Computer-Implemented Systems and Methods for Determining Future Profitability

• US 20100287034A1
• Filed: 05/08/2009
• Published: 11/11/2010
• Est. Priority Date: 05/08/2009
• Status: Active Grant

• Current Assignee: SAS Institute Incorporated
• Original Assignee: SAS Institute Incorporated
• Inventors: Szczerba, Robert Leo, Pope, David Carter, Galway, Llewellyn Arthur
• Granted Patent: US 8,185,432 B2
• Time in Patent Office: Days
• US Class Current: 705/10
• CPC Class Codes: G06Q 10/04 Forecasting or optimisation specially adapted for administrative or management purposes, e.g. linear programming or "cutting stock problem" market predictions or forecasting for commercial activities G06Q30/0202
• CPC Class Codes: G06Q 10/063 Operations research, analysis or management
• CPC Class Codes: G06Q 10/0631 Resource planning, allocation, distributing or scheduling for enterprises or organisations
• CPC Class Codes: G06Q 30/0202 Market predictions or forecasting for commercial activities
• CPC Class Codes: G06Q 30/0206 Price or cost determination based on market factors

Abstract

Computer-implemented systems and methods are provided for determining future profitability for an entity. A present profitability model is generated for the entity based upon present values for a plurality of components of profitability. The present profitability model is used to create a future profitability forecast for the entity.

Claims

1. A computer-implemented method for determining future profitability of an entity, comprising:

executing instructions on a computer system for receiving input data comprising present values for a plurality of components of profitability;

executing instructions on the computer system for generating a present profitability model for the entity, wherein the present profitability of the entity is modeled based upon the input data;

executing instructions on the computer system for producing a profitability driver forecast comprising expected future values for a profitability driver, wherein the profitability driver is one of the plurality of components of profitability;

executing instructions on the computer system for inputting the expected future values of the profitability driver into the present profitability model; and

executing instructions on the computer system for applying the present profitability model to the input expected future values of the profitability driver to create a future profitability forecast for the entity.

2. The method of claim 1, further comprising:

repeating the producing step for each of the plurality of components of profitability;

wherein the present profitability model is applied to expected future values for each of the plurality of components of profitability to create the future profitability forecast for the entity.

3. The method of claim 2, wherein a confidence interval is associated with the expected future values for each of the plurality of components of profitability.

4. The method of claim 3, wherein a confidence interval is associated with the future profitability forecast for the entity.

5. The method of claim 4, wherein the confidence interval associated with the future profitability forecast is based upon the confidence intervals associated with the expected future values for each of the plurality of components of profitability.

6. The method of claim 1, wherein the creating step further comprises:

executing instructions on the computer system for holding constant values for the plurality of components of profitability other than the profitability driver.

7. The method of claim 2, further comprising:

executing instructions on the computer system for selecting a forecasting algorithm from a plurality of forecasting algorithms;

wherein the selected forecasting algorithm is used to produce expected future values for each of the plurality of components of profitability.

8. The method of claim 2, further comprising:

executing instructions on the computer system for displaying data comprising the future profitability forecast on a graphical user interface.

9. The method of claim 1, wherein a forecasting engine applies the present profitability model to the input expected future values of the profitability driver to create the future profitability forecast for the entity.

10. The method of claim 1, wherein because the present profitability model generates both the profitability driver forecast and the created future profitability forecast, confidence is improved regarding dependability of the future profitability forecast.

11. The method of claim 1, wherein the present profitability model is an activity-based costing model.

12. The method of claim 1, wherein the components of profitability are indicators of present profitability or future profitability for a business.

13. The method of claim 12, wherein at least one of the components of profitability is a number of transactions component, costs per unit component, cost per unit transaction component, interest rates over a period component, or total revenues component.

14. The method of claim 13, wherein the components are components which impact the entity'"'"'s profitability for a period under study.

15. The method of claim 1 further comprising selecting one or more of the components of profitability to serve as profitability drivers for use during said producing a profitability driver of determining future profitability.

16. The method of claim 1, wherein the created future profitability forecast is used for inventory management or predicted future costs for a business.

17. The method of claim 1, wherein said holding values constant for the plurality of components of profitability other than the profitability driver allows for isolating effects on profitability of forecasted values.

18. The method of claim 1, wherein the computer system is a server-based system or on a stand-alone computer-based system.

19. A computer-implemented system for determining future profitability of an entity, comprising:

a processor for executing instructions;

computer-readable storage medium or mediums for storing the instructions for execution by the processor;

said processor executing the instructions to perform operations including;

receiving input data comprising present values for a plurality of components of profitability;

generating a present profitability model for the entity, wherein the present profitability of the entity is modeled based upon the input data;

producing a profitability driver forecast comprising expected future values for a profitability driver, wherein the profitability driver is one of the plurality of components of profitability;

inputting the expected future values of the profitability driver into the profitability model; and

applying the present profitability model to the input expected future values of the profitability driver to create a future profitability forecast for the entity.

20. Computer-readable storage medium or mediums encoded with instructions that cause a computer to perform a method for determining future profitability of an entity, said method comprising:

receiving input data comprising present values for a plurality of components of profitability;

generating a present profitability model for the entity, wherein the present profitability of the entity is modeled based upon the input data;

producing a profitability driver forecast comprising expected future values for a profitability driver, wherein the profitability driver is one of the plurality of components of profitability;

inputting the expected future values of the profitability driver into the profitability model; and

applying the present profitability model to the input expected future values of the profitability driver to create a future profitability forecast for the entity.