Introducing ABC involves the ABC system development that is creating an ABC model for the organization and its implementation in the IT environment. In practice the ABC system is developed either with the use of a spreadsheet, or specialist software for ABC modeling, or by making changes in the bookkeeping system. The ABC implementation also requires the collection system development for the data needed in cost calculation. Similarly, changes in the costs and incomes recording system can be necessary. To make the ABC project successful, the users must be made familiar with the value of the ABC-provided information and encouraged to use it in decision making.
Published in Chapter:
The Method of Appraising Needs and Possibilities of Activity-Based Costing Implementation
Arkadiusz Januszweski (University of Technology and Life Sciences in Bydgoszcz, Poland)
Copyright: © 2008
|Pages: 10
DOI: 10.4018/978-1-59904-843-7.ch070
Abstract
Changes that occur in the environment of a given company and a constantly growing competition make the managers enhance the management system. The managers consider which management-support methods and tools could appear effective in fighting competition and ensure the company’s survival or development. Introducing a new management method or tool is in general a complex project, incorporating many aspects and frequently calling for considerable changes in the company’s IT system. Taking up the right decision needs thorough consideration of all the factors supporting or rejecting the project. The decision-making process concerning the implementation of a specific method or tool should address the following questions: • Does, in a given company, there exist objective reasons for which the implementation of a given method would be recommended? • What are the possibilities existing in the company which would make the implementation success realistic? • What tangible benefits will be available due to the new method implementation, in other words, what is the effectiveness of the project? To cut a long story short, one shall determine whether the change is needed, whether it is possible, and whether it will be beneficial to the business. Replying to the third question, different kinds of investment project effectiveness evaluation methods are used, including the internal return rate (IRR) or the net present value (NPV). Their application for the management system improvement project, however, faces many difficulties and can be very time consuming. Yet, one shall remember that before an attempt is made at replying to the third question, positive answers to the first two questions must be given.