Cost structure

Strictly speaking, cost structure is supposed to be about which factors cause costs to go up and down. As an enterprise architect, I’m more interested in studying costs to learn which parts of the enterprise architecture the business is spending money on.

Ideally, costs can be associated with processes, which relate to capabilities, making it possible to create a pie chart that illustrates the distribution of costs across capabilities. In reality, most businesses don’t earmark postings in their ERP system with processes, so it can be difficult to relate costs to elements of the enterprise architecture.

I also look for KPIs in the business. Are there KPIs in place that ensures that changes in cost levels are noticed early?