TDABC provides several benefits for cost and profitability management including an accurate yet inexpensive cost model, integration with transactional data, identification of process efficiencies, and forecasting of resource demands. Departments that tend to benefit most from TDABC are those with standardized repeatable processes, diversity of products/customers, large overhead costs, and available transaction data. These include sales, distribution, engineering, quality, and finance. Industries that are generally not a good fit include batch manufacturers and process industries.

1. What are the benefits of TDABC? What departments and industries benefit most?
TDABC provides:
1. An accurate strategic cost and profitability model that is fast, inexpensive, and easy to build
2. Integration with the detailed transactional data now available from ERP and customer relationship management
systems
3. A costing model based on transactions specific of individual orders, processes, suppliers, and customers
4. A model that identifies opportunities for process efficiencies and capacity management
5. Forecasts of resource demands, allowing companies to budget for the capacity needed to handle the sales and
production estimates in their strategic plans
6. A model that is easily scalable across highly diverse and complex enterprises via scalable applications software
and database technologies
7. A model that is easy and inexpensive to update as changes occur in process efficiencies and process costs
8. A general approach for cost and profitability management that can be used in any industry or company with
complexity in customers, products, channels, segments, and processes, and large expenditures for people and
capital.
What this list does not tell you is that TDABC is better for some departments and industries than others. Users with
these characteristics will benefit most from TDABC:
* Standardized, repeatable processes - makes it easier to model with a time equation
* Wide diversity of products and customers (in the thousands) - makes the more compact nature of the model more
advantageous to calculate huge volumes of data
* Large overhead costs - usually correlates to greater need to model personnel time
* Available data - the time equations depend upon regular data feeds from the transaction system
Who are these users? Feedback over the years from hundreds of organizations who have implemented TDABC is
summarized as follows.
Departments with a better fit include sales, distribution/logistics, design, engineering, quality, packaging,
procurement, underwriting, service, installation, finance, HR, IT and training. Departments with a worse fit include
marketing, research, advertising and batch manufacturing.
To date, the only industries we have found that are not a great fit for TDABC are batch manufacturers, process
industries and civic organizations.
By Steven Anderson, Founder and Chairman of Acorn Systems, Inc., Creator of TDABC, and Co-author with Dr.
Robert Kaplan of the book Time-Driven Activity-Based Costing: A Simpler and More Powerful Path to Higher Profits