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Measuring true profitability of products, services and customers

Accenture develops analytical engine to provide actionable customer insights for next-level campaign management.

Overview

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.

Increasing Profitability at Procter & Gamble

Watch the video to Learn how Accenture helped Procter and Gamble (P&G) cut its time to market, cut development costs and put products in consumers' hands faster.

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Background

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 in:

  • Defining product pricing and messaging

  • Improving process efficiency, or

  • Targeting offerings to customer segments

Podcast

Why Less is the New More

For many companies, the ability to produce savings through more traditional cost-cutting measures is almost exhausted. The solution: Combine cost-cutting initiatives with design and development activities using cost-driven product and service innovations to create new streams of profitable growth.

Recommendations

A profitability analytics solution from Accenture Analytics requires net profitability based on a solution design that includes:

  • General ledger

  • Cost center (functional structure)

  • Processes (value chain)

  • Cost drivers

  • Products

  • Customers (commercial structure)

  • Sales channel

Sound and robust profitability analytics solutions are based on five cornerstones enable better decision-making:

  1. Cost transparency is an important result of the solution.

  2. The organizational structure and general ledger hold the basic information for the methodology—what cost is consumed where and by whom.

  3. Process efficiency can be analyzed and improved, thereby leading to improved cost efficiency.

  4. The costs—and the components of those costs—associated with producing a product are known.

  5. What customers buy and the revenue they generate is known.

Achieving High Performance with Accenture Analytics

Authors

David Axson

David Axson
Managing Director - Accenture Strategy, Finance & Enterprise Performance

David 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.

http://www.linkedin.com/in/davidaxson

Kurt Rosander

Kurt Rosander
Digital Lead Financial Services & Analytics at Accenture

Kurt 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.

http://se.linkedin.com/pub/kurt-rosander/b/b7a/609