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Author's profile photo Chris Grundy

The Journey Beyond Profitability Management

In my earlier blog, I suggested that Profitability Management in organizations comprises twin facets: analysis and control. Each play a vital role in providing organizations with the tools and insights needed for them to steer a course towards managing profitable outcomes. It’s a nice idea eh? Well, not so much an idea anymore, but more a business reality that’s much needed by many organizations struggling to deal with environmental, social, competitive, and market issues daily, in a profitable and sustainable manner of course.

But beyond profitability management, modern software has the capacity to not only provide the analysis and control needed to manage profitability, but to also have the technical capabilities to do so much more. By combining advanced modelling techniques with superior data management capabilities, businesses can attune the same software used for granular profitability analysis and management to focus it on solving issues elsewhere. Think of a process in your business that’s a key part of your operating model, but for which you struggle to optimize performance owing to the process complexity, or the volume and accessibility of data involved. This could be your own candidate for improvement with this new breed of software solution.

Maximizing Returns from Your Profitability Management Software Investment

In the recent white paper, “Build an Actionable Profitability Management Initiative,” Ventana Research suggests that by 2025 over one-third or organizations will have implemented a profitability management solution. That’s great news! But how great would it be, for those organizations to maximize their potential investment return and re-orient that same software for other purposes? For instance:

  • Transfer Pricing

Where they could easily construct complex models of an end-to-end manufacturing process to manage and optimize operational transfer prices across the global value chain, improve liquidity transfer pricing rate modelling, and model the inter-company recharging process.

  • Tax Calculations

To be compliant yet flexible to differing operational realities and legal requirements, creating end-to-end corporate group and legal entity tax models and simulations.

  • IT and other Services Costing

Having an ability to turn cost centres into profit centres by enabling IT, HR, Legal, and other services to accurately cost and then cross-charge internal customers for services consumed.

  • Sustainability Management

Allowing organizations to create comprehensive models for calculating organizational environmental, social, and governance impacts for internal and external reporting, with the flexibility to model and analyze end-to-end value chain sustainability as well as product-specific carbon footprint analysis, in a consistent, efficient, transparent, and auditable manner.

Learn More on September 28 at the FP&A Trends Webcast

If you’re intrigued by the possibilities, why not learn more? Join the FP&A Trends webcast Managing Profitability in Uncertain Times on 28 September, and listen in to the conversation between a panel of experts.

Thanks for reading, and please let me know your views and experiences with profitability management, either in response to this blog, or on LinkedIn

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