The use of activity based costing and activity based management in the shared services sector : a casse study based upon the shared services centre of Oracle EMEA

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Sternal, Christoph
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MA of Business Studies
Dublin Business School
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The primary objective of this dissertation is to analyse the use of Activity Based Costing (ABC) and Activity Based Management (ABM) in the shared services sector. The author concentrates the research on a case study of the shared services centre of Oracle EMEA in Dublin. The research approach is exploratory in nature and comprised of a questionnaire as well as semi-structured interviews with management at the Oracle SSC. This was supported by secondary research. Kaplan and Johnson, in the late 1980s, argued that costing systems had lost their relevance as cost accounting came to be dominated by financial accounting. Turney maintained that traditional cost accounting not only did not work well, but that it was positively dangerous. ABC and ABM were developed to give companies more accurate information about their costs and to allow them to manage these costs more effectively. Shared services centres face a number of challenges that require detailed cost information as well as tools to manage these costs and to improve performance and processes. The results of this research indicate that ABC/M are valuable tools for organisations in a shared services environment. Not only do activity based techniques produce information that is useful for accountants and for senior management, but they also enable operations management to identify inefficiencies and to improve processes. It is concluded that while the implementation of ABC/M is a complex task, the potential strategic and operational benefits of these tools for shared services organisations more than outweigh the costs.