Profits are the “sine qua non” of business success. (That means “without which, not” if your high school Latin is a little rusty.) Case in point. A few years back, a small company started building motorcycles in a gleaming new factory in southern Minnesota. The company was well funded. The motorcycles were beautiful. Reviews were positive and sales were good. There was only one problem. Each bike cost more to build than the company could sell them for. So, after producing less than 2,000 motorcycles—bankruptcy.1
Without profits, no business can survive, no matter how cool its products are. In any business, in any industry, profitability is the one metric that cannot be ignored. And profitability analysis is one of the most important duties of the finance team.
For most companies, profitability analysis is performed with spreadsheets. That presents challenges with siloed data and with any effort to include large numbers of contributors in the planning process. But fortunately, there is an alternative. The Profitability Analysis Quick Start template makes profitability analysis faster, easier and more accurate.
Using customizable, pre-configured models, this template enables finance teams to track profitability performance across every department or group by accurately and consistently allocating the cost of doing business between cost-centers and profit-centers. The template’s dynamic model enables finance teams to adjust allocation methods and cascade the responsibility for allocating costs down to the business unit owners, safe in the knowledge that the calculations will remain transparent, consistent and unbroken. Without the limitations of spreadsheets users can plan at the level of detail that makes the most sense for the business.
Powered by IBM TM1
The Profitability Analysis Quick Start template is designed for use with IBM Planning Analytics, the planning, budgeting, forecasting and analysis solution built on the powerful in-memory OLAP engine of IBM TM1®. IBM TM1 is used by thousands of organizations around the world. If you’re familiar with it, you already know about its powerful, multidimensional modeling capabilities and how it readily facilitates high-participation—just what you need for in-depth, insightful analysis.
To get a good look at the Profitability Analysis Quick Start Template and see how it works, view the demo. Or, better yet, sign up today for the IBM Planning Analytics trial and try out the template for yourself—free for 30 days. (You also have the option of trying the Expense Planning and Sales Margin Planning Quick Start Templates). See what the next generation of planning and analytics looks like. And don’t let lagging profitability cut your ride short.
1 Excelsior-Henderson: Motorcycle dream fades in bankruptcy, Fedgazette, Federal Reserve Bank of Minneapolis, January 1, 2000, (Reprinted from Minneapolis StarTribune, Dec. 23, 1999)