--- title: How to Improve SAP Profitability Management-P2 - The Ultimate Guide description: Improve profitability using SAP Profitability and Cost Management and our proven Best Practices. Part two of our Ultimate Guide. image: https://www.sapbwconsulting.com/hubfs/Stock%20images/Profits%20Ahead%20sign%20with%20clouds%20and%20sky%20background.jpeg --- ![Profitability Management](https://www.sapbwconsulting.com/hubfs/Stock%20images/Profits%20Ahead%20sign%20with%20clouds%20and%20sky%20background.jpeg) # How to Improve SAP Profitability Management-P2 - The Ultimate Guide Table of Contents ## [Improve SAP Profitability Management](https://www.sapbwconsulting.com/how-to-increase-profitability-sap-profitability-management-guide) - Part 2 Here is part two of our **[Ultimate Guide](https://www.sapbwconsulting.com/blog/how-to-improve-sap-profitability-management-the-ultimate-guide)** to improving [profitability management](https://www.sapbwconsulting.com/blog/make-better-decisions-with-sap-profitability-and-cost-management) using SAP [Profitability Management](https://www.sapbwconsulting.com/blog/unleashing-business-success-balanced-scorecard-strategy) tools and techniques.  These have proven to be key [profitability management strategies](https://www.sapbwconsulting.com/blog/9-little-known-factors-that-could-affect-your-profitability). ![Profitability From Day One](https://www.sapbwconsulting.com/hs-fs/hubfs/Stock%20images/Profits%20Ahead%20sign%20with%20clouds%20and%20sky%20background.jpeg?width=600&name=Profits%20Ahead%20sign%20with%20clouds%20and%20sky%20background.jpeg)   ## Here Are The Remaining 10 Profitability Optimization Steps   1. When [reforecasting, ensure](https://www.sapbwconsulting.com/blog/inbound-marketing/speaking-at-the-fame-and-profit-summit-2022) the entire r**eforecasting process** is completed in a couple of days. 2. Identify, measure and **eliminate all [non-value adding activities](https://www.sapbwconsulting.com/blog/why-sap-value-management-is-the-key-to-unlocking-your-businesss-full-potential).  **SAP PaPM provides next-generation integrated [performance management applications](https://www.sapbwconsulting.com/blog/9-epm-sap-strategy-management-how-to-best-practices-to-implement-now) with no set data model. It helps business enterprises to gain more flexibility and accelerate [profitability](https://www.sapbwconsulting.com/blog/a-step-by-step-process-for-setting-profit-improvement-goals-using-sap). You can perform a cost analysis** with minimum investment. ** 3. Your performance management system must be capable of modeling the impact and risk of possible **changes in real time**. Your [business planning process](https://www.sapbwconsulting.com/business-process-consulting) also needs a feedback loop from your PaPM system.  Combined with your enterprise data warehouse, you should be able to uncover [actionable insights](https://www.sapbwconsulting.com/blog/business-reporting-requirements), perform what if scenarios, and iterate to the most [profitable plan](https://www.sapbwconsulting.com/blog/sap-hana-margin-analysis). 4. Provide all layers of management with Month-End **cost and [profitability](https://www.sapbwconsulting.com/blog/senior-executives-use-michael-porters-five-forces-model) reporting** at an appropriate level of detail within a few days of the month end. Use the system to perform a detailed profitability analysis of each product or [service](https://www.sapbwconsulting.com/blog/inbound-marketing/11-super-secret-service-level-agreement-techniques). 5. Provide internal clients with a **detailed monthly invoice** that allows them to make informed decisions about their use of IT.  Provide [**audit capabilities**](https://www.sapbwconsulting.com/request-sap-business-planning-and-consolidation-sap-bpc-consulting-support) to the end user so that they can track both what they used and who to contact within IT to request additional information and support. 6. Provide ongoing **monitoring** of the **cost of key business processes** and managing them down the experience curve.  A good practice is provided by Wal-Mart, demand yearly reductions, whether the supplier is internal or external. This is a key cost management best practice. 7. **Remove excess capacity** and [non-value adding activities in IT](https://www.sapbwconsulting.com/resources/cio-guide-to-it-strategy).  