Modeling for Service-Related Industries

Service industries typically offer a wide range of products. Banks, for example, have many types of checking and savings accounts, home mortgages, and car loans. Cable television companies tend to offer many packages such as basic and standard services, premium packages with selections of movie channels, and digital cable channel packages. Each product or service has its own unique characteristics requiring different demands on the providing organization's resources. Essentially, all of the operating costs associated with the products from any service organization are determined by its customers' behavior.

To determine costs for services, Activity-Based Management lets you model for Bill of Services (BOS). BOS is a collection of product and service costs for customers. This collection of costs, which can be a unique combination of standard products and services, lets you create new service packages and, in turn, new business opportunities to serve your customers.

BOS functionality includes the ability to create new and unique combinations of standard services and combine them into a package service. It also includes functionality to apply a standard rate to the new services provided to estimate new business opportunities and costs to serve a customer. Based on data from pre-existing or new package services, you can manipulate the volume, adjust to the correct customer demand for those services, and eventually calculate the resource requirements for the new changes in demand.