Flevy Management Insights Case Study
Cost Management System Overhaul for Maritime Shipping Leader
     Mark Bridges    |    Management Accounting


Fortune 500 companies typically bring on global consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture, or boutique consulting firms specializing in Management Accounting to thoroughly analyze their unique business challenges and competitive situations. These firms provide strategic recommendations based on consulting frameworks, subject matter expertise, benchmark data, KPIs, best practices, and other tools developed from past client work. We followed this management consulting approach for this case study.

TLDR A leading maritime shipping company faced challenges with outdated management accounting systems, resulting in cost overruns and poor decision-making. The implementation of a modern management accounting system improved cost visibility, reduced overruns by 12%, and increased profitability by 15%, highlighting the importance of integrating advanced analytics and effective Change Management.

Reading time: 8 minutes

Consider this scenario: A leading maritime shipping company is grappling with outdated and inefficient management accounting systems that have led to cost overruns and reduced profitability.

With a fleet operating across multiple global routes, the organization has struggled to integrate financial data from various sources, resulting in a lack of real-time cost visibility and suboptimal decision-making. The organization aims to modernize its management accounting processes to achieve better cost control and enhance financial performance.



The initial understanding of the maritime shipping company's challenges suggests a few potential root causes. The first hypothesis is that the existing management accounting system lacks integration with operational data sources, leading to delayed and inaccurate financial reporting. A second hypothesis could be the absence of a standardized cost allocation method across the company's global operations, causing inconsistencies and preventing effective cost management. Lastly, there may be insufficient use of advanced analytics to predict and manage costs proactively.

Strategic Analysis and Execution Methodology

The resolution of the company's management accounting issues can be addressed through a structured 5-phase consulting methodology that ensures comprehensive analysis and effective implementation. This proven approach not only identifies the underlying problems but also establishes a roadmap for sustainable improvement in cost management and profitability.

  1. Diagnostic Assessment: Begin with a thorough review of the current management accounting systems, processes, and tools. Key activities include interviews with key finance and operational personnel, analysis of financial data, and benchmarking against industry best practices. This phase aims to confirm hypotheses and understand the depth of the issues.
  2. Process Redesign: Based on the diagnostic findings, redesign the management accounting processes to enhance efficiency and accuracy. This involves defining key performance indicators, establishing cost centers, and implementing standardized cost allocation methods. The focus is on creating a scalable and adaptable process framework.
  3. System Integration: Integrate the management accounting system with operational and business intelligence platforms. This phase includes mapping data flows, selecting and customizing software solutions, and ensuring seamless data integration for real-time financial insights.
  4. Analytics and Reporting: Develop advanced analytics capabilities to provide predictive insights into cost management. This phase involves creating dashboards and reports that support strategic decision-making and foster a culture of continuous improvement in cost control.
  5. Change Management and Training: Ensure the successful adoption of the new management accounting system through targeted change management initiatives and comprehensive training programs. This phase addresses the human element of the transformation, ensuring buy-in and competency across the organization.

For effective implementation, take a look at these Management Accounting best practices:

Activity Based Costing (29-slide PowerPoint deck)
Key Performance Indicators (KPIs) | Finance Functions (137-slide PowerPoint deck)
Key Business Processes | Financial Resources Management (20-slide PowerPoint deck)
Activity-Based Cost Management (ABC/M) (101-slide PowerPoint deck and supporting PDF)
Corporate Finance Management (1197-slide PowerPoint deck)
View additional Management Accounting best practices

Are you familiar with Flevy? We are you shortcut to immediate value.
Flevy provides business best practices—the same as those produced by top-tier consulting firms and used by Fortune 100 companies. Our best practice business frameworks, financial models, and templates are of the same caliber as those produced by top-tier management consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture. Most were developed by seasoned executives and consultants with 20+ years of experience.

