context
Activity-Based Management (ABM) is a methodology that allows companies to allocate costs and revenues to clients and products or services, based on activities performed within the company.
This includes techniques such as Activity-Based Costing (ABC), focusing on cost allocation, and Activity-Based Budgeting (ABB), allowing companies to compile their budget in terms of activities expected to be performed.
As a technique decomposing activities and processes and offering a view of how resources are actually used inside the company, Activity-Based Management allows companies to understand customer profitability of their services and products. It is a key component of the performance management architecture in many companies, and within various business domains, as it allows the improvement of the business processes and the increase of profitability.
key considerations
Numerous companies are using ABM as a methodology to understand the efficiency of their processes and activities. Most of them are still using spreadsheet-based solutions though, which along time all show their limitations in terms of their ability to optimally maintain an ABM environment. The major risks related to these solutions include:
- high maintenance costs,
- the need for multiple data reconciliations,
- people's resistance to change,
- limited ability to perform what-if and scenario analysis, and
- limited security.
Successful implementation of Activity-Based Management solutions requires careful consideration of a number of critical parameters and constraints:
- multi-channel information inflow: implementing Activity-Based Management solutions requires thorough evaluation of the underlying data sources to include all relevant data (see also Enterprise Information Management).
- market solutions awareness: the convergence of business intelligence and corporate performance management (CPM) solutions is a fact, even though true integration is not a reality yet, and BI and CPM solutions are not evolving in the same direction. Companies need keep a close view on the product roadmaps in this area to make the right decisions for a successful future.
- multi-disciplinary skills: while business intelligence solutions in the past were mainly driven by IT, CPM solutions such as Activity-Based Management used to be driven solely by the finance department. The convergence of BI and CPM under the performance management umbrella emphasizes the need for high skilled people, who are able to combine technical and business methodology skills, and provide for corporate implementations instead of silo solutions.
Keyrus and Activity Based Management
Thanks to our strategic
partnerships, our knowledge of the ABM solutions on the market and our ability to deliver multidisciplinary teams, Keyrus positions as a leader in guiding and helping its customers making the right choices upfront (see also
strategy studies,
scoping studies and
solution selection) and in implementing ABM solutions.
