Oracle Profitability and Cost Management Cloud Service


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Oracle Profitability and Cost Management Cloud Service

Oracle’s Profitability & Cost Management Cloud Service (PCMCS) provides business users with a solution to allow them to significantly automate and take ownership of their allocation based business processes such as customer & product profitability, management allocations, shared service costing, cost transparency initiatives & legal entity allocations to support operational transfer pricing.

Many organisations struggle to gain a granular view on the key drivers driving profitability in their organisation leading to a lack of understanding into what drives profitability and costs. While some organisations attempt to do this using spreadsheets, the complexities of the process generally lead to an extremely time consuming yet incomplete view.

Implementing a tool such as PCMCS removes the complexities by providing a highly automated solution whilst giving business users the power to own the solution without being overly reliant on IT.

Key Business Benefits

In implementing PCMCS, organisation can enjoy the following key business benefits

  • Gain a granular insight into key drivers behind profitability and costs
  • Provide end-users with a tool which allows them to take ownership of full allocation based business process
  • Out of the Box point & click models reduces reliance on IT department for development
  • Easy optimisation of allocation process to allow for what-if analysis
  • End to End transparency for each step of the allocation process
  • High level of automation, reducing manual effort

Discover and Act on Hidden Profit and Cost

Oracle Profitability and Cost Management Cloud provides actionable insight into allocation-based business processes by seamlessly combining data from the general ledger and other financial systems with data from operational systems. The solution provides the transparency needed to support analysis within today’s complex enterprises.

Profitability and Cost Analysis

Profitability and Cost Analysis

Determining profitability by business dimensions, such as products, services, channels, markets, and legal entities, is often not a simple task. It requires the business elements to be fully burdened with expenses to which they are not directly related. In most cases, the best way to allocate the indirect expenses is to use operational data that ties the indirect expense to the business element. However, combining financial and operational data is often the biggest challenge of profitability analysis. It’s typically not prudent to overload the general ledger (making it ‘fat’) with operational data, such as customer, channel, etc., not needed for statutory reporting. Keeping the general ledger “thin” ensures a streamlined statutory close process.

Likewise, manipulating operational and financial data in spreadsheet-based solutions can be very time consuming and error prone. Therefore, these are not ideal ways to address profitability. Oracle Profitability and Cost Management Cloud includes robust data management capabilities that enable business users to easily map financial and operational data together. It provides a central hub for automating all allocation-based business processes. The solution is purpose-built for the multi-tiered allocations typically required by today’s complex business environments and provides a best practice framework to make model-building easy and consistent, with excellent performance.

Unparalleled Transparency

Instead of the ‘black-box’ calculations resulting from custom solutions, Oracle Profitability and Cost Management Cloud provides business users with step-by-step transparency into allocation-based business processes affording two main benefits.

First, it significantly reduces the time required for troubleshooting during the creation and editing of allocation calculations. Any unassigned or idle amounts in an allocation stage are clearly listed, making it easy to see if the model is mathematically balanced.

Second, the rule balancing reports create a ‘culture of accountability’ within the impacted business community by giving insight to the allocation method. The reports are viewable by business users who may be impacted by the result of an allocation, and provide very clear insight into the nature of each allocation stage impacting their line of business. For example, business stakeholders often question large cost allocations given to them due to a lack of clarity. The rule balancing report helps them to understand the precise metrics that drive the allocation. This information may help them to better align their business operations with the strategy of the enterprise.

Profit and Cost Management - Rule Balancing

Profit and Cost Management – Rule Balancing

Purpose-Built Analytics

Oracle Profitability and Cost Management Cloud includes pre-built dashboards and analytical screens that are purpose-built for analysis of complex, allocation-based business processes, and take advantage of the best practice allocation framework. This means immediate value out-of-the-box. Instead of spending countless hours manipulating data for analysis each reporting period, the pre-built framework and analytics gives immediate insight to the drivers of profit and cost.

The “profit curve” report shown in figure 3 is a good example. The vertical axis represents net profitability, and the horizontal axis represents the business dimension (e.g. customer, product, channel, sales person, zip code, etc.). Data points are sorted from left to right on the axis, showing the most to the least profitable members (in this case, customers). The report can be further enriched by combining it with operational data parameters such as ‘salesperson by product’ or ‘sales channel by product’. These parameters enable queries such as, show ‘Top 20% most profitable customers by sales person’ or ‘Bottom 20% customers by sales person’, thereby providing actionable insight to profitability. There are many other scenarios and parameters that can be used to deliver value to any business processes or business unit.

Profit and Cost Management - Customer Population Profit Curve

Profit and Cost Management – Customer Population Profit Curve

Additional Key Features

In addition to the key features described above, there are many more features of PCMCS with end users can enjoy such as

  • Management Ledger allocation engine which provides a best practice business owned framework for complex allocations such as recursive and multi-tiered.
  • Data Management capabilities to enable automate data collection and mapping
  • Configurable dashboards to deliver board room quality reporting
  • Microsoft Office Add-ins such as Smart View for ad-hoc analysis
  • Cloud Solution = No Capital Infrastructure Investment
  • Supports Hybrid deployments