Business intelligence (BI) specialist Harvey Jones has secured the South African distribution rights for Acorn Systems, an activity-based costing software company.
Terming itself the "Profit Improvement Company", Houston-based Acorn has a 12-year track record of providing activity-based costing (ABC) to more than 150 of the Global 2000 corporations around the world. It says it has saved these companies more than $1 billion in costs, and added more than $15 billion to their market capitalisation.
Acorn’s approach to profitability analysis is through time-driven ABC, or TDABC, says Schalk Viljoen, product manager at Harvey Jones.
"Acorn is the only true TDABC-centric system in the market today. Relative to traditional ABC systems, Acorn deploys faster, is much easier to maintain and provides business users with additional insights such as capacity analysis and transaction-level profitability," says Viljoen.
"Acorn neatly complements our current range of business performance management (BPM) solutions. Any BPM solution is only as good as the information that goes into it. How can you drive changes in business performance without understanding the true costs behind them?
"With Acorn, our customers obtain an insight into the costs which drive business activities and ultimately profitability. It is for this reason that many performance management vendors have partnered with Acorn rather than develop their own competence in this space."
These partners include Microsoft, SAP, Cognos, Sungard, Stern Stewart and BearingPoint.
The concept of time-driven ABC is the brainchild of Dr Robert Kaplan, the co-creator of the Balanced Scorecard, and Steven Anderson, founder and chairman of Acorn.
"The idea behind this new form of ABC is almost embarrassingly simple. Based on time, we calculate the cost of one minute based on overhead. This is called the activity rate. The activity rate is then applied to the various activities depending on how much time they consume using time equations," adds Viljoen. "The activity usage is extracted directly and often automatically from corporate ERP systems, which means minimal user intervention and a detailed level of analysis."
Acorn's clients are a who's who of the corporate world: Coca-Cola, Deutsche Bank, Citigroup, Charles Schwab, Lowe's, Fisher Scientific, Fairchild Semiconductor and many more.
"Corporations use Acorn to analyse the true cost of activities relevant to customers, products or any number of cost objects, and thereby the profitability of each," adds Viljoen. "With Acorn in place, customers can reduce revenue while dramatically improving profitability, for example. It highlights unprofitable activity so management can make the right decisions, focus on the right customers, and perform the right activities at the right price point."
Kaplan and Anderson note: "Time-driven ABC gives companies an elegant and practical option for determining the cost and capacity utilisation of their processes and the profitability of orders, products and customers. It enables companies to improve their cost management systems, not abandon them. Managers obtain accurate cost and profitability information to set priorities for process improvements, rationalise their product variety and mix, price customer orders, and manage customer relationships in ways that benefit both parties."
“South African customers have been starved of options in this important part of the market," concludes Viljoen. "We expect Acorn to enjoy an overwhelmingly positive reception in this market."