No one seems to dispute the importance and value of data warehousing. Knowing its costs is another matter.

At American Banker's retail best practices symposium last week in Orlando, many of the presenters described their progress in being able to separate and analyze customers by profitability.

KeyCorp of Cleveland, for one, is using this capability to expand relationships with its most profitable customers and improve the unprofitable ones' results.

Responding to a question after his keynote address, KeyCorp chairman and chief executive officer Robert W. Gillespie said, "I couldn't tell you" how much the data base effort has cost.

"It would be a pretty impressive number," he said. "It would be pushing right up to near $100 million, I would guess."

Joseph W. Saunders, chairman and chief executive officer of Fleet Card Services, said he would be "hard-pressed to put an actual number" on the technology investments his organization has made.

"It just goes on and on and on and on and on," he said.

The endless investing is necessary, he added. Organizations that do it can transform a raw list of names into a successful, national mailing solicitation that earns superior response rates and leads to lower losses, he said.

Randall B. Grossman, senior vice president for customer data management and analysis at Fleet Financial Group, knew exactly how much his bank spent on its data warehouse, which was completed last year: $28.1 million.

He gave that number in an interview after his conference speech. That was about $10 million under budget, he said. Fleet never proceeded with a planned second phase of the project, after determining its goals had been met with the first, larger phase.

Fleet's secret was fixed-price contracts, he said. "There's nothing like the discipline of a fixed budget to force you to compromise and manage scope."

He praised Fleet's systems integrator, KPMG Peat Marwick, which delivered at the agreed-upon price, even though the project ran eight months beyond the original deadline.

Making the multimillion-dollar investment pay off is Boston-based Fleet's next project. Mr. Grossman estimates that by 2001 the company will be generating $100 million a year from its data warehouse.

"The warehouse itself doesn't make money," he said. "It's the decisions that the warehouse helps you make that make the money."

At least 12 projects under way in Fleet's retail bank are using information from the warehouse, he said. One benefit is lowering the cost of mailing solicitations to certificate-of-deposit customers by 60%, without affecting response rates.

The value of the warehouse will keep rising, as it is used to guide an increasing number of decisions in more departments throughout the bank, he said.

Royal Bank of Canada doesn't know how much it spent to build its data warehouse, for a good reason: it did so a long time ago.

The bank built its customer data base in 1978, said James T. Rager, executive vice president, personal financial services.

"We didn't understand the full value of what we did," Mr. Rager said. "We felt we just had to do it."

Tools to segment customers were not available then, Mr. Rager said. But the move, which he called prescient, has positioned Royal Bank to reap benefits now.

Over the past three years the Toronto-based bank has boosted the number of customers in its most profitable segment by 100,000, to about one million, and increased its profits from them by about $100 each.

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