Persuasion,
decision, commitment - The process of cost justification
The
costing of intangible benefits
The bottom line. "Conservative
accountants who assign zero values to many intangible
benefits prefer being precisely wrong to being vaguely
right. Managers need not follow their example."
(Kaplan, 1986, pg. 92) .
Many research studies have identified significant
intangible benefits that firms may realise as a result of the successful adoption and
integration of new technology with existing technical and social systems. These benefits
are harder to quantify partly because they are difficult to accurately estimate and partly
because they represent revenue enhancements rather than cost savings. The following are
several examples of the intangible potential benefits of new technology that must be
considered in new cost accounting systems:
- Greater flexibility. New technology that is appropriately
integrated and matched to other organisational subsystems can produce increases in the
scope and diversity of available products and services. Products and services can be
modified and customised, and product mix can be varied - all providing substantial
potential competitive advantages.
- Shorter throughput and lead time. Some of these benefits
already have been considered as part of savings from reduced inventories. There is also a
considerable marketing advantage in being able to meet customer demand with shorter lead
times and to respond quickly to changes in market demands.
- Increased learning. Even if cash flows turn up negative,
new technology investments can be valuable by permitting people to gain experience with
the implementation and use of the technology, to test markets for new products, and to
watch for major process advances. Given rapid technological change and the advantages of
being an early market participant, companies who defer investment until the new technology
is established will find themselves far behind the market leaders.
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