Modeling the Profitability of Customer Relationships: Development and Impact of Barclays de Zoete Wedd's BEATRICE.

Author List: Stuchfield, Nicolas; Weber, Bruce W.;

Journal of Management Information Systems, 1992, Volume 9, Issue 2, Page 53-76.

Traditional management accounting systems are limited in their ability to provide profitability information relevant to management decisions. The problems of inadequate profitability measurement are intensified in today's business environments, where changing margins due to deregulation and new entrants, new products with unknown costs, and customer sophistication in locating low-cost providers often combine to leave unprepared firms with growing numbers of loss-making client relationships. In response, firms in a number of service and manufacturing industries are experimenting with new methods for measuring performance, and are implementing these techniques using information systems. The collection and analysis of information on the profitability of customer relationships enables managers to identify and defend their most attractive market segments, and to turn loss-making accounts into profitable ones. The London-based securities house, BZW, developed BEATRICE, an innovative information system that combines activity-based accounting principles and a model of customer profitability to make an income assignment to each of the 6,000 trades the firm makes in a day. The system's value is considerable, and can be evaluated by using industry performance benchmarks, and by comparing management decision making using the currently available information with what was possible with previous data.

Keywords: activity-based accounting; management accounting systems; profitability measurement.

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List of Topics

#44	0.171	approach analysis application approaches new used paper methodology simulation traditional techniques systems process based using proposed method present provides various
#288	0.137	customer customers crm relationship study loyalty marketing management profitability service offer retention it-enabled web-based interactions operations sales strategy channels set
#240	0.134	systems information management development presented function article discussed model personnel general organization described presents finally computer-based role examined functional components
#114	0.119	performance firm measures metrics value relationship firms results objective relationships firm's organizational traffic measure market study improve accounting measuring aggregate
#26	0.113	business large organizations using work changing rapidly make today's available designed need increasingly recent manage years activity important allow achieve
#242	0.084	market competition competitive network markets firms products competing competitor differentiation advantage competitors presence dominant structure share using incumbent make important
#8	0.061	decision making decisions decision-making makers use quality improve performance managers process better results time managerial task significantly help indicate maker
#30	0.050	market trading markets exchange traders trade transaction financial orders securities significant established number exchanges regulatory structures order traditional stock provides