Walldorf, Germany—July 11, 2012—The SAP Net Margin Analysis analytic application from enterprise application software provider SAP brings enterprises a complete financial view of their business-to-business (B2B) operations. The application uses advanced analytics to capture cost-to-serve metrics — the indirect costs hidden in supply chains that service and support customers. Data captured by SAP Net Margin Analysis is readily accessible to help businesses reduce costs at a granular level and perform better.
As the number of channels, services and stakeholders grew exponentially, it became much more difficult for organizations to get an accurate financial picture of an entire B2B ecosystem. To address such questions as ‘Who are my most profitable customers? Who are my most significant loss makers? Are there costs I can’t account for? If so, where are they occurring?’ SAP Net Margin Analysis provides full visibility into all costs. The application uncovers expenses and lines of profit that were not visible before.
“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.”
Engineering profits
With the analytic application, cost-to-serve metrics are presented via role-based dashboards and graphic reports that provide a full view across operations. 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.
Armed with this data, users can intricately fine-tune their B2B sales and operations to better curtail these costs, or to better utilize the segments that are the most profitable for the business. SAP Net Margin Analysis offers a “what if” analysis tool so stakeholders can see the possible impact of their actions before they are implemented. 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. Organizations can ultimately decide which scenario best fits their operations and since the data is shared in a unified view to all decision-makers, it is easier to align strategy with execution.
“Customer stratification is a measurement process for managing and improving customer relationships,” explained Barry Lawrence, Professor, Texas A&M University. “It identifies areas and strategies for improving net margin and sales with each individual customer. Today, best-practice distributors are using customer stratification in a variety of ways; from creating and penetrating core customers to the most effective design and deployment of the sales force and marketing efforts, the possibilities seem endless.”
SAP Net Margin Analysis combines pre-configured content, best practices and pre-defined services to quickly deploy the solution and achieve more immediate cost-savings. SAP estimates that enterprises can save up to five percent on indirect costs in the first year after implementation. Additionally, enterprises get full cost visibility leveraging existing cost allocation tools and financial applications. The average timeframe for a typical deployment is less than 90 days, which helps customers lower the cost of implementation and speed time to value while retaining the flexibility to extend the solution when needed.
