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Profitability analysis helps & guides us in evaluation of a proposal or project as well as to optimize gains from existing projects.it enables us to forecast profit potential regarding different aspects of the market such as different customer groups,Geographic areas or different products.
In my opinion SAP CO-PA is the most suitable ERP component for profitability analysis in a manufacturing environment.
Profitability analysis is a tool for analyzing the organization's overall profitiability in specific terms, It is a very useful tool and gives an insight to the management about the business as which areas needs to be strengthened and which to be discountinued, Although it is a tedious exercise as normally certain certain costs associated with customers/Areas/products are difficult but configuring your cost allocation structure carefully can yeild massive benefits to the organization, SAP ERP has a very powerful CO-PA part of it but again it all depends on how good you configure your data and how you trace your costs to the objects
Profitability analysis is a very vast and dynamic subject, and it also varies from Industry to Industry and company to company...
As regards the software is concern, any ERP System or SAP S&D module which can given generate analytical reports can be used for the above.
Profitability Analysis (CO-PA) is a module of the enterprise resource planning software SAP ERP that allows users to report sales and profit data using different customized characteristics (such as customer, country, product) and key figures (such as number of units, price, cost, etc.)
CO-PA derives its data from the SD[1] (Sales and Distribution), MM[2] (Materials Management), and CO[3] (Controlling) modules of SAP, and as such its configuration is closely tied to those modules.
CO-PA was originally designed as a strategic reporting tool rather than as a financial reporting tool, but soon it began to be used for financial reporting. Because CO-PA recognizes sales differently from the CO and GL modules, this caused some reconciliation issues.
In response, SAP enhanced CO-PA to derive data from the CO and GL modules. This "flavor" of CO-PA is known as "account-based CO-PA", while the original functionality is known as "costing-based CO-PA".
SAP COPA is more suitable for Manufacturing sectors.
