[IN PROGRESS] Quick, Easy and Dynamic Expense Allocation
Anaplan can deliver the granular Profit and Loss Statement—that is, one with a more specific cut, like a per-channel or per-product P&L. Such reports offer specific insights that can lead to more targeted action. While the revenue part of such P&L's are often available (revenue data is often already collected with channel or product cuts), the expense portion can present challenges. For example, overhead expenses are collected in a department and are not readily associated with a channel or product. Allocation is the process by which such expenses are split, and in the case of our granular Profit and Loss statement, expenses are allocated to the cut being presented.
The basic allocation process is the multiplication of the source amount by a set of rates on the target cut, which should in principle sum to 100%. The simplest way to do so is to provide users with an input schedule. An overhead expense can then be multiplied to the allocation rate to get the allocated expense, and this can then be pulled into a granular Profit & Loss.
However, allocation is an exercise that often involves trial and error, and users don't often know allocation rates as much as they know allocation drivers. Allocation drivers are numbers that are naturally available on the target cut. For example, the business knows how many customers there are for a channel, or they know the historical Revenue of a product. Hence, these drivers can be used to calculate a natural allocation rate: driver amount per cut/ total driver amount. With this, we can build a dynamic allocation engine for users. Below, users can choose to either provide allocation Rates or select an allocation driver:
In another module, driver amounts are available to calculate natural allocation rates. Note that it's important that driver amounts are collected in the dimensionality of the cut we want.
The use case presented is a simple one, starting with an expense that needs to be allocated, and providing the user with options on how to do this. In particular, allocation drivers can be offered as an option to do this allocation naturally, without the user having to compute anything.