Implementation of ABC systems and the selection of ABC software are being affected
by the desire to also utilize enterprise resource planning (ERP) systems. ERP
software has the objective of using real-time data to improve the efficiency of organizational
units and processes. Therefore, ERP applications are primarily concerned with
a company’s operational control information system. ERP applications require the use
of actual costs measured with a high degree of precision and focus on supporting the
objective of continuous improvement. To support continuous improvement, timely, accurate,
and detailed information is needed. ABC systems, on the other hand, focus on
customer and product profitability and seek to identify opportunities for process improvement.
ABC assigns costs using predetermined activity rates; thus, the costs assigned
do not necessarily correspond to actual costs. ABC also provides cost information
about the entire value chain: suppliers, products, and customers. It is much broader in
scope than the organizational-unit perspective of ERP applications. Because the two
systems have different purposes, scopes, and cost definitions, it may not be possible to
fully integrate them. It is important to recognize that there are different systems for
different purposes