Activity-Based Management (ABM) in Australia: 2025 Guide

Activity-Based Management (ABM) is gaining serious traction among Australian businesses in 2025. No longer just a buzzword for accountants, ABM is helping organisations—from manufacturers to tech startups—reshape their cost structures and boost profitability. So, what’s behind this renewed focus? And how can ABM help your business make sharper decisions in a fiercely competitive landscape?

What Is Activity-Based Management (ABM)?

At its core, ABM is a management approach that uses detailed data about business activities to analyse and control costs more effectively. Unlike traditional costing, which often buries costs under broad overhead categories, ABM drills down to the granular activities that drive costs and value creation. By mapping every action—from procurement to customer service—ABM enables managers to see which processes are profitable and which are draining resources.

Here’s how ABM stands out in 2025:

• Data-driven insights: With the rise of AI-powered accounting tools and real-time analytics, ABM is more accessible and actionable than ever.

• Focus on process improvement: ABM highlights inefficiencies, helping leaders target waste and streamline operations.

• Greater transparency: By linking costs directly to activities, ABM supports better budgeting and more accurate product pricing.

ABM in Action: 2025 Trends and Policy Updates

The 2025 landscape is shaped by fresh economic pressures and policy updates. The Australian Government’s recent push for digital transformation grants, especially for SMEs, has made advanced cost management tools—including ABM—more accessible. The ATO’s updated guidelines for R&D tax incentives also encourage businesses to document activity-level costs more rigorously, aligning perfectly with ABM methodologies.

Real-world example: Consider an Australian manufacturer in Melbourne using ABM to dissect its production process. By identifying which product lines consume the most setup time and machine hours, the company can:

• Redirect resources to high-margin products

• Negotiate better supplier contracts based on accurate activity data

• Eliminate redundant steps and cut overhead costs

Similarly, a fintech startup in Sydney leveraged ABM to analyse its customer onboarding process. By pinpointing where support tickets spiked, they re-engineered their onboarding journey, reducing average support costs by 30%.

Benefits and Best Practices for Implementing ABM

ABM isn’t just for big corporations with sprawling budgets. Thanks to cloud-based platforms and tailored consulting, even mid-sized Australian businesses are reaping the rewards. Here’s what you can expect:

• Sharper pricing: Understand the true cost of serving each customer segment and set prices that reflect real value.

• Improved product mix: Use activity data to focus on profitable products or services, and phase out loss-makers.

• Enhanced resource allocation: Deploy staff and capital where they deliver the biggest bang for your buck.

To make ABM work, follow these steps:

• Identify key activities: Map out all processes that contribute to your products or services.

• Assign costs: Link every expense to a specific activity, using direct and indirect cost tracing.

• Analyse and act: Review the data, spot inefficiencies, and implement targeted improvements.

• Monitor and adapt: ABM is ongoing—regularly update your activity maps and cost assignments as your business evolves.

Is ABM Right for Your Business in 2025?

As inflationary pressures and global competition intensify, precise cost control is no longer optional. ABM delivers the clarity and agility Australian businesses need to adapt and thrive. Whether you’re a family-owned retailer or an ambitious scaleup, understanding your true cost drivers puts you ahead of the pack.