As companies add channels, services and stakeholders, it becomes increasingly difficult to get an accurate view of their costs. SAP yesterday rolled out an analytics application called Net Margin Analysis that it says employs advanced analytics to capture cost-to-serve metrics — the indirect costs hidden in supply chains.
SAP estimates enterprises can save up to 5 percent on these costs in the first year after implementing the app, which presents cost-to-serve metrics via role-based dashboards and graphic reports.
Organizations can analyze indirect costs in sales, marketing and product management to quickly understand how product mix, order frequency, channel, distribution and customers served impact profitability. The solution can also pinpoint indirect costs across customers that share identical revenue numbers. Using this data, organizations can tweak their B2B sales and operations to lower costs or to better focus on segments that are the most profitable for the business.
SAP Net Margin Analysis also offers a “what if” analysis tool to help stakeholders assess the possible impact of actions before implementing them. Possible courses of action include the elimination of redundant services; creating, eliminating or minimizing discounts and reward options; and taking the best practice of a profitable segment and applying it to other areas of the business.
"SAP Net Margin Analysis provides actionable data on costs that up to this point were below the radar of many enterprises," said Karen Lynch, vice president, Global Wholesale Distribution, SAP. "Previous offerings could only provide a ballpark figure on such costs. Users can now drill down into that data and isolate it precisely to see who their profit and cost generators are. Detailed metrics that took months to produce can now be viewed and acted upon immediately."
SAP Net Margin Analysis is offered as a rapid-deployment solution. SAP says the average timeframe for a rapid-deployment solution, which combines pre-configured content, best practices and pre-defined services, is less than 90 days.