Cost Management for IT Activities: A Case Study in the IT Division of a French Bank Using Activity-Based Costing

13 Pages Posted: 6 Jan 2014

See all articles by Gregory Wegmann

Gregory Wegmann

University of Burgundy - IAE Dijon School of Management, CREGO EA 7317

Date Written: November 1, 2013

Abstract

The costs of information technology (IT) activities have been increasing rapidly these recent years, due to the technological sophistication and more market-oriented strategies that complexify the value chains of the firms. Many of these expenses do not relate to individual products but are associated to customers, market segments and distribution channels. In this context, the companies try to understand the cost of selling their products and services. This is the reason why customer-driven and market-oriented cost management approaches have gained in popularity.

In this paper, we review in a first part the strategic cost management stream and the way we can give a customer orientation to cost management processes, based on the Activity-based costing (ABC) method. In a second part we present a case study that takes place in the IT division of a French Bank that has developed an ABC method since several years. We describe how the ABC model has evolved toward a process that enables to compare the performances of different customers. With this case study, we will conclude about the new forms of management controls and controllers that emerge.

Keywords: Strategic Cost Management, Information Technology Activities, Activity-based Costing, Customer-driven ABC, Case Study

JEL Classification: M41

Suggested Citation

Wegmann, Grégory, Cost Management for IT Activities: A Case Study in the IT Division of a French Bank Using Activity-Based Costing (November 1, 2013). Available at SSRN: https://ssrn.com/abstract=2374972 or http://dx.doi.org/10.2139/ssrn.2374972

Grégory Wegmann (Contact Author)

University of Burgundy - IAE Dijon School of Management, CREGO EA 7317 ( email )

Pôle Economie Gestion
2 Bd Gabriel B.P. 26 611
21066 DIJON, Cedex
France
(33) 03 80 39 52 77 (Phone)

HOME PAGE: http://iae.u-bourgogne.fr/en/

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