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Abstract
Traditional management accounting data are limited in their ability to provide profitability information relevant to strategic management decisions. The problem is intensified in many business environments today where deregulation and new entrants often combine to leave unprepared firms with the risk of growing numbers of loss-making client relationships. Activity-based cost (ABC) accounting methods offer a solution, and several firms are developing information systems (IS) to gather and process cost and revenue data using these techniques. British securities house Barclays de Zoete Wedd's (BZW) response to poor accounting information and adverse conditions in its industry was to develop BEATRICE, an innovative IS, that combines ABC principles and a model of customer profitability for the securities industry that is based on a per-trade assignment of costs and revenues. The impact of customer profitability analysis on BZW's management processes and decision making is shown to be considerable.