Is ABCM Destined for Success or Failure in the Federal Government?

The days of ballooning federal budgets are over. Today, both the president and Congress continue to strive for a balanced budget, while encouraging federal agencies to improve service delivery of the various programs and entitlement benefits provided to their customers. Stakeholder involvement and public opinion about how agencies run their "businesses" are increasingly scrutinized. Trends such as competition for service delivery through franchizing, privatization, and outsourcing are causing an entirely new way of looking at how support and program services are managed. This article explains how the success or failure of activity-based costing management (ABCM) is dependent upon its ability to link the resolution of these external factors with internal business needs, while providing government managers with a better understanding of how to use ABCM to steer their organizations into the future. We also describe the current and future status of ABCM installations at various federal entities where ABCM was recently introduced and where interviews, conducted a year ago, were updated to describe how ABCM is helping these entities align external factors to internal needs. These federal entities are the Immigration and Naturalization Service, the Financial Management Service, and the Veterans Benefits Administration.