Analysis at Your Fingertips
Surviving uncertain economic times and thriving beyond
Economic uncertainty and an increased focus on profitability are driving companies to look inward as they more frequently ask themselves three fundamental questions on performance:
• How are we doing?
• Are we on track?
• Can we perform better?
This corporate soul searching has stepped up the pressure on finance organizations to take a variety of actions to help their companies navigate the current economic turbulence. Not only do businesses need short-term lifelines to respond to a mercurial global economy and fluctuating availability of capital, but they also need to drive cash flow, contain and reduce costs, manage risks and improve profits. And yet, when surveyed, most executives say that a significant amount of performance potential (revenue growth, profitability, and shareholder value) is lost due to sub-par performance management practices.
In fact, some say that as much as 70% of potential is lost.
In addition, executives are being asked to transform critical business processes, responding creatively to constantly changing conditions, sometimes even re-mapping the entire course of the business.
While organizations navigate through these challenges, the quantity of information has mushroomed, and all business functions now regard this universe of data as a strategic, competitive asset. Organizations must capitalize on this information, using it to build intelligence and acquire the insight to respond more effectively to changing business conditions.
One of the most critical challenges executives face is that of monitoring key metrics on profitability while using the information gleaned from intelligence discovery processes to the organization’s strategic advantage. BILogix and IBM Cognos offers solutions to help organizations meet this challenge.
Profitability: The new imperative and a new approach
Profitability analysis is a cross-enterprise discipline that seeks to unlock profit potential wherever it may be found. Once primarily a management and accounting-driven reporting exercise, it is now being used to help all parts of a company gain the insight necessary to deploy their limited resources in pursuit of the most profitable opportunities. Departments and divisions such as sales, marketing, operations and engineering can use profitability analysis to answer simple, profit-focused questions in the context of their day-to-day strategic and tactical business decisions. Examples of these questions include:
• Who are my most profitable customers?
• What are my most profitable products or service lines?
• Which are my most profitable sales channels?
With this evolution of profitability analysis, profitability itself has moved to the front lines of the business where employees are making daily “micro-optimization” business decisions. This transformational shift is compelling not only finance but all business functions to move beyond the complexity of costing to focus on an approach that helps their entire business. Today, an analyst or team of analysts, often cross-functional, starts with a specific business decision that needs to be made and moves back through a number of activities and disciplines to obtain the source information needed to illuminate the full range of factors affecting the ultimate profitability of a given course of action.
• Assess the right profitability metrics that can optimize business performance.
• Move from merely a costing-oriented, historical profitability reporting exercise to a forward-looking profitability modeling paradigm.
• Tie profitability analysis to other performance management processes such as planning, financial consolidation, controls reporting, strategy management, scorecarding and more.
• Analyze different dimensions of profitability (for example, customer, channel, product, region, line-of-business, employee, and supply chain).
• Apply advanced analytics based on a broader array of data.
• Increase the frequency and speed of profitability analysis for both short-term and long-term benefit.
Profitability analysis powered by IBM Cognos provides the necessary capabilities to address the full spectrum of profitability considerations, delivering the key metrics needed to understand not only the typical historical view, but causality and the scenarios to determine the best next actions to be taken. A powerful and flexible solution that includes reporting, analysis, modeling, planning and collaboration, Cognos scales to support the profitability analysis and decision making of large numbers of users—and can be readily blended into planning and forecasting processes.
We at BILogix can assist financial and business in using the power of IBM Cognos to achieve profitability improvements.