Drill down to costs and profits in detail

When you know the costs and profits in detail, you are able to provide answers to questions such as:

  • Which of my customers are the most profitable ones?
  • What is the cost structure of each product and service?
  • Which of my business processes are inefficient and most in need of development?
  • How have the costs and profits developed over time?

Keys to success

  • Managing data efficiently is a necessity in complex cost and profitability management systems. Data needs to be integrated from different sources, such as accounting, sales, and customer database.
  • Cost and profitability modelling connects accounting data with information from daily activities, products and customers. Appropriate level of details and justified assignment rules in modelling ensure that the results are relevant and reliable – and also enables smooth maintenance of the system.
  • No information is useful until it is delivered to the decision makers in an understandable way. Reporting and visualization lets you get a clear picture of the profitability from different perspectives, and the drivers behind it.
  • Cost and profitability management projects are filled with potential pitfalls, when operating in the intersection of business needs and practical constraints. Systematic project management and especially experience of similar implementations in the past enable reaching the goals.

Enabling actions with advanced analytics

Profitability Analytics Process

Knowing the momentary costs and profits is the foundation of better decisions – but there is still a long way to go. What if you could take a step further, and answer even more complex questions:

  • What are our customer segments – taking profitability into account – and how should they be managed to improve profitability?
  • How should we treat the customer considering its expected lifetime value?
  • What would be the impact of changes in workforce or material costs on profitability?
  • How should we allocate workforce to tasks or orders to production facilities to optimize costs?

Profitablity accelerator – fast business benefits

Profitability management is frequently seen as a long and complex project that is difficult to get started with. We at Avarea disagree. Our Profitability Accelerator -service is an ideal solution for successful and easy initiation to the topic and enabler of fast business benefits.

  • Conceptualized service providing a systematic approach to start the utilization of profitability analytics
  • Takes advantage of activity-based costing method, produces information about products, customers and/or processes
  • Easily maintainable calculation model in 6-12 weeks
  • Helps identifying the needs for profitability management and sets the ground for further development

Customer stories

Case Valio: Atlas – Up-to-date Monitoring of Sales and Profitability

“Using Atlas has increased trust in our figures and the understanding of accounting cause and effect relationships. Atlas is our most important reporting tool, and the basis for almost all management reporting. With Atlas, up-to-date profitability information is readily available to everyone who needs it, without the finance department having to separately produce it. This frees our time so we can focus on analysing information.”Osmi Hämäläinen, Valio
Read the full case story