At a recent Business Breakfast, held jointly by SAS Institute South Africa and Mail & Guardian, at the Sandton Sun, in Johannesburg, international thought leader in the fields of activity-based costing, performance management and analytics, Peter Turney, offered delegates insight into how to improve customer profitability using predictive analytics.
His presentation focused on finding hidden opportunities within businesses for sustainable bottom line growth and increased profits, as well as the value of activity-based cost management in understanding the true costs of serving customers to better understand the real profits of a company.
According to Turney: “Hidden profits can be as much as 400% of current profits.” Businesses need to understand who their profitable customers are to leverage this, and become smarter about managing existing business to find and take advantage of hidden profits within their organisation.
“Activity-based costing and management gives organisations the ability to discover the true costs of doing business by attributing not only the cost of production, but also service, market-facing activities, business support costs and so on. ABC and ABM report costs by process or objective, so any company can get an accurate view of exactly how much products cost and how much profit is really being generated,” says Maphum Nxumalo, Managing Director of SAS South Africa. “This, combined with the power of analytics, enables action plans to be developed around costs, as well as opportunities for improvement and added value.”
Turney added that analytics can help to find and diagnose problems, understand and forecast issues, and revise budgets accordingly to enable smarter decisions for the greatest positive impact on the bottom line.
He concluded his presentation with five steps towards sustainable bottom line growth: identify the top sources of increased profits; evaluate how decisions are made; close the decision gap; change the performance management systems from revenue to profitability; and track the results to validate success.
Peter Turney is the founder, President and CEO of Cost Technology, and over the past 30 years has helped hundreds of companies to transform their efficiency and profitability, and led them to sustainable bottom line growth. Delegates were each given a copy of Turney's latest book, “Common Cents - How to succeed with Activity-Based Costing and Activity-Based Management”.
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