The project will take excessive time, focus may be lost, and model complexity may destroy its usefulness. On the other side of the coin, even with pristine results, if nobody in your company believes them or is willing to make changes, then the only outcome is information. Success occurs when the information is used to garner greater profitability. Many people make the distinction between the information provided by activity-based costing and use of this information. Activity-based costing should be viewed as a powerful management tool.
Communication is enhanced with data and performance metrics can be linked to the bottom line.
Some say that to effectively manage something, you must be able to measure it. Change by its nature is rarely comfortable for people. After implementing activity-based costing, several companies are doing exactly this, but it is quite a change. The point is that ABC provides the data and tools to make difficult business transitions based on fact, not history or feel. Management must understand where and how activity costs are derived and how these costs are traced to customers, products, vendors, etc.