“Through KPMG’s

Multidimensional Cost & Profitability

solution management will have
Profitable
better visibility into current and
future product, customer and market
profitability allowing analysis that
Growth
Powered by
Multidimensional Cost & Profitability
aligns with business strategies”

Contact
JARK OTTEN

T +31(0)20 656 4453

M +31 (0)6 109 019 36
E otten.jark@kpmg.nl

PAUL PIEROEN

T +31(0)20 656 8758

M +31 (0)6 527 578 37
E pieroen.paul@kpmg.nl

© 2018 KPMG Advisory N.V., registered with the trade register in the Netherlands under number 33263682, is a subsidiary of KPMG Europe LLP and a member firm of
the KPMG network of independent member firms affiliated with KPMG International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved. The name
KPMG, logo and ‘cutting through complexity’ are registered trademarks of KPMG International.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to
provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in
the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
 Managing Profitable Growth
SUMMARY
The ultimate scorecard for profit is a company’s consolidated
P&L. But a consolidated P&L does not help to manage
profitable growth. To do this, companies need targeted
visibility to current and future cost and profit from the
perspective of the drivers of profit - products, customers,
KEY ISSUES AND CHALLENGES FOR MANAGING PROFITABLE
GROWTH
THROUGH THE MC&P APPROACH, MANAGEMENT CAN HAVE BETTER VISIBILITY INTO CURRENT AND FUTURE PRODUCT MARGINS ALLOWING
ANALYSIS THAT ALIGNS WITH BUSINESS STRATEGIES AND ENABLES MANAGING COMMERCIAL DEPARTMENTS ON MARGIN IMPROVEMENT
RATHER THAN REVENUES.
While the strategic focus of management is profitable growth,
CLIENT PROFITABILITY ANALYSIS PRODUCT PROFITABILITY ANALYSIS
KPMG research has identified a number of issues and
challenges management faces in utilizing cost and margin • Profitability overview of the • Profitability overview of the full
information, thus inhibiting their ability to make informed

+
full client base product portfolio Product
channels and markets. decisions that align with strategic growth initiatives including: D
• Identify the hidden profit • Identify unprofitable products
• Limited confidence in approach to recording, tracking, and (serving unprofitable • Identify product investments Product Product
The last 10 years of global growth have driven companies to

Profitability
A

+/-
allocating cost data to make critical decisions; customers) • Support pricing decisions based
B
begin analyzing the effectiveness of their growth strategies at a
• Cost information is not aligned with revenue information; • Identify opportunities to on budgeted/forecasted
much greater level of detail. Multidimensional views of revenue Product
• Limited visibility into customized product offering, margin improve profitability for high volumes, cost and revenues C
have provided analytic capability that allows greater insight to
details to manage the commercial department on margin value, 0-income and
the achievement of growth goals. It is creating visibility to the

-/-
improvement rather than revenues; unprofitable customers
profitability of that growth that has remained elusive because of • Current profitability analyses are not aligned with the internal Low Medium High
inadequate and misaligned cost information. The lack of aligned, governance and responsibilities across the value chain and Revenue
structured, and adequate cost information limits the ability of therefore lack the ability to manage short term sales and long
any global organization to measure and understand profitable term product and client portfolio’s;
growth. • Difficulty obtaining all the information required for decision
making - majority of time spent gathering cost data instead of CUSTOMER, CHANNEL AND MARKET COST INSIGHTS INTERSECTED PRODUCT LIFECYCLE ANALYSIS
Building an enhanced view of current and future cost that is
analyzing, and the information to create insights; WITH DETAILED PRODUCT COSTS CREATE “ONE VERSION OF THE
aligned to the revenue model is required to manage profitable • Providing historical and forward
• Margin analysis involves manual, ad hoc analysis (often offline TRUTH” TO SUPPORT COST COMPLEXITY ANALYTICS
growth. Having the ability to analyze cost to support key product looking insights in unitary cost
and cost optimization initiatives is absolutely critical in today’s in spreadsheets) to prepare current costing data to the views
required for decision making (manual manipulation also What is the margin and profitability per product to
world of profitable growth. Translating data from standard costing for a certain product, gain insight in the product life
to actionable metrics is a challenge for most organizations and is increases chances of errors); and,
• Simple product profitability reports take weeks and an
customer, market cycle
often hampered by segmented ownership and approaches that intersection?
differ by organization (marketing, engineering, finance, and supply extraordinary amount of effort to produce. • Compare life cycles of
chain). Achieving alignment of cost data to revenue dimensions in interrelated products and
What is the
a consistent defined structure, along with fully developed, services, supporting investing
customer margin
relevant cost information important to understanding profit is and pricing decisions
for certain
needed to manage profitable growth. products? • Provide full transparency on
Customer
Total Cost of Ownership
Costs

ADDED VALUE
Market Product END-TO-END PROCESS / SERVICE COST OPTIMIZATION
 Provide full transparency, drill-back analytics, Costs Costs • End-to-end costs for processes
on costs and revenues to support margin and services delivered by
improvement multiple business functions
 Enabling forward looking what-if scenarios Channel • Identify end-to-end cost
reduction opportunities
to support decision making in investing or Costs
• Understand the drivers of cost
discontinuing products, clients or markets THROUGH THE MC&P APPROACH, MANAGEMENT CAN HAVE BETTER (sales, key volumes, etc.)
 Track and trace cost optimization and VISIBILITY INTO CURRENT AND FUTURE PRODUCT COST AND What is the What is the
• Identify and track unit costs
profitable growth initiatives across functions MARGINS ALLOWING ANALYSIS THAT ALIGNS WITH BUSINESS product line market segment
which drive pricing and cost
STRATEGIES. margin for certain margin for certain
 Enables managing commercial departments performance
channels? products?
on margin improvement rather than revenue This visibility is achieved through:
• An understanding of a company’s specific business drivers for
growth and profit;
KPMG DIFFERENTIATORS • Intelligently identifying the right cost data and enriching it to
INTERNAL AND EXTERNAL BENCHMARKING DRIVER BASED BUDGETING AND FORECASTING
support the forward looking scenario analysis of growth and • Insight in total costs and unit • Identify and analyze differences
 Global network, global experience profit; costs for internal and external between budgeted and realized
• Aligning cost to revenue analysis dimensions and creating a benchmarking (unitary) costs
 Proven approach, solid delivery complete picture of margins;
• Identify most and less cost • Analyze volume, efficiency,
 Standard sector specific models available • Leveraging ’big data’ and advances in data management and
efficient and profitable business productivity, occupancy and

Unitary cost
which follow a robust, flexible and accurate analytic tools to facilitate the enrichment of, and analysis of,
units quality effects and differences
margins; and
allocation approach and provide detailed • Identify opportunities to related to the budget
insight into the profitability of products, • Embedding the MC&P processes in the current Planning &
leverage from most cost • Calculating scenario’s with
Control cycle to secure permanent focus.
customers, channels and markets efficient business units various input drivers
The resulting information provides management greater • Align margin objectives with
BU 1 BU 2 BU 3 BU 4 BU 5 BU 6 BU 7 BU 8
assurance, transparency, consistency, and analytical power to Direct cost IT Cost Overhead
responsibilities within the
address profitability and cost business issues. organization
© 2018 KPMG Advisory N.V., registered with the trade register in the Netherlands
under number 33263682, is a subsidiary of KPMG Europe LLP and a member firm of
the KPMG network of independent member firms affiliated with KPMG International
Cooperative (‘KPMG International’), a Swiss entity. All rights reserved.