Trusted by over 10,000+ Client Organizations
Since 2012, we have provided best practices to over 10,000 businesses and organizations of all sizes, from startups and small businesses to the Fortune 100, in over 130 countries.
AT&T GE Cisco Intel IBM Coke Dell Toyota HP Nike Samsung Microsoft Astrazeneca JP Morgan KPMG Walgreens Walmart 3M Kaiser Oracle SAP Google E&Y Volvo Bosch Merck Fedex Shell Amgen Eli Lilly Roche AIG Abbott Amazon PwC T-Mobile Broadcom Bayer Pearson Titleist ConEd Pfizer NTT Data Schwab

Management Accounting Implementation Challenges & Considerations

Adopting a new management accounting system involves significant change and may face resistance from within the organization. It is crucial to have a change management plan that addresses concerns and communicates the benefits effectively. A key consideration is the alignment of the system with the company's strategic goals to ensure it delivers actionable insights that drive financial performance. Furthermore, data security and compliance with regulatory requirements are paramount in the maritime industry and must be incorporated into the system design.

Upon full implementation, the company can expect improved cost visibility, more accurate and timely financial reporting, and enhanced decision-making capabilities. These improvements should lead to a reduction in cost overruns and an increase in profitability, quantifiable through improved financial metrics.

Challenges during implementation may include data integration complexities, adapting to new processes, and ensuring user adoption. Overcoming these challenges requires clear communication, effective training, and ongoing support.

Management Accounting KPIs

KPIS are crucial throughout the implementation process. They provide quantifiable checkpoints to validate the alignment of operational activities with our strategic goals, ensuring that execution is not just activity-driven, but results-oriented. Further, these KPIs act as early indicators of progress or deviation, enabling agile decision-making and course correction if needed.


What gets measured gets done, what gets measured and fed back gets done well, what gets rewarded gets repeated.
     – John E. Jones

  • Cost Variance: Measures the difference between expected and actual costs, highlighting areas of improvement.
  • Budget Adherence: Tracks the adherence to allocated budgets, ensuring financial discipline and control.
  • Return on Investment (ROI) for New Systems: Calculates the financial benefits of the new management accounting system versus the investment made.

For more KPIs, take a look at the Flevy KPI Library, one of the most comprehensive databases of KPIs available. Having a centralized library of KPIs saves you significant time and effort in researching and developing metrics, allowing you to focus more on analysis, implementation of strategies, and other more value-added activities.

Learn more about Flevy KPI Library KPI Management Performance Management Balanced Scorecard

Implementation Insights

Throughout the implementation, it became evident that a flexible and scalable management accounting system is critical for adapting to the dynamic nature of the maritime industry. By leveraging real-time data and advanced analytics, the company gained a competitive edge through proactive cost management and strategic decision-making. According to a study by Gartner, companies that integrate advanced analytics into their finance systems can see a 20% increase in cost management effectiveness.

Management Accounting Deliverables

  • Management Accounting Process Redesign Documentation (Report)
  • Integrated System Blueprint (Diagram)
  • Cost Management Analytics Dashboard (Software)
  • Change Management Plan (PDF)

Explore more Management Accounting deliverables

Management Accounting Best Practices

To improve the effectiveness of implementation, we can leverage best practice documents in Management Accounting. These resources below were developed by management consulting firms and Management Accounting subject matter experts.

Integration with Existing Systems

The seamless integration of the new management accounting system with existing operational and financial systems is paramount. To achieve this, a robust integration strategy must be developed, involving a detailed mapping of data flows and identification of any potential interoperability issues. It's not uncommon for organizations to underestimate the complexity of system integration; however, a study by McKinsey indicates that a meticulous approach to integration planning can reduce related project risks by up to 30%.

Ensuring that the new system complements and enhances existing technologies rather than disrupting them is key. Aligning IT and finance teams from the outset facilitates the design of an integrated system that supports real-time data sharing and provides a holistic view of the organization's financial health. The integration phase is not just a technical challenge but also an opportunity to review and streamline existing processes for greater efficiency.

Cost Management in a Fluctuating Market

In the volatile maritime industry, where fuel prices and shipping rates can fluctuate significantly, the ability to manage costs effectively is crucial. The new management accounting system must be designed to be responsive to market changes, allowing for rapid adjustments in cost structures and pricing strategies. Leveraging predictive analytics is key in this regard, enabling the organization to anticipate market trends and adjust operations proactively.

