Customer asset management in action: using customers portfolio for allocating resources across business-to-business relationships for improved shareholder value

Suvi Nenonen Customer asset management in action: using customer portfolios for allocating resources across business-to-business relationships for improved shareholder value Customers are crucial assets to all firms as customers are the ultimate source of all cash flows. Regardless this financial importance of customer relationships, for decades there has been a lack of suitable frameworks explaining how customer relationships contribute to the firm financial performance and how this contribution can be actively managed. In order to facilitate a better understanding of the customer asset, contemporary marketing has investigated the use of financial theories and asset management practices in the customer relationship context. Building on this, marketing academics have promoted the customer lifetime value concept as a solution for valuating and managing customer relationships for optimal financial outcomes. However, the empirical investigation of customer asset management lags behind the conceptual development steps taken. Additionally, the practitioners have not embraced the use of customer lifetime value in guiding managerial decisions - especially in the business-to-business context. The thesis points out that there are fundamental differences between customer relationships and investment instruments as investment targets, effectively eliminating the possibility to use financial theories in a customer relationships context or to optimize the customer base as a single investment portfolio. As an alternative, the thesis proposes the use of customer portfolio approach for allocating resources across the customer base for improved shareholder value. In the customer portfolio approach, the customer base of a firm is divided into multiple portfolios based on customer relationships’ potential to contribute to the shareholder value creation. After this, customer management concepts are tailored to each customer portfolio, designed to improve the shareholder value in their own respect. Therefore, effective customer asset management with the customer portfolio approach necessitates that firms are able to manage multiple parallel customer management concepts, or business models, simultaneously. The thesis is one of the first empirical studies on customer asset management, bringing empirical evidence from multiple business-to-business case studies on how customer portfolio models can be formed, how customer portfolios can be managed, and how customer asset management has contributed to the firm financial performance.

Customer asset management in action: using customers portfolio for allocating resources across business-to-business relationships for improved shareholder value

Suvi Nenonen Customer asset management in action: using customer portfolios for allocating resources across business-to-business relationships for improved shareholder value Customers are crucial assets to all firms as customers are the ultimate source of all cash flows. Regardless this financial importance of customer relationships, for decades there has been a lack of suitable frameworks explaining how customer relationships contribute to the firm financial performance and how this contribution can be actively managed. In order to facilitate a better understanding of the customer asset, contemporary marketing has investigated the use of financial theories and asset management practices in the customer relationship context. Building on this, marketing academics have promoted the customer lifetime value concept as a solution for valuating and managing customer relationships for optimal financial outcomes. However, the empirical investigation of customer asset management lags behind the conceptual development steps taken. Additionally, the practitioners have not embraced the use of customer lifetime value in guiding managerial decisions - especially in the business-to-business context. The thesis points out that there are fundamental differences between customer relationships and investment instruments as investment targets, effectively eliminating the possibility to use financial theories in a customer relationships context or to optimize the customer base as a single investment portfolio. As an alternative, the thesis proposes the use of customer portfolio approach for allocating resources across the customer base for improved shareholder value. In the customer portfolio approach, the customer base of a firm is divided into multiple portfolios based on customer relationships’ potential to contribute to the shareholder value creation. After this, customer management concepts are tailored to each customer portfolio, designed to improve the shareholder value in their own respect. Therefore, effective customer asset management with the customer portfolio approach necessitates that firms are able to manage multiple parallel customer management concepts, or business models, simultaneously. The thesis is one of the first empirical studies on customer asset management, bringing empirical evidence from multiple business-to-business case studies on how customer portfolio models can be formed, how customer portfolios can be managed, and how customer asset management has contributed to the firm financial performance.

Managing Information Risks in asset management - Experiences from an in-depth case study in the utility industry

Information is one of the most important resources in our globalized economy. The value of information often exceeds the value of physical assets. Information quality has, in many ways, an impact on asset management organisations and asset managers struggle to understand and to quantify it, which is a prerequisite for effective information quality improvement. Over the past few years, we have developed an innovative management concept that addresses these new asset management challenges: a process for Total Information Risk Management (TIRM), which has been already tested in a number of asset management industries. The TIRM process enables to manage information quality more effectively in asset management organisations as it focuses specifically on the risks that are imposed by information quality. In this paper, we show how we have applied the TIRM process in an in-depth study at a medium-sized European utility provider, the Manx Electricity Authority (MEA), at the Isle of Man.

