As Published In May 2005

Capturing Customer Intelligence
By Alan Joch

Truly a single source of truth: Complete customer information is coming your way.

True or False?

You have 234,987 customers. Your support desk logged 4,721 calls regarding one product in March. Many of your most profitable customers reside in a sales region handled by that new rep.

Think of how your strategy might change if you knew some simple, basic facts about your customers. If you could see customer activity—interactions with customer service, accounts payable, sales and marketing, and more—in its entirety. If you could know that what you were seeing was the latest, most accurate information—and if all this were available to you in near-real time, not days or weeks later.

True customer intelligence. It's an elusive goal, but it's becoming a reality for companies tired of the incomplete and slippery information that tries to pass as corporate truth.

For years, companies of all sizes in every industry have searched for ways to discover the truth about their customers. But more often than not, businesses face uncertainties about even simple truths—such as how many customers they really have and which ones are worth keeping. Something as simple as one person's calling himself Jim Smith, J. Smith, and James Smith on different forms can cloud the truth. And even if customers use the same name every time, they may exist as separate entities on multiple, unintegrated systems. This confusion hurts your bottom line, through added expenses, lost sales opportunities, receivables delays, and poor customer service.

But thanks to a new, open-standards-based technology called data hubs, business truth is at hand. Data hubs provide a single, central place to hold accurate data that stays up to date even in the rush of constantly changing business conditions. A big strength of hub technology is that companies can operate from one set of data—one version of the truth, as opposed to multiple replicated sources—and that data becomes integrated into the flow of all business transactions. "There's a mad rush for information, now that people see we can provide accurate data," says Angie Couron, manager of data stewardship for Network Appliance (NetApp), in Sunnyvale, California. "It's almost as if we're trying to hold the doors shut. We can't move quickly enough."

Commercial data hub technology is catching on. Initial estimates by Stamford, Connecticut-based technology research firm Gartner show that the market for customer data integration (CDI) hubs grew from about US$25 million in 2003 to US$65 million in 2004 and is set to grow to more than US$100 million in 2005. Gartner also predicts that the application integration and middleware market, which includes hubs, will almost double, from about US$4.6 billion in 2002 to US$8.8 billion in 2006.

Although data hub pioneers point to clear benefits, they also warn that hubs require careful planning and the ability to navigate some treacherous technical and cultural hurdles. But with senior-executive buy-in, IT prowess, and close collaboration with business users, data hubs can quickly become a valuable corporate asset.

Pain Points

Poor data quality is a common source of pain for most organizations, with 75 percent of respondents in some surveys admitting to data problems, according to John Radcliffe, vice president at Gartner. But many of these companies don't realize the extent of the problem. "Significant initiatives, such as customer relationship management (CRM) and business intelligence (BI), are failing at high rates," he notes, adding that they often fail because the underlying data is of such poor quality.

The conventional approach to data quality is manually intensive and unreliable. It requires a company to "cleanse" each data source separately and load the cleansed data in all of the business's operational systems, data marts, and other repositories. To do this, many companies build homegrown solutions, only to find the challenge too great. "They often do not have the stamina to respond to rapidly changing customer and market requirements," the CDI Institute concluded in a customer data integration report published last December.

Data hubs provide an alternative to the homegrown approach. They let companies manage data quality from a central repository, where it's easy to find and eliminate duplicate entries. The hub also feeds accurate information to operational systems such as enterprise resource planning (ERP), sales force automation, and financial applications. Some hub technologies also "enrich" data, by supplementing internal data with information from third-party commercial databases.

For example, the Oracle Customer Data Hub, part of the Oracle Customer Data Management solution, uses open standards to synchronize data from Oracle E-Business Suite applications as well as with third-party software. (Companies that operate business application suites from a single vendor can create master customer records without a data hub. See the "Consolidation for Cost Savings" sidebar.)

A central management interface in the Oracle hub helps users see and resolve duplicates, implement enterprisewide rules for creating and updating records, and enrich files by using Dun & Bradstreet and other services.

Know Thy Customer

The Church Pension Group serves the Episcopal Church with pension benefits and services, life and disability insurance, health benefits, property and casualty insurance, and book and music publishing (including the official worship materials of the Episcopal Church). This comprehensive offering serves numerous clients, including approximately 28,000 active and retired clergy and lay employees; about 7,500 congregations; and another 2,000 Episcopal organizations, including hospitals, schools, and social service agencies. The data volume, and the fact that each business unit kept separate records, made it very difficult to track and update data.

"Our enterprise-level data could sometimes be unreliable," says Clayton Crawley, CPG's chief technology officer. "While a line of business within CPG may have had the correct data for an individual or an institution, there was no way for us to roll this up at the enterprise level. This missing piece of our data infrastructure really mattered for us when we wanted to accurately communicate to all of our clients from the corporate level."

