Activity based costing – a worthwhile activity?

I met the news that I was going to have to carry out an activity-based costing (abc) exercise on my library service with considerable trepidation. My main concern was that I simply couldn’t see how I could generate the data, my other was the time it would take.

In essence, I was required to assign library costs across the business school’s staff and students, with students divided by programme. My main budget lines are staffing and databases with printed journals a distant third, so it was suggested that I concentrate solely on these two lines. However – and it’s a big however – although we record heaps of statistics about enquiries and database usage we don’t, and in the latter case can’t, record either by user group. I was assured that this was understood and that instead the intention was to create a guestimate picture, and that I should not spend too much of my time on it.  A good thing too as I had a million and one other things clamouring for my attention! After receiving this welcome reassurance I set about constructing the guestimate by assigning the % of time that my library team spend with different user groups, the time spent on databases by respective user groups, and according to which specific user groups the databases are effectively purchased. For e.g. advanced finanical datasets chiefly used by faculty and PhDs. 


In order to reassure myself that my guestimate wasn’t wildly out I decided to ask my Deputy to concurrently calculate the same figures in order that the final totals could be derived from from the middle ground between the two.

What was immediately fascinating about the results was that the %s we both independently assigned were almost identical. Perhaps this exercise was going to be worthwhile after all?

The next stage, which was not actually required for the abc exercise was for us to compare these figures against registered library users to see if there was any parity. On this occasion I was not at all surprised to observe a complete contrast. Almost half of our users (48%) are not actually business school members and yet in terms of staffing and databases they only account for 14% of our resources. Whereas conversely our MBA and Masters of Finance courses together represent only 17% of our registered users and yet they actually account for around  a third (35%) of resource spend and activity.


In short, the process quantified our service in a way that hadn’t been previously been attempted or indeed presented, giving us much food for thought going forward. Yes it’s broad brush but nevertheless its a worthwhile representation. So if you have an hour to spare in the next week (yes I know – a spare hour, what’s that?!) then why not give it a whirl for your service. I’d wager there’s a good chance that it’ll help you see your resources and activities in a brand new light…



One thought on “Activity based costing – a worthwhile activity?

  1. armchairbusiness says:

    Sounds like it was a worthwhile exercise. For us, ABC substantiated what we already knew. Our results were in line with our expectations. As such, it was equally as valuable in that it gave us the confidence we needed to move forward.
    Thanks for sharing.


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