Classifying data quality problems in asset management

© Springer International Publishing Switzerland 2015. Making sound asset management decisions, such as whether to replace or maintain an ageing underground water pipe, are critical to ensure that organisations maximise the performance of their assets. These decisions are only as good as the data that supports them, and hence many asset management organisations are in desperate need to improve the quality of their data. This chapter reviews the key academic research on data quality (DQ) and Information Quality (IQ) (used interchangeably in this chapter) in asset management, combines this with the current DQ problems faced by asset management organisations in various business sectors, and presents a classification of the most important DQ problems that need to be tackled by asset management organisations. In this research, eleven semi structured interviews were carried out with asset management professionals in a range of business sectors in the UK. The problems described in the academic literature were cross checked against the problems found in industry. In order to support asset management professionals in solving these problems, we categorised them into seven different DQ dimensions, used in the academic literature, so that it is clear how these problems fit within the standard frameworks for assessing and improving data quality. Asset management professionals can therefore now use these frameworks to underpin their DQ improvement initiatives while focussing on the most critical DQ problems.

Construction management contracts: law and practice

The context of construction management (CM) reveals that this method of procurement is as much a management philosophy as a contract structure. It is important to consider legal and contractual issues in this context. The interplay between management and law is complex and often misunderstood. Before considering specific issues, the use of contractual remedies in business agreements is discussed. In addition, the extent to which standardising a form of contract detracts or contributes to the success of projects is also considered. The dearth of judicial decisions, and the lack of a standard form, render it difficult to be specific about legal issues. Therefore, the main discussion of legal issues is centred around a recently completed research project which involved eliciting the views of a cross-section of experienced construction management clients, consultants and trade contractors. These interviews are used as the basis for highlighting some of the most important legal points to consider when setting up CM projects. The interviews revealed that the advantage of CM is the proximity of the client to the trade contractors and the disadvantage is that it depends on a high degree of professionalism and experience; qualities which are unfortunately difficult to find in the UK construction industry.

Accounting information systems as institutional carriers: a case study of regulatory compliance in UK asset management houses

Previously, governments have responded to the impacts of economic failures and consequently have developed more regulations to protect employees, customers, shareholders and the economic wellbeing of the state. Our research addresses how Accounting Information Systems (AIS) may act as carriers for institutionalised practices associated with maintaining regulatory compliance within the context of UK Asset Management Houses. The AIS was found to be a strong conduit for institutionalized compliance related practices, utilising symbolic systems, relational systems, routines and artefacts to carry approaches relating to regulative, normative and cultural-cognitive strands of institutionalism. Thus, AIS are integral to the development and dissipation of best practice for the management of regulatory compliance. As institutional elements are clearly present we argue that AIS and regulatory compliance provide a rich context to further institutionalism. Since AIS may act as conduits for regulatory approaches, both systems adopters and clients may benefit from actively seeking to codify and abstract best practices into AIS. However, the application of generic institutionalized approaches, which may be applied across similar organizations, must be tempered with each firm’s business environment and associated regulatory exposure. A balance should be sought between approaches specific enough to be useful but generic enough to be universally applied.