CPG took action almost three years ago, when it created a customer data hub, a project that came to life when CPG's chief executive mandated a unified database to cross all of the lines of business. Crawley sketched a solution that would address this goal. "My architecture was a hub-and-spoke model, with the hub being a database of record where the transactional systems could share common data," he says. The project predated the Oracle Customer Data Hub, which CPG recently installed. But even so, the original version looked "very similar" to the current implementation, he adds.

The hub uses industry-standard XML-defined data formats to move information between the database and the various applications run in each of CPG's business units. CPG's data-quality efforts weren't all technology-related. The organization also created the position of data specialist to monitor and approve changes to customer records before the information becomes available to each of the business units. The privacy of its customers is also important to CPG, so the types of data to be included in the hub are reviewed for privacy implications and safeguards have been implemented for access and use rights in certain types of data.

Everything Comes Together

Today, CPG's data-quality efforts have cleared up many of the unknowns surrounding CPG's clients. "It was a case of, 'Surprise! These two churches we thought were different are actually the same church,'" Crawley says. "When situations like this happened, with the Oracle Customer Data Hub, we have been able to centrally merge records, scrub the data in our outlying transactional systems, and maintain the high quality of our historical data on both individuals and institutions," Crawley adds. "Now we know exactly who and where our clients are and can get a crystal-clear snapshot of our overall business."

The central customer record also maintains accurate demographic information about individuals on CPG's client roster. "Now when someone in CPG brings up a client record, that person will see a name, the client's employment history, the current address, and the parish that individual is associated with," Crawley explains. In addition, clients no longer have to notify each CPG business unit of address changes or other information updates. "Our customers see us as an integrated organization, and with this unified demographic view of our clients, we can now function as an integrated organization," he says.

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Besides improving customer service, data integrity benefits CPG's receivables. In the past, bills may have gone to a church treasurer's home address, which a line of business within CPG thought belonged to a church. "The business unit thinks everything's just fine, and then the treasurer leaves," Crawley says. "Suddenly we're asking ourselves, 'Why has this church stopped paying its bills?' Now, with the entire enterprise watching our client addresses, the overall responsibility for data integrity is much greater than before and we're reaping the benefit of more-accurate data at every level."

Central data also sharpens CPG's service-oriented edge. "Our customers often have choices for service providers, including companies that are far larger than CPG," Crawley says. By leveraging our enterprise-level customer data and our knowledge of the church, we can often provide a personalized level of service that exceeds that of those big providers. The only way to do that is to view our customers—institutions or individuals—centrally. With this enhanced view of our data, we know exactly who Father Smith is, where he is in his career, and how we can best serve his needs. This is something we simply wouldn't be able to do if our lines of business were still operating in data silos. The data hub allows us to stop thinking in a fragmented way and instead start asking, 'Where is the opportunity for our company, and where can we provide a higher level of service to our clients, in order to, as our mission states, 'free our ministers to minister'"?

BI Boom

NetApp, a vendor of network storage technology, is benefiting from a central data hub, even though it runs a mixed application environment that includes not only ERP applications from Oracle but also sales force automation (SFA) and CRM applications from other vendors. NetApp's hub also forms the foundation for expanded business intelligence services, including new financial performance scoreboards for senior executives. Before implementing hub technology, the three operational systems at NetApp were separate, and data entries were redundant, often inaccurate, and inconsistently structured. "It took a long time to find out whom we were really selling to," NetApp's Couron recalls.

In addition, the three applications didn't support NetApp's financial goal of mining additional business from existing customers. "We needed to know more about each customer to do that," she says, "and operational data quality was a prerequisite for making the analytics valuable and trusted."

Resources Oracle Solutions for Data Synchronization Oracle Business Integration Demo Oracle Information Architecture BearingPoint: Customer Data Hub Gives a 360° Customer View

So NetApp built an enterprisewide master customer record, a data storehouse that now holds about 30,000 records and is growing rapidly. The hub interacts with each of the three operational systems, so an employee can call up a customer record from the ERP, SFA, or CRM side and see consistent customer information.

Better Data Drives Efficiency

The benefits for NetApp are huge. No longer does the company manage dozens of records for the same customer. "That makes accounts receivable management easier," Couron says. Better data has put an end to situations such as when someone in collections would negotiate a payment with a customer; go down the list; and, two records later, call the same person about another invoice. Now the people in the collections department see a complete customer record and negotiate a payment plan for the entire account at the same time. "That's a huge bang," Couron says. "They love to make one call rather than three."

Back-end operations are also more efficient, because people aren't re-entering the same customer information three or four times—and sometimes entering errors such as misspellings, which can create the appearance of multiple customers for a single individual. "The people who run ERP have a relatively small and clean customer master, which means fewer accounts to manage and fewer accounts to call," she explains. "This helps them with booking orders, because they don't have 25 versions of First Avenue."

Dashing for Dashboards

The data hub has also opened the window to new business intelligence insights, which is particularly attractive to NetApp's executive staff. "We're able to log into a data warehouse reporting tool, so executives can look at our top customers and see on one screen everything that's going on with them," Couron says. "We don't have people in each area working on reports all night and all weekend to figure out what's happening with XYZ company."

