In this overview, we'll show you the highlights of why your business needs the product, how the product works, and how it can be applied to address various industry challenges. A critical component of a company's success is understanding where its profitability comes from. In today's business climate, companies have to probe beyond statutory gross margin financial statements.
They must analyze many more dimensions to reveal their true costs and revenues, which provide a precise view of how profits are actually made. As an example, a company sells a product that produces $1000 in revenue. When they factor in direct costs like freight charges, and other semi-direct costs like warehousing, distribution, and store operations, that revenue is reduced to $200.
But what about the corporate overhead costs, such as IT, HR, Sales, Marketing, and Merchandising? When you factor those in, you may find that what you thought was a profitable product isn't. Profitability and Cost Management Cloud can expose these profit losers so that you can take action on them.
So what is Profitability and Cost Management Cloud? It's a powerful, cloud-based data analysis and calculation platform that takes data from your general ledger, adds data and dimensions that either don't exist or don't belong in your GL, and then allocates that data to where you need it for performance management reporting. And all of these processes occur in a mistake-proof sandbox area called a Performance Ledger.
It also enables you to simplify your general ledger by removing things that don't belong there, such as: Operational transfer pricing Shared Services Costing Product and Customer profitability The heart of the product is in the rules and rule sets that you create for these allocations. Using a simple, point-and-click interface, you set up the rules for allocation, and then organize those rules into rule sets. The waterfall sequence of rules and rule sets defines the business logic for your financial data, and they can be created by business analysts with no coding experience required.
The rule balancing screen shows the result of the data manipulation. You can see where the data was allocated from, and where it was allocated to. You can also drill through on the data to analyze it in Excel using Smart View.
This provides the transparency and accountability that is required in today's business environment. Let's look at how Profitability and Cost Management Cloud can apply to various industries: Healthcare: provides for accurate charge coding and patient profitability. Education: shows the cost of a course by calculating the cost of all of the things required to deliver that course, including the cost of the building the course was given in Financial Services: provides for an n-dimensional strategic P&L, which allows you to calculate not only revenue but cost down to the customer, product, and branch.
Telecommunications: apply network costs directly to a product that consumes actions on that network, such as minutes of call time or gigabytes of data Transportation: helps calculate all of the costs of moving a plane from point to point, including the capitalization on the plane, crew costs, station costs at each airport. These can be allocated down to the plane based on factors like the number of passengers carried or the number of flights taken. Utilities and other public services: allows you to allocate all of the shared costs such as facilities and support staff into the services provided, while providing transparency required for government oversight.
No matter what industry you are in, you can calculate the true cost of the products or services that you provide and uncover which customers, products, and services grow revenue profitably. This information enables you to pinpoint and protect your profit winners, and to take action on your profit losers. It can also help you identify which resources align to the most profitable opportunities.
In this overview, we showed you the highlights of Profitability and Cost Management Cloud. To learn more, visit cloud. oracle.