Health management contracts in Costa Rica from a comparative perspective

Includes bibliography

Asset management of wastewater networks

Asset Management (AM) is a set of procedures operable at the strategic-tacticaloperational level, for the management of the physical asset’s performance, associated risks and costs within its whole life-cycle. AM combines the engineering, managerial and informatics points of view. In addition to internal drivers, AM is driven by the demands of customers (social pull) and regulators (environmental mandates and economic considerations). AM can follow either a top-down or a bottom-up approach. Considering rehabilitation planning at the bottom-up level, the main issue would be to rehabilitate the right pipe at the right time with the right technique. Finding the right pipe may be possible and practicable, but determining the timeliness of the rehabilitation and the choice of the techniques adopted to rehabilitate is a bit abstruse. It is a truism that rehabilitating an asset too early is unwise, just as doing it late may have entailed extra expenses en route, in addition to the cost of the exercise of rehabilitation per se. One is confronted with a typical ‘Hamlet-isque dilemma’ – ‘to repair or not to repair’; or put in another way, ‘to replace or not to replace’. The decision in this case is governed by three factors, not necessarily interrelated – quality of customer service, costs and budget in the life cycle of the asset in question. The goal of replacement planning is to find the juncture in the asset’s life cycle where the cost of replacement is balanced by the rising maintenance costs and the declining level of service. System maintenance aims at improving performance and maintaining the asset in good working condition for as long as possible. Effective planning is used to target maintenance activities to meet these goals and minimize costly exigencies. The main objective of this dissertation is to develop a process-model for asset replacement planning. The aim of the model is to determine the optimal pipe replacement year by comparing, temporally, the annual operating and maintenance costs of the existing asset and the annuity of the investment in a new equivalent pipe, at the best market price. It is proposed that risk cost provide an appropriate framework to decide the balance between investment for replacing or operational expenditures for maintaining an asset. The model describes a practical approach to estimate when an asset should be replaced. A comprehensive list of criteria to be considered is outlined, the main criteria being a visà- vis between maintenance and replacement expenditures. The costs to maintain the assets should be described by a cost function related to the asset type, the risks to the safety of people and property owing to declining condition of asset, and the predicted frequency of failures. The cost functions reflect the condition of the existing asset at the time the decision to maintain or replace is taken: age, level of deterioration, risk of failure. The process model is applied in the wastewater network of Oslo, the capital city of Norway, and uses available real-world information to forecast life-cycle costs of maintenance and rehabilitation strategies and support infrastructure management decisions. The case study provides an insight into the various definitions of ‘asset lifetime’ – service life, economic life and physical life. The results recommend that one common value for lifetime should not be applied to the all the pipelines in the stock for investment planning in the long-term period; rather it would be wiser to define different values for different cohorts of pipelines to reduce the uncertainties associated with generalisations for simplification. It is envisaged that more criteria the municipality is able to include, to estimate maintenance costs for the existing assets, the more precise will the estimation of the expected service life be. The ability to include social costs enables to compute the asset life, not only based on its physical characterisation, but also on the sensitivity of network areas to social impact of failures. The type of economic analysis is very sensitive to model parameters that are difficult to determine accurately. The main value of this approach is the effort to demonstrate that it is possible to include, in decision-making, factors as the cost of the risk associated with a decline in level of performance, the level of this deterioration and the asset’s depreciation rate, without looking at age as the sole criterion for making decisions regarding replacements.

On the Efficiency of the Benchmarks Used in the Asset Management

In this work we studied the efficiency of the benchmarks used in the asset management industry. In chapter 2 we analyzed the efficiency of the benchmark used for the government bond markets. We found that for the Emerging Market Bonds an equally weighted index for the country weights is probably the more suited because guarantees maximum diversification of country risk but for the Eurozone government bond market we found a GDP weighted index is better because the most important matter is to avoid a higher weight for highly indebted countries. In chapter 3 we analyzed the efficiency of a Derivatives Index to invest in the European corporate bond market instead of a Cash Index. We can state that the two indexes are similar in terms of returns, but that the Derivatives Index is less risky because it has a lower volatility, has values of skewness and kurtosis closer to those of a normal distribution and is a more liquid instrument, as the autocorrelation is not significant. In chapter 4 it is analyzed the impact of fallen angels on the corporate bond portfolios. Our analysis investigated the impact of the month-end rebalancing of the ML Emu Non Financial Corporate Index for the exit of downgraded bond (the event). We can conclude a flexible approach to the month-end rebalancing is better in order to avoid a loss of valued due to the benchmark construction rules. In chapter 5 we did a comparison between the equally weighted and capitalization weighted method for the European equity market. The benefit which results from reweighting the portfolio into equal weights can be attributed to the fact that EW portfolios implicitly follow a contrarian investment strategy, because they mechanically rebalance away from stocks that increase in price.

Progetto di integrazione di strumenti per l'asset management in funzione di privacy e sicurezza

Progetto per l'integrazione degli strumenti attualmente utilizzati per l'amministrazione degli asset in funzione anche della normativa in vigore.

