Company: Business Objects UK
Category: Enterprise Risk Management
Published: 01 January 2007
It is estimated that companies spend over U.S. $500 million per year on software and services for profitability analysis. Now that many have data warehouses providing a single view of the customer and their transactions, and the focus is shifting to using this customer data, we can only expect this level of spending to increase. In order to be more reliable, this must be underpinned by cost and profitability analysis with an activity-driven view of how your organization’s products, customers, and channels consume resources and incur costs. Without this foundation, the resulting analysis will be critically flawed and will result in inappropriate decisions. This paper describes how activity-based costing (ABC) contributes to more reliable customer, product, and channel profitability analysis, concluding with two brief case studies where financial services providers have successfully deployed ABC.