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Activity Based Costing:
A Key Weapon in the Cost Containment Wars
 By
Steve Murtagh, CATScan Product Manager
Activity-based costing (ABC) is a financially oriented
analysis tool that examines any operation in terms of the specific tasks
it performs, the resources which are consumed in executing those tasks,
and the detailed costs of completing them. Because of its uniquely impressive
ability to demystify a complex cost structure and significantly improve
the quality of management decisions it has enjoyed a long history of
success in the manufacturing and process control environments. Increasingly,
contact center managers, directors and Chief Customer Officers are applying
ABC concepts to their contact centers and customer facing operations
to achieve breakthrough performance gains.
In an ABC analysis, your operation is defined by the detailed activities
it performs and the many tasks which comprise each activity. ABC assigns
costs to each task based on the resources that they consume and then
produces a baseline financial view of the “business as usual”
scenario. The result is a financial picture of the contact center that
illuminates high-cost activities and tasks, suggests the most likely
areas for changes and improvement, and helps predict the financial results
of investments or process changes. Additionally, the baseline serves
as a benchmark against which management can compare any potential process
changes or investments, and measure actual results.
What can the ABC approach do for you?
- Clearly identify high cost activities and opportunities for process
improvement and/or cost reduction with pinpoint precision.
- Generate a realistic budget forecasts and ROI analyses for each
alternative scenario, allowing you to effectively prioritize based
upon the real financial impact of each alternative.
- Generate unlimited ‘what-if’ scenarios detailing the
financial and operational impacts of alternative courses of action,
so you know the expected outcomes before you commit.
- Provide a detailed, unambiguous means of verifying the actual results
of any scenario implementation.
Activity based costing is an essential tool that every contact center
and customer support executive should have available. Click here for
a free white paper containing
more detailed information about ABC and how you can use it to address
your most immediate issues.
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