However, do not constrict it so much that there is no room for innovation.  Business users often have needs that require advanced [business modeling](https://www.sapbwconsulting.com/sap-best-practices-greenfield-implementations) to provide performance insights.  SAP solutions, when configured correctly, can help here.  They can also be used to eliminate redundant IT capabilities, further driving down operating costs, reducing maintenance cost and still provide better performance management solution capabilities. 8. Use a purpose built application such as **[SAP Business Objects Profitability and Cost Management (PCM)](https://www.sapbwconsulting.com/blog/sap-businessobjects-bi-4-advanced-analysis-demo).** 9. Use an **activity based approach** to IT resource planning and [budgeting](https://www.sapbwconsulting.com/blog/14-sap-business-planning-best-practices) - which should better able to cope with the complexity of IT than traditional budgeting. 10. Use an activity based approach to **services costing** and to planning and budgeting in IT - possibly as part of adopting an ITIL approach to service management.   There you have it.  SAP Profitability and Performance Management, PaPM, is a SAP Solution that offers you very powerful profitability improvement tools.  Used within SAP's Enterprise Resource Planning (SAP ERP) environment, you can set and achieve healthy performance goals.     ## Have You Taken All 21 Steps to Profit Maximization?   Twenty-one concrete [Profitability Management Strategies Best Practices](https://www.sapbwconsulting.com/how-to-increase-profitability-sap-profitability-management-guide) for improving your firm's profitability, along with potential IT solutions and management practices to support it.  You can also download all of these tips in a handy presentation by clicking the button below.   [![How to Improve Profitability with SAP Profitability and Cost Management](https://no-cache.hubspot.com/cta/default/118735/d0b17c88-7622-43f3-adb6-99e2827dc7de.png)](https://cta-redirect.hubspot.com/cta/redirect/118735/d0b17c88-7622-43f3-adb6-99e2827dc7de)         Topics from this blog: [Best Practices](https://www.sapbwconsulting.com/blog/topic/best-practices) [Strategy Management](https://www.sapbwconsulting.com/blog/topic/strategy-management) [How-To](https://www.sapbwconsulting.com/blog/topic/how-to) [Profitability Management](https://www.sapbwconsulting.com/blog/topic/profitability-management) [SAP PCM](https://www.sapbwconsulting.com/blog/topic/sap-pcm) ### Download SAP BW Mindmap Learn what SAP Business Warehouse is and what it does in under five minutes [![Get this Mindmap](https://no-cache.hubspot.com/cta/default/118735/8db2ad37-8211-47a3-86ae-09b6b2bb297b.png)](https://cta-redirect.hubspot.com/cta/redirect/118735/8db2ad37-8211-47a3-86ae-09b6b2bb297b) [mailto:someone@yoursite.com](mailto:someone@yoursite.com) ### Lonnie D. Ayers, PMP About the Author: Lonnie Ayers is a Hubspot Certified Inbound Marketing consultant, with additional certifications in Hubspot Content Optimization, Hubspot Contextual Marketing, and is a Hubspot Certified Partner. Specialized in demand generation and sales execution, especially in the SAP, Oracle and Microsoft Partner space, he has unique insight into the tough challenges Service Providers face with generating leads and closing sales using the latest digital tools. With 15 years of SAP Program Management experience, and dozens of complex sales engagements under his belt, he helps partners develop and communicate their unique sales proposition. Frequently sought as a public speaker in various events, he is available for both inhouse engagements and ** remote coaching. ** ![Balanced Scorecard Consultant](https://www.sapbwconsulting.com/hubfs/social-suggested-images/Balanced%20Scorecard%20Certified%20Graduate.jpg) He also recently released a book **"How to Dominate Any Market - Turbocharging Your Digital Marketing and Sales Results",** which is available on [ Amazon.](https://www.amazon.com/Dominate-Turbocharging-Digital-Marketing-Results/dp/1728357950/ref=sr_1_1?dchild=1&qid=1589182458&refinements=p_27%3ALonnie+D.+Ayers&s=books&sr=1-1&text=Lonnie+D.