Increasing competition, both globally and locally, make it clear that businesses need to know accurately and understand the source of process-, product- and service costs within their organization. Activity Based Costing (ABC), with its focus on deconstructing overhead pools and assigning costs to products and services in a more meaningful manner, has been a giant leap forward from traditional costing models where a high percentage of cost is arbitrarily allocated to products.

ABC models often look at cost from a financial point of view, assigning costs to some product accounting “box” without a thorough understanding of the business process that defines the resource utilization that creates the cost. Activity Based Management (ABM) reflects how the organizational process consumes resources and costs flow and captures in total the costs in the financial system to insure the financial integrity of the model.

The advantages of the ABM approach over cost decomposition are many:

• Because the business process model is dynamic, simulation and “what if” analysis can be done to evaluate business decision alternatives.
• Productivity improvements, sensitivity analysis, process changes and investment justifications can all be evaluated via the model.
• The model integrates the business process and the cost system, promoting understanding of how process affects cost.
• It helps identify key performance measurement opportunities.
• It provides strategic financial and operational decision support.

To align your cost structure with your operations and your strategy, Ackinas offers:

• To assess your strategic cost management maturity;
• To collect and consolidate your cost model input;
• To draw and document your cost model;
• To analyse your costs;
• To establish your Activity Based Budget and Forecast;
• To simulate alternative strategic options or operational improvements;
• To calculate customer profitability;
• To define and find use for your excess capacity;
• To benchmark your results within your company and with other companies in your field (i.e. specific for hospitals);
• To link your cost model with your operations and your strategy;
• To train your people in Activity Based Management;
• To train your people in the Ackinas CPM Model.

• Scorecard, OLAP and BI tools