This issue explores how companies across all industries are striving to remain profitable, focusing on increasing the top line to achieve not just growth but profitable growth.

Key Issues and Challenges for Managing Profitable Growth

Senior management’s current strategic focus across industries is on profitable growth, but this presents several challenges:

• Limited confidence in the approach to recording, tracking, and allocating cost data.
• Misalignment between cost and revenue information.
• Lack of visibility into customized product/service offering margin details.
• Difficulty in obtaining necessary information for decision-making, leading to a significant amount of time spent gathering data rather than analyzing it.
• Reliance on manual and ad hoc analysis for margin assessment, increasing the likelihood of errors.
• Extensive effort and time required to produce simple profitability reports.

Drivers for Enhanced Accounting Systems and Cost Information

• Globalization of markets, putting pressure on margins and contributions.
• Supply chain efficiencies due to increased collaboration and communication technologies.
• Rising demand for quality and enhanced product features.
• Diversified market channels, product offerings, and customer segments.
• Global price inelasticity.
• Shortening product/service life cycles.

Performance Review Service

DMO and Associates offer services to enhance reporting and analysis of cost and margin information across the product and service offerings. This involves leveraging AI tools and big data to enrich cost information and align it with the organization’s revenue profile.

Achieving Visibility and Alignment

DMO and Associates focus on:

• Understanding the specific business drivers for growth and profit.
• Identifying the right cost data to support analysis.
• Aligning cost with revenue dimensions to create a complete picture of margins.
• Using advanced data management and analytic tools to facilitate margin analysis.

Challenges in Managing Profitable Growth

Building an enhanced cost view aligned with the revenue model is essential for managing profitable growth. This involves translating standard costing data into actionable metrics, aligning cost data to revenue dimensions consistently, and ensuring relevant cost information supports profit understanding.

Profitable Growth from a Product, Market, and Customer Perspective

The modern marketplace consists of complex products and transactions tailored to specific customers, segments, and markets. Traditional cost systems often fail to recognize the complexities this introduces from a cost perspective. Enhancing the product cost dimension is a critical first step for many companies.

Approach to Supporting Profitable Growth

DMO and Associates’ approach includes:

1. Understanding the information needed to manage profitable growth.
2. Determining the detailed revenue and cost data required.
3. Aligning cost and revenue dimensions.
4. Providing full analytic capability to deliver information and value.

Technological Advances Supporting Profitable Growth

• Enhanced visibility to cost information on a global basis.
• Utilization of big data technology to access previously unavailable cost drivers.
• Development of information-rich sales analysis data repositories.
• Advances in business analytics user interfaces, allowing businesses to harness analytic power directly.

Summary

DMO and Associates align costs around a company’s strategic growth view to support profitable growth margin calculation, enrich cost data, optimize CGS decisions, and provide detailed profitability analysis.