Which activity-based costing/management (ABC/M) software you choose depends on characteristics of your business; one solution isn’t right for every organization. Use the following questions to find the product that will work best for your company.
- Does the software offer multi-dimensional analysis — in other words, can it separate out costs by customer, product, geographical region and business channel?
- Can you use it to extract information from a number of sources, such as your enterprise resource planning (ERP) system, legacy software and transaction database?
- Once you’ve analyzed data from an activity-based viewpoint, can the software transfer the information into Microsoft Excel or report it on the corporate intranet? Can it feed ABC/M information into the larger system that your company uses for reporting?
- Does the software support user-defined terminology developed by the Consortium for Advanced Manufacturing – International (CAM-I)? This common terminology is a standard for ABC/M implementation.
- Can you link the ABC/M data that the application gathers with data from other types of initiatives, such as the Balanced Scorecard?
- Has the vendor formed any relationships with other companies, such as ERP vendors? How long has the vendor been selling the software?
- Will the vendor create a hypothetical model for you based on preliminary activity-based data you provide?
- Is the product flexible enough to adjust to any changes you may need to make in your model?
- Is entering data manually into the software easier than importing information electronically?
- Is the throughput—the speed at which the software produces information after data is entered—fairly high compared with other products?
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