Product Profitability

Product profitability is the new standard for value added services delivered by any finance team. Product Analytics provides a detailed financial breakdown of all costs and revenues for an enterprise’s entire range of products, allowing management to evaluate actual product profitability and forecast the profitability future product mixes.

Above: An example view of a dashboard showing customised representations of product profitability data.

The solution ensures that product profitability is a key driver within the budgeting and forecasting cycle for both operational and financial departments. Additionally, Product Analytics supports independent “what if” scenarios which can be exploited by the marketing and sales departments to evaluate changes in pricing or bundling structures.

Business Pains

Product Analytics minimises common business pains when managing product profitability by allowing:

• The comparison of long term product profitability figures by ensuring that hierarchy changes don’t cloud the issue
• Business Managers to respond with confidence to ‘what if’ scenarios for new products and new product bundles
• The quick identification of non performing products
• The detailed breakdown of product related costs to find the ‘root cause’ of non-performing products

Key Features of Product Profitability

Define and maintain product hierarchies and mixes – Product Analytics provides a the structure to defined, maintain and change product hierarchies ensuring business managers are able to measure the true effectiveness of product bundles instead of wasting time trying to establish the cost structure.  

Manage and exploit alternative hierarchies for product cost of sales versus product revenues – alternative hierarchies are a fact of life in a fast moving and dynamic business; Product Analytics ensures that business managers and users are not overwhelmed by mass changes to product mixes allowing comparison between the old and the new.

Apply different methods for the allocation of overhead and non cost of sales related expenses – keep a firm grip on overhead allocation without being forced summarise at too high a level or use the same rules for all parts of the business.

Benefits of Product Profitability

ReportsSource’s Product Analytics is a scalable solution which can be implemented as part of a Business Performance Management (BPM) suite or as a targeted solution to provide:

• A clear view of which products and product mixes are cost effective. In addition to managing current results the analysis can refine product pricing strategies
• Single source of product data that can be utilised across the enterprise to facilitate a true common reporting platform for product profitability
• Real-time analytic capability of what discounts can be given to customers while accurately assessing the impact on margins to ensure margin protection
• Provide ‘what-if’ analysis for changes in the cost base allowing for re-forecasting and preparation for changeable commodity markets
• Identify areas of growth in margin not just in revenue and accurately forecast profitability of new products and proposed product mixes

Powered by Hyperion

ReportSource’s Product Analytics utilises Hyperion System 9 Essbase Analytics and Hyperion System 9 Interactive Reporting delivering detailed analytical reporting through a highly accessable BI tool. The solution fully exploits the power flexibility and control delivered by Hyperion Master Data Management (MDM) and Hyperion System 9 Planning.

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