Increase Accuracy of Service Costing using Customer Involvement - An Application Scenario based on Service System Analytics

Authors

Abstract

A service provider is interested in precise service cost calculations. Reliable cost information is required for sound economic decisions and provides valuable input for human resource management. But, without accounting for customer involvement, service costing is not accurate. Existing costing methods like Activity-Based Costing (ABC) have paid too less attention on customer introduced uncertainty. To overcome this problem and to increase reliability we measure a customer’s individuality e.g. (experience, company size or speed of internet connection) and integrate it into cost accounting. We have developed a three layered
approach based on customer factors, customer factor classes and Time-Driven Activity-Based Costing (TDABC) to compute a customer’s influence on service costs. Our approach is used to compute customer factors to forecast service activity time. In this paper we describe our approach and demonstrate that it increases accuracy of service costing. The approach was evaluated using data from an international software provider.

, Peter Hottum2, Jorge Cardoso2,3

Keywords

service systems, service analytics, service cost

Subject

Service Systems

Conference

SIG SVC 2013 Workshop, Delivering and Managing Services in “Systems of Service Systems”, December 2013

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