context
Profitability analysis is a component of performance management that focuses on the company's bottom line results. Looking at the individual customer's profitability is part of this exercise. Although looking only at profitability does not provide a complete view of the performance of the organization, it embraces a set of measures and ratios that all have a critical role in determining the organization's present and future financial standing. As such, profitability analysis, supported by several methodologies, like for example Activity-Based Management, and tools, is an important component of the performance management environment. Profitability analysis includes the calculation of a number of financial measures and ratios, as well analysis of trends and history, requiring a lot of data to be available.
key considerations
Successful profitability analysis initiatives rely on several key components:
- data quality and availability: profitability analysis delivers financial measures and ratios, which require a lot of data to be available:
- historical data: to allow a correct understanding of the company's profitability, to identify trends and evolutions, and to perform competitive analysis, a large volume of historical data is required. Keyrus sees the Enterprise Information Management components as key in delivering profitability analysis solutions.
- complete data: the financial measures and ratios used in profitability analysis models require a lot of different data to be available from both a profit and a cost perspective, originating from various systems, from the core accounting systems to tools such as CRM and Activity-Based Management.
- ability to store large volumes of transactional data: studies have demonstrated that organizations which are able to capture costs and revenues on a transactional level are able to provide more accurate and useful profitability information. This leads to technical challenges, not only on the pure integration of data, but also on the storage itself, and must be considered seriously.
Keyrus and profitability analysis
Aware of the challenges that companies have to face when implementing profitability analysis solutions, Keyrus positions as a key partner guiding and supporting organizations in this domain thanks to a wide knowledge of profitability analysis and closely related domains like CRM and Activity-Based Management, combined with a large expertise in designing and implementing strong performance management foundations.
