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The need for detailed and relevant information on profitability around products and services offered to customers is critical to an effective business strategy.
However, companies are increasingly finding themselves lost in the confusion of cost allocations.
Accenture explores strategies that allow business leaders in today’s volatile and competitive marketplace to assemble comprehensive and methodical approaches to gauging true profitability.
As businesses struggle to grasp what products and services are delivering in terms of profitability, there is a risk of operating with inaccurate information—leading to equally inaccurate resource allocation for sales, advertising and customer service.
Fortunately, much of the information companies need already exists—but it is scattered across multiple systems. Detangling, cleaning and aggregating this data is key to building an approach that offers agile decision making.
Armed with good data, decision-makers are more likely to trigger "ah-ha" moments that lead to success—be that in:
A profitability analytics solution requires net profitability of all elements (products, services, customers) to equal the reported profit. The solution design should include the following analytical dimensions:
Because profitability analytics is a live system, the solution should be built on five cornerstones that can enable better decisions:
Cost transparency is an important result of the solution.
The organizational structure and general ledger hold the basic information for the methodology—what cost is consumed where and by whom.
Process efficiency can be analyzed and improved, thereby leading to improved cost efficiency.
The costs—and the components of those costs—associated with producing a product are known.
What customers buy and the revenue they generate is known.
David A. J. AxsonDavid Axson is a managing director for Accenture Strategy. Based in Cleveland, USA, Axson has more than 27 years of consulting, industry and entrepreneurial experience working with clients and enterprises in more than 40 countries.
An accomplished author, Axson specializes in advising clients on the challenges of doing business in an uncertain and volatile global marketplace—focusing on strategy, performance management, risk management and analytics, and guiding them on their journey to high performance.
Kurt RosanderKurt Rosander is responsible for Accenture Analytics for the Nordic region, within the Bank and Insurance group. Based in Stockholm, Sweden, Rosander brings over 25 years of consulting, industry and entrepreneurial experience in analytics, profitability analysis and modeling, process management and enterprise performance management (EPM).
Having published numerous articles and a book on activity-based management (ABM), Rosander has been actively focused on the question of profitability management for the last 21 years and implemented over 60 cross industry and cross region EPM assignments.
January 28, 2014
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