Capital expenditure is one of the biggest conundrum for any CEO and CFO. Recent studies are highlighting a common secret among top-management and procurement professionals. The average misallocation in every CapEx allocation is approximately 22% of the whole amount of that project. In certain industries such as telecommunication and technology companies the average is exceeding 30%. The grounds for the misallocation can widely vary, extending to:
Moreover, the days where capital expenditure was easily and clearly defined are long gone. Nowadays, CapEx may even include capitalized labour costs and overheads associated with the development of intangible assets, such as software, R&D and patents, irrespective if the software if for internal use or sale.In the case of Agile development and DevOps, if the FP&A department is unable to reconcile the change in methodology, it may decide to expense all Agile development labour costs, loosing the opportunity to capitalize that part of the labour cost and in essence misallocate resources.
Our CAP AI toolkit with its open API (RESTful), will integrate with the BI, CRM, ERP, procurement and planning systems of our clients to facilitate them to allocate properly their assets.