Intersoft Lab: Allocations

Allocations - the CPM-application, is selected from structure of the solution Circuit, created on the basis of the available functionality and implements multistep redistribution of indirect expenses with necessary extent of detailing on profit centers, clients and their derivatives.

2016: Fulcrum approach of expense allocation

On October 11, 2016 the Intersoft Lab company announced upgrade of the Allocations application as a part of the Circuit CPM platform 3.kh. In the application tools for cascade diversity of expenses and mechanisms of cyclic distribution appeared.

The functionality will help to consider allocation of costs between the divisions rendering each other mutual services. Implementation of a new method in the application – transparency of calculations for the account of the return trace of results of cyclic distribution.

Banks use redistribution (allocations) of overheads in solving of tasks of planning and assessment of actually reached profitability of divisions, clients, client segments, the business directions, products, product groups, projects and so forth and also for implementation of functional value analysis.

In the upgraded version of the application of Allocation two methods of expense allocation are implemented: cascade (step-by-step) and cyclic. Each method works in the scope. The greedy method is intended for accomplishment of multistep consecutive expense allocation from sources on receivers, for example, for transfer of costs of the providing divisions for profit centers and further on products or clients, at the same time the flow of distribution is sent to one direction. The cyclic algorithm well proved for more complex circuits of diversity in which it is necessary to reflect oncoming traffic of flows of distribution of costs in case of mutual rendering services by divisions, for example, between IT department and accounting between centers. The best effect can be gained when using at the same time of both methods in one distribution model when the cyclic algorithm is started on separate steps of distribution. For example, solving a problem of efficiency evaluation of profit centers and products, on the first step it is possible to apply cyclic diversity of expenses on profit centers, and further on the following steps to use the greedy method for allocation of costs from profit centers on products. It will allow to combine advantages of cascade and cyclic models - transparency of result on each step and accounting mutual allocation of costs.

According to the statement of the company, test calculations showed the high performance of the fulcrum approach on the model including more than 20 kost-drivers and about 100 thousand nodes of distribution. Time of calculation of the distribution including more than 1 million transitions between nodes was several tens of seconds.

Intersoft Lab is ready to offer the clients automation of any scenario of allocations using cascade and cyclic algorithms of calculation. It should be noted that we managed to overcome the main bottleneck of the fulcrum approach connected with opacity of calculations. In the updated application of Allocation the return trace of diversity for the fulcrum approach allowing to monitor transfer on each node of distribution is implemented. Yulia Amiridi, the associate director on Intersoft Lab business development

2013: "Allocations"

The CPM-application of Allocation is intended for refining and correction of a financial result, it allows to increase the accuracy of efficiency evaluation of profit centers, partners and also the provided services and sales channels. By means of the program it is possible to define adjustments for the managerial profit and loss statement, and not only when accounting the actual result, but also at its planning, the press service of the company reported on June 20, 2013.

Applied opportunities of software of Allocation provide flexible configuration of cost centers (cost Center), kost-drivers (cost driver) of different types (resource, financial, process and user), methods of distributions (vector and matrix) and steps of allocations which when calculating integrate in chains. Using this application it is possible to implement various and difficult techniques of allocations most of which fully conform to individual requirements of credit institution.

Implementation specialized a CPM-application of Allocation will allow to overcome those restrictions which are inherent in the spreadsheets of Microsoft Excel used not only in small, but even in large credit institutions for diversity of indirect expenses.

The application guarantees transparency of calculation results of allocations. Interfaces for storage and viewing all intermediate results of calculation give the chance to trace changes of result on all chain. Thus, the financial service of bank receives the convenient tool for efficiency analysis of the applied valuation methods of costs that allows to select from them optimal and to increase productivity of financial management in general. Besides, Allocations provide the high speed of calculations, control of integrity and data consistency and rules of their processing.

The important feature – a possibility of setup and calculation of any separate step of a chain of allocations irrespective of the others - the user can perform tuning and calculation of each step separately, quickly and with the minimum efforts to create and configure different distribution models of expenses.