The difference between "calculated" and "verified" savings is the entire budget for improvements. This is how we close that gap.

We see the same scenario play out over and over again during rollouts. The improvement program posts impressive numbers for the year. The CFO requests a more detailed breakdown, and within a week, less than half of the figures remain. The following year, the program has a smaller budget.

Not because there hasn't been any improvement. But because the savings were calculated in a way that wouldn't hold up under an audit.

Three Areas Where Financial Discrepancies Arise

• Everyone calculates it differently. One process improver uses the department’s hourly rate, another uses gross pay, and a third uses an estimate. The same improvement on two production lines results in a twofold difference.
• The investment isn't recorded anywhere. The €18,000 expenditure appears in a different budget than the savings it generated. As a result, no one will ever calculate the return on investment correctly.
• No one will come back a year later. The savings are reported in the month the project is completed and are not verified again. If the change stops working after six months, the figures in the report remain unchanged.

A cost savings that hasn't been approved by the controlling department isn't a cost savings. It's just a well-intentioned estimate.

What does the BC module do with it?

The calculation methodology is defined once by the controlling department—workstation rates, unit price, energy cost, and rules for hard and soft savings. The improvement specialist calculates and enters the amounts in detail and can enter the following inputs: number of seconds, number of units, and number of kWh. The customer defines the level of detail and the method of recording.

The investment is recorded on the same tab as the savings, so the payback period and ROI are calculated automatically, rather than in a separate table. And twelve months after the project is closed, the system can automatically initiate a follow-up verification: Are the defined financial amounts still valid?

A result that can be justified

At first glance, organizations that operate this way report lower figures than before. The difference is that these figures “pass” the finance department’s review—and thanks to them, the budget for improvement does not decrease year over year, but rather increases.