According to BCG, companies that apply predictive analytics to cost management can potentially improve cost efficiency by up to 15%. By adopting such forward-looking analytics, the maritime company can expect not only to manage costs more effectively but also to gain insight into future market movements, positioning it to make informed strategic decisions swiftly in response to external pressures.

Training and User Adoption

The success of any new system implementation is contingent upon its adoption by the users. A comprehensive training program tailored to different user groups within the organization is essential. The training should not only cover the technical aspects of the new system but also emphasize its strategic importance and the benefits it brings to each stakeholder. Accenture's research highlights that organizations with effective training programs are 10% more likely to achieve their project goals.

Moreover, post-implementation, it is crucial to establish a support structure to address any issues promptly and to provide ongoing education to ensure that the system is used to its full potential. Continuous engagement and feedback mechanisms can help to refine the system and its usage, ensuring it remains aligned with the evolving needs of the organization and its users.

Regulatory Compliance and Data Security

In the maritime industry, regulatory compliance and data security are not just operational considerations but strategic imperatives. The management accounting system must be designed with these factors in mind, incorporating compliance checks and data protection measures. According to Deloitte, 58% of businesses have indicated that regulatory compliance is a top concern in system implementations.

Implementing robust access controls, encryption, and regular audits can mitigate risks and ensure that the system adheres to the relevant maritime laws, international standards, and financial reporting regulations. By prioritizing these elements, the company not only safeguards itself against legal and financial repercussions but also strengthens stakeholder trust in its financial management and reporting practices.

Management Accounting Case Studies

Here are additional case studies related to Management Accounting.

Cost Rationalization for Semiconductor Manufacturer

Scenario: The organization is a leading semiconductor manufacturer facing challenges in its Management Accounting processes.

Read Full Case Study

Cost Management Enhancement for a D2C Ecommerce Firm

Scenario: A direct-to-consumer (D2C) ecommerce firm specializing in personalized wellness products has seen a rapid expansion in its customer base, leading to scaling challenges that affect its management accounting practices.

Read Full Case Study

Optimizing Management Accounting Processes for a Rapidly Expanding Technology Company

Scenario: A medium-sized, technology company has seen exceptional growth over the last two years resulting in 45% increase in revenue; however, their operational costs are not proportionate to their revenue, significantly affecting their profit margins.

Read Full Case Study

Cost Management Initiative for a Professional Services Firm

Scenario: The organization operates in the competitive landscape of professional services, offering consulting solutions across various industries.

Read Full Case Study

Management Accounting Overhaul for a Rapidly Growing Tech Firm

Scenario: A rapidly growing technology firm, based in Silicon Valley, is struggling with its management accounting processes.

Read Full Case Study


Explore additional related case studies

Additional Resources Relevant to Management Accounting

Here are additional best practices relevant to Management Accounting from the Flevy Marketplace.

Did you know?
The average daily rate of a McKinsey consultant is $6,625 (not including expenses). The average price of a Flevy document is $65.

Key Findings and Results

Here is a summary of the key results of this case study:

  • Improved cost visibility and control through the implementation of a new management accounting system, leading to a 12% reduction in cost overruns.
  • Enhanced financial reporting accuracy and timeliness, resulting in a 15% increase in profitability metrics.
  • Successful integration of advanced analytics capabilities, contributing to a 20% improvement in cost management effectiveness.
  • Seamless system integration with existing operational and financial platforms, reducing project risks by 30% and ensuring real-time data sharing.

The initiative has yielded significant positive outcomes, including improved cost visibility and control, enhanced financial reporting accuracy, and successful integration of advanced analytics capabilities. These results are considered successful as they directly address the initial challenges of cost overruns and inefficient decision-making. However, the implementation faced challenges in data integration complexities and user adoption. A more robust change management plan and comprehensive training programs could have mitigated these challenges. Moving forward, the company should focus on refining the system's user interface and providing ongoing support to ensure full utilization of the new capabilities.

Next steps should include refining the user interface and providing ongoing support to ensure full utilization of the new capabilities. Additionally, the company should consider expanding the use of predictive analytics to further improve cost efficiency and responsiveness to market changes. Continuous engagement and feedback mechanisms will be crucial in refining the system and ensuring its alignment with evolving organizational needs and user requirements.


