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Activity-Based Costing (ABC), a method that measures the cost andperformance of activities, resources, and cost objects, is becomingincreasingly adopted in today's market as more and more companiesrealize that the current generation of systems can efficientlysupport it. As companies continue to make a huge investment of bothmoney and effort in their SAP system, they seek ways to incorporatethe benefits of Activity-Based Costing into their current SAPsystem.
The 123s of ABC in SAP shows corporations exactly how the ABCapproach can be effectively incorporated into today's SAP systems.While SAP training teaches what buttons in the system to push andABC courses and workshops teach the philosophy, consultants DawnSedgley and Christopher Jackiw provide the first documentation onhow to apply the ABC philosophy to the SAP costing engine-in short,how to use the tool to support the ideas.
The book is designed for readers with advanced knowledge of the ABCframework but does not assume the reader has any familiarity withthe SAP R/3 application. In clear, nontechnical language, theauthors provide a basic explanation of SAP R/3, specifically, theControlling Module (CO) including the CO-ABC component. The SAP-COmodule, which is the costing engine of the system, is based on theGerman costing philosophy, which is being augmented and repackagedunder the name Resource Consumption Accounting for the U.S. market.You will learn the difference between the American and Germanphilosophies, the benefits of using them together, and whatmanagement decision information they can provide.
To assist you in grasping the concepts, the book takes a pictorialapproach. Illustrations are also completely linked and built upon,effectively generating a large-scale case study whose lessons youcan apply to your needs.
As large companies shift to enhancement-type projects once theirSAP implementations have been completed, effective implementationof SAP ABC will become ever more critical to the success of yourcompany. A must for CFOs, controllers, cost managers, SAP projectmanagers, SAP-C level leaders, and SAP-CO team members, The 123s ofABC in SAP will provide valuable answers to the critical question,"How can I maximize my investment in my SAP R/3 system?"
Given SAP's dominance in the enterprise resource planning (ERP) market, many companies and their managers encounter SAP AG applications in some form or another. Of those organizations, some utilize Activity-Based Costing/Management concepts to perform more accurate cost assignments or drive performance initiatives. Managers are then faced with trying to determine how Activity-Based Costing can be incorporated into the SAP environment. We have written this book to help business managers understand the capabilities of the SAP R/ 3 business application to support Activity-Based Costing, Management, and Budgeting. This book is not intended as a primer in Activity-Based Costing (ABC): many such conceptual introductions have already been written. In order to bring the focus on the application of ABC concepts to an SAP R/ 3 environment, it is assumed that the reader has knowledge of the ABC framework. This book is divided into three parts: the conceptual foundation, the capabilities of SAP ABC, and integration with other tools. Part One consists of Chapters 1 through 4 and covers the basic conceptual fundamentals to lay the foundation for detailed discussions.
The conceptual foundation begins with Chapter 1, addressing the shortfalls of ABC and introduces the Resource Consumption Accounting philosophy (RCA). This philosophy is heavily incorporated into the design of the SAP Controlling (CO) module, which contains SAP's ABC functionality. The chapter also establishes the differences between ABC and RCA and provides support for the use of both approaches to support management costing needs. Chapter 2 expands the foundation to include analysis of the differences between the two main types of tools that support ABC concepts. Addressed are the core conceptual and technical differences between stand-alone ABC modeling tools utilized to support ABC and an "integrated" ABC tool.
Although it is assumed that the reader understands the basic concepts of ABC principles, we do not assume the reader has any familiarity with the SAP R/ 3 application. Therefore, Chapter 3 provides the reader with a basic understanding of SAP R/ 3, specifically the Controlling module, including the CO-ABC component.
Since there is relatively little information available on the subject of ABC within SAP, many misconceptions abound as to its capabilities and maturity. Chapter 4 chronicles the evolution of ABC within SAP R/ 3. This chapter is useful for managers to determine what overall capabilities are available within the given release of SAP R/ 3 their organization either currently utilizes or is considering implementing.
Part Two, the capabilities of SAP ABC, provides several chapters that detail the integrated ABC capabilities with each individual area within the SAP Controlling module. Chapters 5 through 9 are structured in a similar manner. Each chapter addresses the main functionality highlights of the individual area of focus, the information flows, sample key business decisions to be supported, implementation guidelines or considerations, and ends with a summary table to be utilized as a reference.
Part Three utilizes the same chapter structure to address the combined capabilities of SAP R/ 3 ABC with the Oros modeling tool (Chapter 10) and the SAP Strategic Enterprise Management (SEM) application (Chapter 11).
LAYING THE FOUNDATION.
Cost Management: A Brief History and the Convergence ofPhilosophies.
Systems Support of the Activity-Based Costing Philosophy:Stand-alone Analytical ABC versus Integrated ABC.
Overview of SAP and Integrated Activity-Based Costing.
Evolution of SAP's Integrated Activity-Based Costing.
SAP R/3 INTEGRATED ACTIVITY-BASED COSTING.
Integrated Activity-Based Costing with ResponsibilityAccounting.
Integrated Activity-Based Costing with Overhead OrderAccounting.
Integrated Activity-Based Costing with Product Costing andProduction Control.
Integrated Activity-Based Costing with Market SegmentAnalysis.
Integrated Activity-Based Costing.
BEYOND SAP R/3 INTEGRATED ACTIVITY-BASED COSTING.
SAP Integrated Activity-Based Costing Combined with Oros ModelingCapabilities.
Activity-Based Costing/Management with Strategic EnterpriseManagement.
Posted July 16, 2003
As a experienced SAP-CO consultant, I found this book to be an excellent foundation on how to design and implement SAP-ABC in the most beneficial way. Additionally, it imparts a critical understanding of RCA (Resource Consumption Accounting), which is the bedrock of cost management using SAP. Well worth the price.Was this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.
Posted May 21, 2002
I have several years of costing accounting experience in private industry as well as a few as an SAP consultant in the Controlling module. With all this experience, I have never had the opportunity to utilize Activity Based Costing. This book explains in solid detail the benefits of using ABC in SAP R/3. I find this book very helpful in understanding how an ABC integrated solution available in SAP is possible and beneficial. There is enough detail in this book for a consultant to gain a solid understanding of how ABC operates. The summaries and graphics were helpful as well.Was this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.