CEO Topic: Best Practices for Measuring Product Line Profitability

Author: Andrew Jacobson

Date: August 10, 2017

Description

Outsell’s latest CEO Topic covers whether and how companies use product line profitability (PLP) reporting to make important strategic and operating decisions. Information industry companies with size and scale have numerous products and business lines, but there is wide variance in how companies report profitability, present KPIs, and allocate corporate overhead and shared resources.

Our report, Best Practices for Measuring Product Line Profitability, looks at how companies approach portfolio management and digs deep to uncover whether industry executives are getting the PLP information they need to make crucial product management decisions, including:

  • Whether to invest further in certain products/product lines
  • Whether to contract or fold products/product lines
  • Tracking the progress of newly launched products and services

Get our report to look into what is being measured and monitored, how leaders drive the PLP process, and best practices in PLP reporting and related decision-making.

Methodology

This study combines the results of:

  • A survey of Outsell Leadership Council (OLC) members, with 36 respondents
  • In-depth personal interviews with 12 senior industry executives
  • Original analysis based on extensive industry experience of the author

We organized our survey and detailed findings to consider:

  • What’s being measured?
  • Who manages the process and what systems are used?
  • How is PLP reporting actively and successfully used in decision-making?
  • What practices are optimal to ensure executives have what they need to make decisions about their product portfolio?

Contents

  • Why This Topic
  • Methodology
  • Key Findings
  • What’s Being Measured and Monitored?
  • Allocation of Corporate Overhead
  • Allocation of Shared Costs
  • Cash vs. GAAP
  • Impact of the Trend to Digital
  • Migration from One Major Product to Many
  • Dashboards
  • Sample KPIs Monitored by Those Surveyed
  • Best Practices: What’s Being Measured
  • Who Drives the Process and What Systems/Software Are Used?
  • Who Produces, Designs PLP Reporting?
  • Who Consumes PLP Reporting?
  • Accounting Systems — Are they Flexible Enough?
  • Accounting Software Utilized
  • Best Practices: PLP Process, Systems & Software
  • How Is PLP Reporting Used in Decision-making?
  • Are PLP Reports Accurate, and Is There Internal Disagreement on How to Interperet Them?
  • Specific Ways PLP Analyses Are Used
  • Best Practices: How Companies Use PLP Analysis to Make Key Decisions
  • Essential Actions

Figures & Tables

  • Table 1. Top KPIs Tracked by Function
  • Figure 1. How Companies Use PLP Reporting by Category, According to Executives

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Additional information

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