The Importance of Cost and Profitability Reporting
Common Profitability Challenges
- Unable to identify which customers / channels / sectors / products are truly profitable
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Unable to easily calculate true “cost to serve”
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Unable to identify true profitability drivers within the business
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Manual allocations of overheads are time consuming and difficult to trace-back
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Allocations of shared services / head office costs are un-equitable
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Unable to understand what is driving our shared services costs
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Cannot identify where to cut costs without adversely impacting customer service
Stakeholder Vision
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Understand what drives costs
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Know exactly where profit is made
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Optimise resources
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Keep shared services aligned
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Flexible solution which is owned and managed by Finance
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Future proofed scalable solution
- Profitability information in a timely manner to enable informed business direction decisions to be made
What is SAP PCM? (Profitability and Cost Management)
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An in-memory solution which calculates allocations in real time.
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Stand alone – does not use NetWeaver or HANA, but can be interfaced into BW using FIM / Data Services / DB Connect
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Can be simple allocations through to Activity Based Costing methodology, dependent on the level of data available.
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Is highly scalable and can manage high volumes of data
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Quick “what if analysis” can be performed
- Integration with other EPM applications
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Owned by Finance rather than IT
Positioning of PCM with other SAP applications
Uses of SAP PCM
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Reduces month end performance impact of allocations within SAP ECC (eg CO-PA / CCA assessment cycles)
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Can perform simple allocations through to complex waterfall type allocations utilising either simple rules or more complicated activity based costing methodologies.
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Suitable for (examples only):
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Service Industry (shared service cost allocations)
- Retail (shared service costs, head office cost allocations, store profitability)
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Banking (branch profitability, product profitability, allocation of head office / shared service costs)
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Manufacturing (cost to serve allocations, shared service cost allocations, channel, product , customer profitability)
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Public sector (shared service cost allocations, facilities cost allocations)
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