Purpose: The purpose of this paper is to discuss how activity-based costing (ABC) technique can be applied in the context of higher education institutions. It also discusses the obstacles and challenges to the successful implementation of activity-based management (ABM) in the higher education environment. Design/methodology/approach: This paper adopts a combination of case study and survey approaches. It also uses SAS ABM software to transform the ABC model into a working model. Findings: The results demonstrate that, using SAS ABM software, implementation of ABC technique can result in improved information of benefits to the university administrators. However, several obstacles and challenges especially those relating to supporting information systems may hamper the success of ABM system implementation. Originality/value: This is the first paper that investigates the feasibility of ABM system implementation in higher education institution in Malaysia. It is also the first to use specific software to transform the ABC into a working model. (Contains 5 tables and 1 figure.)