Activity-Based Costing Software
“The combination of methodologies such as activity based costing (ABC) with multi-dimensional analytical tools provides companies with powerful capabilities to find opportunities for profit optimization.”
Profitability Analysis & Optimization
Gaining a competitive edge – BPM Partners, December 2008
There are many stories of large enterprise software implementation failures. There are also many stories of big expensive ABC failures. These ABC failures are not a flaw in the methodology – ABC is sound as a concept. The reason for these ABC failures is the same as the reason for many enterprise software implementation failures - long projects that take significant resources and take years to demonstrate a return on investment are traditionally high risk.
The secret to a successful ABC implementation isn’t really a secret at all - it’s public knowledge but hardly implemented. The trick is to build a model rapidly, at a high level, and to automate as much as possible. There is a wealth of data available in most organizations and using this data to its fullest advantage is a key to successful ABC implementations.
Using this approach, models become very driver focused, that is, existing data is used from anywhere it is available in an organization to build driver formulas and relationships. This allows values to flow through a model in an automated way, which facilitates maintenance while still maintaining model complexity.
ABC Model
It is important to note that the size of the organization is not the biggest issue when developing an ABC model, however the quality of the data sources can be critical.
So what do you do if you don’t have quality data? You can still build a model with limited quality data, however this has to be clearly understood by everyone using the model and the model can be used to determine where to focus on improving data quality. This approach has been taken on a number of implementations and it is a great way to provide feedback to the source data system owners and users on how data issues can have a big impact on decisions made by the organization.
If you are ready to build an ABC model then ACE on-Demand is a low cost, low risk approach and best of all, you can start immediately.