DISTINCTIVES: VDDW & ABC/BI Point Solution - Side-By-Side

  • What the ABC / BI Point Solution Entails

    By an “ABC / BI Point Solution” we mean a system, often built atop a 3rd party package, that performs activity-based costing to achieve an activity or process centric view of performance, which exhibits the following characteristics:

    1. The system is separate from the data warehouse, even though it is likely linked to it in terms of inbound / outbound data supply.

    2. The system does not or is not capable of handling data at the transaction level as allocation input, as source supply for allocation drivers, or as the target grain for allocation output.

    The key distinguishing characteristic of such a system is the presence of complicated ETL integration back and forth between the ABC tool and the warehouse.

    Numerous ETL streams may be involved extracting and often rolling up transactional data from the warehouse to a different level of granularity (by product or customer, or product-customer combination) prior to loading the ABC tool. Post allocation, the ABC results might only be available at these aggregate levels, or some additional ETL mechanics may be involved to push the Results back down to individual transactions in the warehouse (in a real sense re-allocating the ABC tool's output).

    Are a 3rd party ABC package and VDDW therefore mutually exclusive options? Not really. One is a software tool. The other is a design / integration approach. (And the VDDW approach in fact depends on a good ABC engine as one of its core components. See VDDW Architecture for more information.) While it is possible, perhaps likely, that not all commercially available ABC tools can support the VDDW approach, some vendors’ tools have proven scalable enough to handle the transactional detail that the VDDW approach requires. The key comparison being made is not VDDW vs. Vendor, but VDDW versus an aggregated, separately built, and cumbersomely integrated ABC point solution, whomever the supporting vendor.


  • How the ABC / BI Point Solution and VDDW compare

    Assuming a commercially available ABC tool is employed, users of an ABC point solution are likely to enjoy a handsome modeling interface and OLAP reporting component or connector for the ABC output, which will make for Ease of Use. Beyond that, the rest of the comparison criteria combine to diminish the value of the ABC point solution versus that which would otherwise be achieved via a VDDW.

    Separating the ABC function from the data warehouse environment and dealing with the data at an aggregate level involves a cumbersome degree of integration that clutters the Information Supply Chain and impairs scalability, but more importantly casts doubt on the accuracy of results or makes it much more difficult to analyze results back to root cause. Example questions / issues that the ABC point solution cannot address:

    1. Is this customer consistently unprofitable, or only for certain types of interactions?

    2. Is this product unprofitable by itself, yet profitable by way of affinities with other products for which it is a loss leader?

    For these reasons, the ABC / BI point solution approach achieves less return and organizational buy-in than does the VDDW approach.


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