+Ayers)**** [View All Articles by Lonnie D. Ayers, PMP](https://www.sapbwconsulting.com/blog/author/lonnie-d-ayers-pmp) ## The SAP Blog Subscribe to our blog and receive SAP BW Updates, demand generation, inbound marketing, sales enablement, technology and revenue generation insights and ideas delivered right to your email. [mailto:someone@yoursite.com](mailto:someone@yoursite.com) ![SAP](https://googleads.g.doubleclick.net/pagead/viewthroughconversion/960101754/?value=0&guid=ON&script=0) ![](https://www.facebook.com/tr?id=199270410761059&ev=PageView&noscript=1) ```json { "@context" : "https://schema.org", "@id" : "https://www.sapbwconsulting.com/blog/how-to-improve-sap-profitability-management-p2-the-ultimate-guide#blogposting", "@type" : "BlogPosting", "about" : [ { "@type" : "Thing", "name" : "Profitability", "sameAs" : "https://en.wikipedia.org/wiki/Profit_(accounting)" }, { "@type" : "Organization", "name" : "SAP", "sameAs" : "https://en.wikipedia.org/wiki/SAP_SE" }, { "@type" : "Thing", "name" : "Cost Management", "sameAs" : "https://en.wikipedia.org/wiki/Cost_accounting" }, { "@type" : "Thing", "name" : "Best practices", "sameAs" : "https://en.wikipedia.org/wiki/Best_practice" }, { "@type" : "Thing", "name" : "Management", "sameAs" : "https://en.wikipedia.org/wiki/Management" }, { "@type" : "Thing", "name" : "Cost", "sameAs" : "https://en.wikipedia.org/wiki/Cost" } ], "author" : { "@id" : "https://www.sapbwconsulting.com/about-lonnie-ayers#person" }, "description" : "This guide provides key insights on how to improve profitability using SAP Profitability and Cost Management solutions.", "headline" : "How to Improve SAP Profitability Management (P2) - The Ultimate Guide", "inLanguage" : "en", "mainEntityOfPage" : { "@id" : "https://www.sapbwconsulting.com/blog/how-to-improve-sap-profitability-management-p2-the-ultimate-guide" }, "mentions" : [ { "@type" : "Thing", "name" : "Techniques", "sameAs" : "https://en.wikipedia.org/wiki/Technology" }, { "@type" : "Thing", "name" : "Identification", "sameAs" : "https://en.wikipedia.org/wiki/Identification_(information)" }, { "@type" : "Thing", "name" : "Measurement", "sameAs" : "https://en.wikipedia.org/wiki/Measurement" }, { "@type" : "Thing", "name" : "Integration", "sameAs" : "https://en.wikipedia.org/wiki/Vertical_integration" }, { "@type" : "Thing", "name" : "Performance management", "sameAs" : "https://en.wikipedia.org/wiki/Performance_management" }, { "@type" : "Thing", "name" : "Data model", "sameAs" : "https://en.wikipedia.org/wiki/Data_model" }, { "@type" : "Thing", "name" : "Enterprise", "sameAs" : "https://en.wikipedia.org/wiki/Business" } ], "name" : "How to Improve SAP Profitability Management (P2) - The Ultimate Guide", "potentialAction" : { "@type" : "ViewAction", "name" : "How to Improve Profitability with SAP Profitability and Cost Management", "target" : { "@type" : "EntryPoint", "actionPlatform" : [ "http://schema.org/DesktopWebPlatform", "http://schema.org/MobileWebPlatform" ], "inLanguage" : "en", "urlTemplate" : "https://www.sapbwconsulting.com/how-to-increase-profitability-sap-profitability-management-guide" } }, "publisher" : { "@id" : "https://www.sapbwconsulting.com#organization" }, "url" : "https://www.sapbwconsulting.com/blog/how-to-improve-sap-profitability-management-p2-the-ultimate-guide" } ``` ```json { "@context" : "https://schema.org", "@id" : "https://www.sapbwconsulting.com#website", "@type" : "WebSite", "name" : "SAP BW Consulting, Inc.", "publisher" : { "@id" : "https://www.sapbwconsulting.com#organization" }, "url" : "https://www.sapbwconsulting.com" } ``` ```json { "@context" : "https://schema.org", "@id" : "https://www.sapbwconsulting.com#organization", "@type" : "Organization", "logo" : { "@id" : "https://www.sapbwconsulting.com#logo" }, "name" : "SAP BW Consulting, Inc.", "sameAs" : [ "https://www.linkedin.com/company/543163/", "https://www.youtube.com/user/SAPBWConsulting/", "https://twitter.com/Lonniea39", "https://www.facebook.com/SAPBWConsulting" ], "url" : "https://www.sapbwconsulting.com" } ``` ```json { "@context" : "https://schema.org", "@id" : "https://www.sapbwconsulting.com#logo", "@type" : "ImageObject", "caption" : "SAP BW Consulting, Inc. logo", "url" : "https://www.sapbwconsulting.com/logo.png" } ``` ```json { "@context" : "https://schema.org", "@id" : "https://www.sapbwconsulting.com/about-lonnie-ayers#person", "@type" : "Person", "name" : "Lonnie D. 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