Maturity Model for Successful Cost Transformation in ETO Companies

Abstract

Companies are more and more required nowadays to monitor and to improve their cost structure. Hereby, ETO enterprises experience particular difficulties, due to the high complexity and dynamics as well as less opportunities for standardization which are an intrinsic part of their products and processes. Therefore, a systematic and holistic approach for cost management is needed, considering hard factors as well as soft factors, like organizational and behavioral aspects. In this paper, we introduce a product cost maturity model, which integrates a multitude of success factors for cost transformation from different categories in an ETO environment. Hereby companies will be enabled to determine and evaluate their current state as well as a future state to derive a roadmap for necessary actions. The maturity model is based on a thorough literature research and on practical experiences in ETO companies. It is complemented with a systematic procedure for cost transformation projects. We describe the maturity model and its application as far as possible in detail, hereby also justifying every design decision we made.