The foundation for sustainable bottom-line growth

Effectively managing costs and improving profitability is one of the major challenges in today’s dynamic business environment.  The pressure to increase value while maintaining productivity is compounded by economic uncertainty and global competition.  Ultimately, companies must transform volumes of data into meaningful knowledge to identify, understand, and improve drivers of cost and profitability to achieve sustainable bottom-line growth.

While the benefit of accurate cost and profit knowledge is substantial, the penalty for the absence of such information is even greater.  For example, the “whale curve” pattern of profitability is found in nearly every company.  After ranking customers by true profitability, companies see that the first 20% of customers generate 5 times the amount of earned profit, while the next 60% simply break even.  The remaining 20% destroy 400% of profit to arrive at earned total profit.  While traditional financial accounting hides these details, cost and profitability management allows you to identify and capitalize on these opportunities.

Cost and profitability management solutions allow organizations to measure the true cost and profitability of products/services, sales channels, and customers.  Using activity-based costing as the underlying engine, these solutions provide actionable insight into costs and profitability across all parts of an organization that reveals opportunities to cut cost, grow revenue, and achieve sustainable bottom-line growth.

Cost & Profitability Management Applications

• Accurately identify the cost to produce goods and services by understanding direct and indirect resource use.
• Determine the cost contribution of shared services and overhead to products.
• Effectively reduce costs by revealing process changes necessary for permanent cost reduction.
• Identify and improve high-cost processes.
• Measure and avoid unprofitable design of products and services.
• Calculate true cost of inputs and supply chain by identifying cost to acquire.
• Identify and reduce high overhead costs per unit.
• Make the right outsourcing decisions.
• Predict resource implications of changes in demand.

• Set the right prices based on true cost of products/services.
• Measure profitability of individual customers, markets, and geographic regions by calculating cost to serve (cost to acquire, service, retain, etc.) with transaction level detail.
• Reengineer customer relationships to increase efficiency and reduce cost.
• Accurately prioritize marketing and sales initiatives based on true product and customer profitability.
• Determine the profit maximizing portfolio of products/services and customers.
• Identify and improve the profitability of sales channels and partnerships.
• Establish profitable sales compensation and incentive