Understanding Profitability: How Companies Can Improve Their Businesses with Profitability Analytics

Accenture explores strategies that allow business leaders in today’s volatile and competitive marketplace to assemble comprehensive and methodical approaches to gauging true profitability.

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 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 product pricing and messaging, improved process efficiency, or targeting offerings to customer segments.

RECOMMENDATIONS

A profitability analytics solution requires net profitability of all elements (products, services, customers) to equal the reported profit. The solution design following analytical dimensions can be included:
- General ledger
- Cost center (functional structure)
- Processes (value chain)
- Cost drivers
- Products
- Customers (commercial structure)
- Sales channel

With profitability analytics being a live system, a solution should be built on five cornerstones:

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

2. The organizational structure and general ledger hold the basic information for the methodology.

3. Process efficiency can be analyzed and improved.

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.

Download the report (20 pages in english):
http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture-Understanding-Profitability-Companies-Improve-Businesses-Profitability-Analytics.pdf

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