This is a follow‐on article to the author's JCAF September/October 2015 article titled “Optimizing the Income Statement With Advanced Analytics to Truly Maximize Profit … and More: Reimaging the Enterprise Master Plan.” (See http://onlinelibrary.wiley.com/doi/10.1002/jcaf.22082/abstract for a copy.) In it, the author observed that is possible to think of the optimized income Statement (OIS) from a demand standpoint—as an optimized demand‐driven plan (ODDP). This article elaborates on this premise, including: (1) how sales and marketing activities drive demand/forecast as a dependent variable; (2) how an OIS not only truly maximizes profit but also truly maximizes the return on investment (ROI) of sales and marketing expenditures. (As described in the previous article, the OIS proof‐of‐concept model improved ROI between 28% and 158%), (3) how an OIS aligns the entire organization's annual planning effort by driving much closer cross‐functional planning collaboration, particularly between the chief financial officer (CFO) and sales and marketing. This collaboration will take the firm, under the CFO's leadership, to the “next generation” of annual planning, that is, for the first time ever, truly optimized. © 2015 Wiley Periodicals, Inc.

Imagine relaxing the assumption of a fixed sales forecast to solve for the optimum level of sales and marketing spending that will provide the maximum profit and return on investment. This article and case study explains how.

The time has come for Finance to get started to apply optimization/advanced analytics. By applying advanced analytics to the income statement, the “one report every organization needs,” it is now possible to optimize it, creating an optimized income statement (OIS). The key deliverables of an OIS are an updated forecast that is maximally profitable and an updated supply chain that is the optimally feasible one required to make and fulfill the new forecast. © 2016 Wiley Periodicals, Inc.

The author of this article suggests that an optimized income statement (OIS) is the very embodiment of “advanced analytics and, as such, represents the next generation of financial planning. Further, an OIS assures all the related annual planning application (e.g., Financial Planning and Analysis, Sales and Operations Planning, and Marketing Mix Modeling) are harnessed to the maximally profitable forecast supported by the optimally feasible and sustainable supply chain required for the forecast's fulfillment. Finally, the chief financial officer (CFO) is being increasingly seen as the appropriate person responsible for the employment of advanced analytics. The CFO (1) owns the data, (2) normally uses analytics, and (3) serves as the primary guardian of “representational faithfulness of reported data. © 2015 Wiley Periodicals, Inc.

Imagine relaxing the assumption of a fixed sales forecast to solve for the optimum level of sales and marketing spending that will provide the maximum profit and return on investment. This article and case study explains how.