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SAP Profitability and Cost Management (PCM)

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“I have ways of making money that you know nothing of.”– John D. Rockefeller

Maybe if SAP PCM were available and applied to Standard Oil business back in the day, we would all know Mr. Rockefellers ways of making money. You see, PCM is a user-friendly modeling engine to perform activity based costing in defining costing pools and allocations to a multi-dimensional set of data. Using PCM, costing can be aligned to customer, products, channels, segments, geographies, and the like. Utilizing a simple graphic interface to define relationships of costing, PCM generates logic to perform potentially massive calculations to very deep level of granularity; allocating overhead costs down to deep product levels.


Originally developed as a standalone Activity-Based Costing tool, PCM incorporates the industry standard costing methodology known as the CAM-I Cross of Activity Based Management. Integrated with the SAP Analytics platform, ABC becomes even more powerful in the ability to link results with planning scenarios (BPC) or business intelligence analytic tools (Analytics Cloud).

37%

Increase in revenue generated per employee, in organizations with mature cost accounting and analysis

Source: SAP Performance Benchmarking

Armed with that information, executives can make informed decisions on investments and optimizing corporate resources.

What truly are the company’s most profitable customers? To which customers are we giving away business and why? Why products are performing well? Is their profitable trend rising or are competitive forces meaning that a former top product is starting into decline?

Which of our distribution channels are operating well and profitable? Should I be growing our brick and mortar footprint to build brand awareness, or does the ease of the web channel drive enough volume and profitability to lead me to focus more marketing and promotion dollars in that area?


SAP BusinessObjects Profitability and Cost Management allows users to:

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  • PCM delivers a set of predefined dimensional structures and logic that facilitate best practice methodology for profitability reporting and cost analysis. Furthermore, a number of predefined calculations such as activity rates, price per unit, and variance logic are embedded out-of-the-box.
  • Run Activity Based Costing scenarios on PCM’s out-of-the-box costing engine against your actual data to allocate overhead costs

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  • Account or responsibility center level cost details can be assigned to activities using a resource driver. Then, these activity costs can be further assigned to cost objects (such as customer or product or channel) using an activity driver. These Cost allocations can be cascaded to product then customer, or simultaneously assigned to all cost objects in a multi-dimensional fashion.
  • PCM supports an unlimited number of dimensional hierarchies and attributes to facilitate allocation logic or reporting
  • Simply define and model complex cost pools across multiple periods using your choice of costing methodologies
  • Define custom formulas, rules, and alerts with simple wizard-driven functions

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  • Create unique cost model versions based on alternate scenarios to assess potential market impacts
  • Integrate the results of actual data costing and profitability to your plans and forecasts to dynamically produce budget and forecast profitability analysis
  • Conduct transfer pricing analysis to assess ongoing intercompany activities