The integration of activity based costing and enterprise modeling for reengineering purposes

This paper describes an approach to integrate the Activity Based Costing (ABC) technique within the framework of GRAI Integrated Methodology (GIM) in order to assist business process reengineering justi"cation and evaluation. The "rst step of integration is to have ABC adopt cost pools and lists of activities derived from GIM process modeling. Further on ABC is involved in two stages of the methodology: (a) ABC adds to the ECOGRAI method of performance modeling by supporting the determination of the right performance indicators that are responsible for business process costs. (b) ABC is a sound approach to translate operational performance indicators not found in accounting ledgers into "nancial terms and the company's pro"t bottom line. The approach has been developed during the Esprit research project REALMS and implementation results from two industrial partners are presented. ( 2000 Elsevier Science B.V. All rights reserved.