So far, only a small group has dashboards, but Couron believes that may change. "Those who have seen them have really flipped for them," Couron says. "There's a stampede for more reporting, because people see the power of all of this information."

Clean, consistent, accurate data—that's a truth anyone can handle.

Cultural Challenges Although customer data hubs benefit companies with a single version of corporate truth, hub pioneers say they've had to work through two key cultural challenges to be successful. 1. Data Ownership Relinquishing control of customer data to a central authority can be a cultural jolt for some business managers. "People really feel passionate about their customer master data," says Angie Couron, manager of data stewardship for Network Appliance, in Sunnyvale, California. "Everyone feels like they own it, and it's really hard to give it up." Nevertheless, two years after launching a centralized customer data hub, business managers have learned to trust the technology, partly because it has made duplicate information rare. It also took communication among the IT and business people to develop trust. To accomplish that, Couron and her staff involved the business managers in the up-front planning and implementation process, so they could understand the hub strategy. "You have to focus on getting that buy-in—you can't talk to the business community enough or do too much to gain its confidence," she says. "It's a lot easier to enforce data-quality standards when you can explain the upstream and downstream effects of bad data on the enterprise. Now managers realize that if they add 'fake' customer names to the master, it potentially affects the Credit and Collections group, order management, and everyone else. One wrong record matters." The Church Pension Group (CPG) relied on the commitment of C-level executives to push data-hub skeptics into line. "Though the CEO wasn't directly involved with the implementation, he said, 'This is important and I want this to happen,'" Clayton Crawley, CPG's CTO, says. Otherwise, "a line-of-business person could say, 'Oh, it's a technical problem and we can't really deal with it right now,' and that will delay things for a good 10 years," Crawley adds. 2. Training For Michael Wedge, CIO of Danka Office Imaging, training staff on the impact of data hubs is key to a successful rollout. A focal point for Danka was moving from the procedures of the old legacy environment to a fully integrated relational-database-based application. "We went from localized functions and business practices to a single environment with all of the institutional controls over workflow processes where there's full visibility into the transactions as they're happening," Wedge explains. "There's always that culture shock of going from one environment to another. We addressed this by showing people what the new capabilities could do for them. Where we have succeeded in selling and demonstrating that value, it has helped change management."

Consolidation for Cost Savings Companies that operate business applications from different vendors can benefit from data hubs that ensure that each application sees the same information about each customer. Similar advantages are available, without a full-blown hub, to companies that use suites, or sets of business applications from one vendor. For Danka Office Imaging, the latter option provides welcome relief from customer-data confusion. The distributor of copiers, fax machines, and printers serves a variety of customers, from small offices to production printers. Danka's growing services business is a key contributor to its US$1.3 billion in annual revenues. But keeping track of 3,000 global field technicians and nearly 70,000 active contracts was a data-management nightmare when Danka ran separate legacy applications for each business unit. Customer information was constantly changing, and because many customers had multiple divisions, redundant and duplicate records were common. Information fragmentation led to needless expense and service problems. "We had different segments of many customers in different legacy systems," says Michael Wedge, global chief information officer and executive vice president of operations for Danka. "We would get a call for service, and because dispatch didn't have a central view of all the contract information, we ended up billing some contract customers on a time-and-materials basis and other times treated a customer as if it were under contract when it wasn't." Financial analysis also suffered. Financial reporting data resided in one legacy system, and a different system held supply chain information. "We didn't have one complete view of the customer," Wedge says. So Danka underwent a Herculean effort every time the financial department needed to produce a report. "There were a lot of individuals doing a lot of extracts and analyses and going to data marts, data warehouses, spreadsheets, and the like to get to a complete story," Wedge says. Consequently, Danka executives often had to wait as long as six weeks after a financial reporting period closed before receiving their reports. "It's very tough to run a business from your rearview mirror," he adds. A Clean Sweep Danka attacked its data-integrity problems as part of a larger IT reorganization that replaced its legacy systems with Oracle E-Business Suite. Now, thanks to the integrated applications environment and a newly built enterprise customer master record, all of Danka's transactions data on its customers—contracts, customer information, service histories—lives in one place. Danka structured its data with Oracle Trading Community Architecture, a data model that organized all the information inside the application suite. "The data model architecture itself was built into the applications," Wedge says. "We didn't have to build the architecture; we just had to implement it." The reorganization provides what Wedge calls "the full customer view from customer master records." The entire effort, including the master record, contributed to savings of about US$30 million in Danka's North American operations (the company expects a master customer record to eventually encompass its international operations). Now Danka can quickly generate customer reports, using more-timely information. Reports that used to take six weeks to complete now appear in about two weeks. Customer service has improved too. "Having all the data in one place allows us to be a lot more responsive," Wedge states. The central data storehouse is also providing a foundation for new self-service customer portals. Instead of having to contact the Danka call center for service, customers go directly to a secure Danka Web site to view account information and log service calls. "Customers that are adopting that technology tell us they're seeing some tremendous benefits by doing things a lot more efficiently," Wedge says.