An optimized income statement’s (OIS) Activity-Based Planning value proposition is simple:  Because the fundamental building block of an OIS model, its cost function slopes, can be computed from traditional ABC data, all current ABC models of income statements can be turned into an OIS model with considerably less effort than would otherwise be required. (NOTE: For any interested ABC practitioner or academician, a White Paper titled “How much PROFIT is your current Plan Leaving on the Table? is available and should be read. A shorter article has been published in Wiley’s Journal of Corporate Accounting and Finance in May 2014, titled Enterprise Master Plan: Next Generation Planning with Activity-based Planning”

This instantly translates these ABC models from ones focused on last year’s customer and product profitability analyses to next year’s projected income statement.  Further, this ABC data-driven enterprise master plan  mathematically assures 1) the forecast is optimal which means the projected income statement is maximally profitable, 2) a supply chain that is  optimally  feasible and 3) optimally sustainable.   Further, an OIS guarantees all the enterprises’ other annual planning applications (e.g., FP&A and S&OP) are aligned to the maximally profitable forecast and optimal supply chain.  The resulting model, built principally with activity-based costing data, represents, truly, the next generation of planning functionality.

There are two ways of comparing this ABC data-driven “next generation” planning functionality with both FP&A and S&OP.  Specifically:

1) Applications

2) Practitioners

For a description of the product, INSIGHT Enterprise Optimizer which creates an OIS, see IEO Description on the INSIGHT web site: How to Maximize corporate profitability.