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Activity Based Management (ABM) is a discipline that focuses on the management of activities as a way to improve customer value and profit. ABM includes cost driver analysis, activity analysis, and performance measurement.

The Basics of Activity Based Management (pdf 186 kb)
The battle to sustain and increase corporate profitability grows ever more arduous in most sectors of the economy. Margins are caught in a pincer movement by, on the one hand, the steady improvement in competition, and on the other, the increasing awareness of customers. We need to grasp every opportunity not only to be ever more effective at what we do, but also to be truly competitive, winning more market share of the customers both nationally and globally. For success, a full understanding of costs and cost structures is necessary. Conventional accounting and management reporting throw little light on the real cost dynamics in a business. As a result we are not in control of profitability at a level of detail that supports substantive decision-making...
Develin & Partners

The Basic Principles of Building ABM Models
(pdf 197 kb)
When starting to build ABM models there are a number of things to consider before plunging into the detail. As always, some thought and planning at an early stage will prevent a path being taken that leads to an inefficient model or one that does not answer the business issues ABM was hoping to address. When structuring a model there are a number of key points to consider...
Develin & Partners

Undertaking an ABM Project
(pdf 132 kb)
Embarking on an ABM project is not a trivial exercise. Like any project that has to make a significant impact on business performance it will require dedicated resources, the co-operation of the business to become involved in the task of data collection, and the determination of the top team to use the results to improve the organisation’s fortunes...
Develin & Partners

Jargon review - glossary of Activity Based Management terms
Bamboozled by ABM terms and Acronyms? Get all the answers with the Activity Based Management Jargon Review...
Develin & Partners

Activity Based Management - Merging Process and Measurement
Increasing competition, both globally and locally, make it clear that businesses 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.

However, ABC models often look at cost from a financial point of view, making sure only that all costs are assigned to some product accounting "box" without a thorough understanding of the business process that underlies and defines the resource utilization that creates the cost. This paper will describe a methodology that combines business process analysis with ABC to create a tool that translates Activity Based Costing into Activity Based Management (ABM), a methodology for running, improving and measuring a business...

Further reading

Activity-based Cost Management: Making It Work: A Manager's Guide to Implementing and Sustaining an Effective ABC System

Activity-based Cost Management: Making It Work: A Manager's Guide to Implementing and Sustaining an Effective ABC System
Gary Cokins

This work describes the benefits of activity-based costing and how to implement it. It shows how to avoid implementation failure and how to sustain the activity-based costing and management system. The unification of time, cost and quality is illustrated, and the text shows how to trace the flow of costs from resources to final cost objectives. Jargon-free explanations and illustrations are provided, making the text a useful learning tool for managers and an internal selling tool for ABC advocates.

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Activity Based Management: Improving Processes and Profitability
Brian Plowman

Activity Based Management: Improving Processes and Profitability

Product and particularly customer profitability are black holes in most managers' understanding of their business. Identifying customer revenue is easy but identifying what they cost - so we can understand whether or not they are profitable - is difficult. In a world in which competition, regulation and the increasing use of the Internet put ever greater pressure on margins it is vitally important to understand both product- and customer-profitability. Activity Based Management (ABM) enables you to do this.

This book explains the power of using ABM to increase the profitability of your business. It provides step-by-step guidance on basic principles, comparisons between traditional methods, definitions of processes, activities and cost-drivers as well as details of data collection techniques and implementation steps. Through the book's numerous detailed examples a logical picture builds up of how to obtain the benefits that ABM can deliver. On its own ABM will change management decision-making: by showing how ABM also supports other profit improvement initiatives such as Business Process Reengineering, Shareholder Value Added and Customer Relationship Management, managers will learn how they can use the best possible toolkit to put their business firmly on the road to leaps in profitability.

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The Activity Based Management Authority - Better Management.Com
BetterManagement.com aggregates content from over 200 leading organizations including Harvard Business School Working Knowledge, The McKinsey Quarterly, and University of Pennsylvania’s Knowledge@Wharton. This extensive library is organized into “Authorities.” one of which handily is Activity Based Management...







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