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The Reality of Enterprise Wide Profit and Cost Analysis
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The Reality of Enterprise Wide Profit and Cost Analysis
Author:
Steve Anderson
8/15/2009
In the recent Gartner Financial Executives International (FEI) technology survey of finance managers(Gartner ID G00168766), the #1 constraint faced by finance managers relating to technology was Measuring Customer and Product Profitability, followed closely by (2) Ongoing Measurement of Business Performance and (3) Helping to Position the Company for Profitable Growth. Over 50% of the respondents said they had technology concerns with Measuring Customer and Product Profitability. I’m not surprised. For the past 10 years, we’ve been REPLACING legacy systems and it has not been a pretty picture (Acorn has replaced every major third party solution and scores of homegrown ones). What we’ve seen is non-sustainable, does not easily show root cause, is not accurate, is not broad enough, takes too long to run, etc. In short, they are piece-meal attempts at solving a problem that is NOT easy to solve: Enterprise-wide Profit, Cost and Capacity Analysis. Replacing a piece of software and a solution that some company has spent millions on can only mean one thing - the system being replaced wasn’t anywhere near sufficient for those companies.
Why is this happening? We discussed in a previous blog the phenomenon of “Perpetuating the Mediocrity” that exists in Enterprise-wide Profit and Cost Analysis. It will continue to exist because there is so much money to be made on these “projects” (tens of millions per company) by management consulting companies and big software companies. If these companies were delivering solutions that were remotely sustainable and satisfactory, there would be no reason for Acorn to exist! Companies truly interested in understanding the drivers of, and measuring their customer and product profitability and who want a sustainable solution that can guide them in taking the steps toward profitable growth need look no further.
Tags:
profit analysis, cost analysis, customer profitability, product profitability
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