizations incorporate advanced stakeholder engagement practices to achieve faster implementation times, higher user adoption rates, and sustainable business impact. The Human Factor in Digital Transformation ...

The Critical Role of Human Decision-Making in AI-Enhanced Profitability Management

By Pedro San Martin posted 12-25-2024
The Critical Role of Human Decision-Making in AI-Enhanced Profitability Executive Summary While artificial intelligence offers robust cost optimization and revenue enhancement tools, it's crucial to remember that human judgment remains irreplaceable in strategic profitability management. This analysis underscores the unique value that human decision-makers bring to the table, particularly in navigating complex financial choices and leveraging AI capabilities to maximize organizational performance. The emergence of AI has generated significant enthusiasm for automating financial decision-making processes. However, the notion that AI alone ...