The Importance of ABC in Completing the Enterprise Performance Management Process

Understanding customer and product profitability can mean the difference between promoting products and services that generate the greatest returns and wasting time and energy on a losing proposition. With the improved insight EPM gives into strategic direction and the key performance indicators of every business unit, management¹s expectations for detailed insights are increasing and the search for the 'holy grail' of profitability analysis is intensifying.

This paper will underscore the importance of profitability analysis in providing a complete view of enterprise performance management, outline the risks associated with using simplified profitability measures, and illustrate how activity-based costing (ABC) contributes to more reliable and actionable customer, product, and channel profitability analysis.

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