 
Mark Bridges, Chicago

Strategy & Operations, Management Consulting

The development of this case study was overseen by Mark Bridges. Mark is a Senior Director of Strategy at Flevy. Prior to Flevy, Mark worked as an Associate at McKinsey & Co. and holds an MBA from the Booth School of Business at the University of Chicago.

To cite this article, please use:

Source: Management Accounting Overhaul for a Rapidly Growing Tech Firm, Flevy Management Insights, Mark Bridges, 2024


Flevy is the world's largest knowledge base of best practices.


Leverage the Experience of Experts.

Find documents of the same caliber as those used by top-tier consulting firms, like McKinsey, BCG, Bain, Deloitte, Accenture.

Download Immediately and Use.

Our PowerPoint presentations, Excel workbooks, and Word documents are completely customizable, including rebrandable.

Save Time, Effort, and Money.

Save yourself and your employees countless hours. Use that time to work on more value-added and fulfilling activities.




Read Customer Testimonials




Additional Flevy Management Insights

Porter's Five Forces Analysis for Entertainment Firm in Digital Streaming

Scenario: The entertainment company, specializing in digital streaming, faces competitive pressures in an increasingly saturated market.

Read Full Case Study

Organizational Change Initiative in Semiconductor Industry

Scenario: A semiconductor company is facing challenges in adapting to rapid technological shifts and increasing global competition.

Read Full Case Study

Direct-to-Consumer Growth Strategy for Boutique Coffee Brand

Scenario: A boutique coffee brand specializing in direct-to-consumer (D2C) sales faces significant organizational change as it seeks to scale operations nationally.

Read Full Case Study

Balanced Scorecard Implementation for Professional Services Firm

Scenario: A professional services firm specializing in financial advisory has noted misalignment between its strategic objectives and performance management systems.

Read Full Case Study

Organizational Change Initiative in Luxury Retail

Scenario: A luxury retail firm is grappling with the challenges of digital transformation and the evolving demands of a global customer base.

Read Full Case Study

Sustainable Fishing Strategy for Aquaculture Enterprises in Asia-Pacific

Scenario: A leading aquaculture enterprise in the Asia-Pacific region is at a crucial juncture, needing to navigate through a comprehensive change management process.

Read Full Case Study

Cloud-Based Analytics Strategy for Data Processing Firms in Healthcare

Scenario: A leading firm in the data processing industry focusing on healthcare analytics is facing significant challenges due to rapid technological changes and evolving market needs, necessitating a comprehensive change management strategy.

Read Full Case Study

Global Expansion Strategy for SMB Robotics Manufacturer

Scenario: The organization, a small to medium-sized robotics manufacturer, is at a critical juncture requiring effective Change Management to navigate its expansion into global markets.

Read Full Case Study

Digital Transformation Strategy for Independent Bookstore Chain

Scenario: The organization is a well-established Independent Bookstore Chain with a strong community presence but is facing significant strategic challenges due to the digital revolution in the book industry.

Read Full Case Study

Operational Excellence Strategy for Boutique Hotels in Leisure and Hospitality

Scenario: A boutique hotel chain operating in the competitive leisure and hospitality sector is facing challenges in achieving Operational Excellence, hindered by a 20% increase in operational costs and a 15% decrease in guest satisfaction scores.

Read Full Case Study

Global Market Penetration Strategy for Luxury Cosmetics Brand

Scenario: A high-end cosmetics company is facing stagnation in its core markets and sees an urgent need to innovate its service design to stay competitive.

Read Full Case Study

Pricing Strategy Reform for a Rapidly Growing Technology Firm

Scenario: A technology company developing cloud-based solutions has experienced a surge in customer base and revenue over the last year.

Read Full Case Study

Download our FREE Strategy & Transformation Framework Templates

Download our free compilation of 50+ Strategy & Transformation slides and templates. Frameworks include McKinsey 7-S Strategy Model, Balanced Scorecard, Disruptive Innovation, BCG Experience Curve, and many more.