Robert Kugel's Analyst Perspectives

Profitability Management vs. Managing Profitability

Posted by Robert Kugel on Aug 5, 2013 11:32:03 AM

Pricing and profit margins appear to be trending topics, which is normal at this stage of the business cycle. North American companies achieved high levels of profitability coming out of the last recession by staying lean, but this trend has run its course. Margins are being squeezed, and companies are looking for ways to add to the bottom line.

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Topics: Planning, Sales, Operational Performance Management (OPM), ABC, Analytics, Business Performance Management (BPM), Financial Performance Management (FPM), Sales Performance Management (SPM), Activity Based Costing, costing, FPM, Price optimization, profit, Profitability, S&OP

Getting to the Next Generation of Finance Analytics

Posted by Robert Kugel on Mar 19, 2013 11:12:55 AM

One of the most important IT trends over the past decade has been the proliferation of ever wider and deeper sets of information sources that businesses use to collect, track and analyze data. While structured numerical data remains the most common category, organizations are also learning to exploit semistructured data (text, for example) as well as more complex data types such as voice and image files. They use these analytics increasingly in every aspect of their business – to assess financial performance, process quality, operational status, risk and even governance and compliance. Properly applied, business analytics can deliver significant value by deepening insight, supporting better decision-making and providing alerts when situations require attention from managers or executives.

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Topics: Planning, Predictive Analytics, Customer, Operational Performance Management (OPM), ABC, Budgeting, close, closing, Finance Analytics, plan, PRO, strategy, Analytics, Business Analytics, Business Collaboration, Cloud Computing, Accounting, Business Performance Management (BPM), CFO, Financial Performance Management (FPM), pricing, Risk, risk management, costing, FPM, price optimizaiton, Profitability

Make IT Spending Transparent

Posted by Robert Kugel on Aug 9, 2012 10:17:50 AM

What does it cost to run an IT department? That’s an easy question to answer, but for most companies, why it costs that amount is not. IT departments often complain that most of their budget is devoted to funding daily operations and basic maintenance (“keeping the lights on”), but often, one big overlooked problem is the chargeback process that most companies use to assign IT department operating costs.

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Topics: Operational Performance Management (OPM), ABC, Budgeting, chargebacks, Business Intelligence (BI), Business Performance Management (BPM), Financial Performance Management (FPM), Activity Based Costing, innovation, IT cost

Some Ways To Get More Bang for Your IT Buck

Posted by Robert Kugel on Jan 25, 2012 10:09:24 AM

One of the major issues IT executives face is how to charge their departmental costs back to each part of the business according to their usage. It’s a touchy issue that can be the source of end-user disenchantment with the performance and contribution of the IT organization. Ultimately, charge-back friction can hobble IT’s ability to make necessary investments in new capabilities and become the primary cause of misallocated IT spending. The two risks are related: Unless an IT department can calculate the real costs of the services it provides to specific parts of the business and charge for them accordingly, it is almost impossible for line-of-business department managers to assign priorities to the “keep the lights on” part of the budget, so even low-priority maintenance or upgrade efforts can crowd out all but the most pressing needs. The issue of allocating IT department costs spills over to Finance, which typically handles the allocations in budgeting and profit calculations. As a first step toward establishing an effective means of funding the IT function, I believe the finance department must establish better methods of allocating IT costs. Eventually the proper allocation of IT costs also becomes an issue for senior corporate executives as well because it has a direct impact on how effectively a company uses information technology.

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Topics: Performance Management, Operational Performance Management (OPM), ABC, Budgeting, Analytics, Business Analytics, Business Intelligence, CIO, Enterprise Software, Business Performance Management (BPM), CFO, Financial Performance Management (FPM), Activity Based Costing, Allocations, CEO