An Integrated Approach to Strategic Asset Management

This paper focuses on identifying and analysing the elements of Strategic Management for infrastructure and engineering assets. These elements are contended to involve an understanding of governance, corporate policy, corporate objectives, corporate strategy and interagency collaboration and will in turn, allow the ability determine a broader and more comprehensive framework for engineering asset management, ie a ‘staged approach’ to understanding how assets are managed within organisations. While the assets themselves have often been the sole concern for good management practices, other social and contextual elements have come into the mix in order to promote strategic asset management. The development of an integrated approach to asset management is at the base of the research question. What are the considerations and implications for adopting and implementing an integrated strategic asset management (ISAM) framework? While operational matters have been given prominence, a subset of corporate governance, Asset Governance, details the policies and processes needed to acquire, utilise, maintain and account for an organisation’s assets. Asset governance stems from the organisation’s overarching corporate governance principles; as a result it defines the management context in which engineering asset management is implemented. This aspect will be examined to determine the appropriate relationship between organisational strategic management and strategic asset management to further the theoretical engagement with the maturity of strategy,policy and governance for infrastructure and engineered assets. Asset governance stems from the organisation’s overarching corporate governance principles; as a result it defines the management context in which engineering asset management is implemented. The research proceeds by a document analysis of corporate reports and policy recommendations in terms of infrastructure and engineered assets. The paper concludes that incorporating an integrated asset management framework can promote a more robust conceptualisation of public assets and how they combine to provide a comprehensive system of service outcomes.

Impact assessment of an integrated approach for thermal power generation plants asset management in the current energy market

El sector energético, en España en particular, y de forma similar en los principales países de Europa, cuenta con una significativa sobrecapacidad de generación, debido al rápido y significativo crecimiento de las energías renovables en los últimos diez años y la reducción de la demanda energética, como consecuencia de la crisis económica. Esta situación ha hecho que las centrales térmicas de generación de electricidad, y en concreto los ciclos combinados de gas, operen con un factor de utilización extremadamente bajo, del orden del 10%. Además de la reducción de ingresos, esto supone para las plantas trabajar continuamente fuera del punto de diseño, provocando una significativa pérdida de rendimiento y mayores costes de explotación. En este escenario, cualquier contribución que ayude a mejorar la eficiencia y la condición de los equipos, es positivamente considerada. La gestión de activos está ganando relevancia como un proceso multidisciplinar e integrado, tal y como refleja la reciente publicación de las normas ISO 55000:2014. Como proceso global e integrado, la gestión de activos requiere el manejo de diversos procesos y grandes volúmenes de información, incluso en tiempo real. Para ello es necesario utilizar tecnologías de la información y aplicaciones de software. Esta tesis desarrolla un concepto integrado de gestión de activos (Integrated Plant Management – IPM) aplicado a centrales de ciclo combinado y una metodología para estimar el beneficio aportado por el mismo. Debido a las incertidumbres asociadas a la estimación del beneficio, se ha optado por un análisis probabilístico coste-beneficio. Así mismo, el análisis cuantitativo se ha completado con una validación cualitativa del beneficio aportado por las tecnologías incorporadas al concepto de gestión integrada de activos, mediante una entrevista realizada a expertos del sector de generación de energía. Los resultados del análisis coste-beneficio son positivos, incluso en el desfavorable escenario con un factor de utilización de sólo el 10% y muy prometedores para factores de utilización por encima del 30%. ABSTRACT The energy sector particularly in Spain, and in a similar way in Europe, has a significant overcapacity due to the big growth of the renewable energies in the last ten years, and it is seriously affected by the demand decrease due to the economic crisis. That situation has forced the thermal plants and in particular, the combined cycles to operate with extremely low annual average capacity factors, very close to 10%. Apart from the incomes reduction, working in out-of-design conditions, means getting a worse performance and higher costs than expected. In this scenario, anything that can be done to improve the efficiency and the equipment condition is positively received. Asset Management, as a multidisciplinary and integrated process, is gaining prominence, reflected in the recent publication of the ISO 55000 series in 2014. Dealing Asset Management as a global, integrated process needs to manage several processes and significant volumes of information, also in real time, that requires information technologies and software applications to support it. This thesis proposes an integrated asset management concept (Integrated Plant Management-IPM) applied to combined cycle power plants and develops a methodology to assess the benefit that it can provide. Due to the difficulties in getting deterministic benefit estimation, a statistical approach has been adopted for the cot-benefit analysis. As well, the quantitative analysis has been completed with a qualitative validation of the technologies included in the IPM and their contribution to key power plant challenges by power generation sector experts. The cost- benefit analysis provides positive results even in the negative scenario of annual average capacity factor close to 10% and is promising for capacity factors over 30%.