From cost accounting to strategic cost management: the experience of Italian higher education cost management in public services has often been viewed with disenchantment. The perception of costs is associated with spending reviews and cuts in personnel, disregarding their strategic role. This chapter re-positions cost management at the strategic level. This repositioning is central to revaluate costs in their true essence: the calculation of how we use resources. This strategic view has two main benefits. The first is related to the results of cost allocation, that offer insights on how we consume our resources for service delivery. The second is related to the process for calculating these costs. There are several decisions in the process that might change the results; these decisions are not purely technical: they are a constitutive process in which managers, if involved, reflect on the services and products but also the organization and their responsibility centres. This chapter poses the attention on these issues, presenting the experience of the Good Practice project. Good Practice is an Italian benchmarking initiative in which state universities voluntarily provide their costs, within the same protocol, in order to have a reference for their strategic management. The project started in 1999 under the initiative of the Italian Government, but from 2003 it has been brought forward and financed by universities directly. The project overall has involved more than 50 state universities during its 20-year life. The chapter focuses in particular on three cases that are representative of how universities adopted a strategic approach to cost management. Three types of cost-strategizing configurations are identified: organizational reshaping, service balance and resource programming. The study offers a picture that is very distant from the often-employed cost-cutting approach. Cost data are instead part of a more strategic vision, although always coupled with other data. The chapter is organised as follows. The next section illustrates the context and the method. Then, the distinctive features of the strategic approach to cost are presented. The empirical cases are illustrated in the third section, followed by a discussion of the managerial implications.

From cost accounting to strategic cost management: The experience of Italian higher education

Deborah Agostino;Michela Arnaboldi
2021

Abstract

From cost accounting to strategic cost management: the experience of Italian higher education cost management in public services has often been viewed with disenchantment. The perception of costs is associated with spending reviews and cuts in personnel, disregarding their strategic role. This chapter re-positions cost management at the strategic level. This repositioning is central to revaluate costs in their true essence: the calculation of how we use resources. This strategic view has two main benefits. The first is related to the results of cost allocation, that offer insights on how we consume our resources for service delivery. The second is related to the process for calculating these costs. There are several decisions in the process that might change the results; these decisions are not purely technical: they are a constitutive process in which managers, if involved, reflect on the services and products but also the organization and their responsibility centres. This chapter poses the attention on these issues, presenting the experience of the Good Practice project. Good Practice is an Italian benchmarking initiative in which state universities voluntarily provide their costs, within the same protocol, in order to have a reference for their strategic management. The project started in 1999 under the initiative of the Italian Government, but from 2003 it has been brought forward and financed by universities directly. The project overall has involved more than 50 state universities during its 20-year life. The chapter focuses in particular on three cases that are representative of how universities adopted a strategic approach to cost management. Three types of cost-strategizing configurations are identified: organizational reshaping, service balance and resource programming. The study offers a picture that is very distant from the often-employed cost-cutting approach. Cost data are instead part of a more strategic vision, although always coupled with other data. The chapter is organised as follows. The next section illustrates the context and the method. Then, the distinctive features of the strategic approach to cost are presented. The empirical cases are illustrated in the third section, followed by a discussion of the managerial implications.
Managing Public Services. Making Informed Choices
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11311/1211192
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