Essential Concepts

To model cost and revenue flows with Profitability and Cost Management, you must understand the following essential concepts:

• Dimensions—Data categories in an underlying database used to organize data for retrieval and preservation of values. Dimensions usually contain hierarchies of related members grouped within them. For example, a Period dimension often includes members for each time period, such as Quarter or Month.

• Application—A related set of dimensions and dimension members that is used to meet a specific set of analytical or reporting requirements.

• Modeling elements—Application parts used in a Profitability and Cost Management application that apply allocation logic to dimensions and members. Modeling elements include cost allocation rules and analysis definitions that reflect existing or proposed business cases.

  Together these elements organize the allocation points in the application into a logical flow. Careful modeling can capture the actual processes and activities, enabling you to realistically allocate costs and revenues.

A Profitability and Cost Management application is a representation of part or all of an organization, and contains costs and revenue categories that are similar to the organization's chart of accounts and general ledger. Profitability and Cost Management applications enable you to accurately trace the processes and activities that contribute to costs and revenue within the organization.