The Quest for Customer Data Integration

Smart CIOs are experimenting with new Web-based technologies to integrate their customer data applications without having to rip out their legacy systems. But before they plunge into the implementation, they need to craft a data management strategy.

The multiple mergers that formed insurer UnumProvident in the late ’90s aggregated billions in revenue, assembled thousands of employees—and created a quagmire of customer data systems that couldn’t talk to each other. In all, between Provident, Colonial, Paul Revere and Unum there were 34 disconnected policy and claims back-office systems, all loaded with critical customer data. As a result, "it was very difficult to get your hands around the information," understates Bob Dolmovich, UnumProvident’s VP of business integration and data architecture. One UnumProvident customer’s account, for instance, might exist in multiple places within the newly combined company, leading, of course, to a great deal of waste.

For the first couple of years after the mergers, UnumProvident used a homegrown data-store solution as a Band-Aid. But by 2004 the $10 billion disability insurer felt compelled to embark on a new master data management strategy aimed at uniting the company’s disparate pockets of customer data, including account activity, premiums and payments. Core to UnumProvident’s strategy would be a customer data integration (CDI) hub, built on service-oriented architecture (SOA), using a standard set of protocols for connecting applications via the Web (in effect, Web services). The project, begun in early 2005, has already improved data quality, soothed the multiple customer records headaches and created the possibility for a companywide, in-depth customer analysis. But as Dolmovich acknowledges, there’s still a long way to go. Of those original 34 systems, he has been able to get rid of only four to date. But he’s still optimistic.

"The desired end state is a CDI hub that has information about all customers across all products," he says.

The Quest for the CRM Holy Grail

Despite the long, slow slog, Dolmovich is hoping that the new CDI approach will ultimately give his company the 360-degree view of the customer that has been promised by vendors since the dawn of CRM. In the late ’90s, enterprise software vendors like Oracle, PeopleSoft and Siebel sold the single-customer view as CRM’s holy grail. But implementation flameouts and legacy integration nightmares soured many CIOs on these expensive enterprisewide rollouts. More recently, on-demand CRM has generated a lot of buzz, but it too has run into scaling and integration problems, particularly at large companies. (See The Truth About On-Demand CRM.)

A CDI hub differs from a traditional CRM solution in that a CDI hub allows a company to automatically integrate all of its customer data into one database, while ensuring the quality and accuracy of the data before it is sent to the hub’s central store for safekeeping. A standalone CRM system can’t do that because it can’t be integrated with the billing, marketing, ERP and supply chain systems that house customer data, and it has no way to address inconsistent data across platforms.

What is also missing in many of these earlier CRM implementations, experts say, is a management strategy that identifies important customer data and lays out a disciplined governance process to ensure its quality and its integration with critical systems. "Unless companies have a broad strategy about how [to manage their data], no matter how good transactional systems are, they’re not going to be able to deliver," says Ronda Krier, Oracle’s senior director of product strategy.

An increasing number of CIOs are now realizing the importance of such a data management strategy and are experimenting with Web services technology to unite legacy systems with new applications without having to rip and replace everything. Many of these CIOs are building a service-oriented architecture that can integrate their divergent applications into a CDI hub via the Web.

However, much like the CRM implementations that preceded it, this new approach is neither cheap nor fast. Ray Wang, Forrester Research’s principal analyst of enterprise applications, says that average CDI installations cost nearly $5 million for licenses and implementation services. And they can take much longer than expected. (UnumProvident’s CDI implementation, still unfinished, has taken a year so far.) But that’s still cheaper and quicker than ripping out all of a company’s old systems and installing proprietary enterprise CRM.

A CDI strategy is especially relevant to mid-market CIOs who may not have the budget to buy proprietary CRM solutions or the time to invest in the typically arduous CRM implementation process which, according to Gartner’s guideline for enterprise CRM rollouts, can cost more than $20 million over a three-year period. (Some CRM failures have run up to $100 million in overall costs. See AT&T Wireless Self-Destructs, for one disastrous example.)

The beauty of [the CDI hub approach] is that most organizations already have most of the pieces in place," Wang says. "They just need to find a way to pull it all together."

The Problem’s Not the Software; It’s You

In the late ’90s, CRM vendors promised that their software could give companies the ability to leverage customer data to boost sales. That software cost millions and took years to install, and yet at the end of those marathons many companies were left with tools and systems they couldn’t or didn’t want to use. Integration often was incomplete, data frequently dirty, and all too often companies had no guidelines for who would own the data or how it would be input and reconciled among systems. Eventually, business and technology executives became disillusioned with the enterprise approach. Many companies, large and small, turned to on-demand CRM, only to find out it also had problems with costly customizations and real-time integration challenges.

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In a 2005 Forrester survey of 22 Fortune 1000 companies in North America, Europe and Asia, business and IT leaders voiced widespread disillusionment with their CRM implementations. Just 14 percent strongly agreed that their CRM applications had improved end user productivity, and only 10 percent strongly agreed that they had achieved the business results they were expecting. CRM implementations "always seemed to overpromise and underdeliver," says Dolmovich. In fact, for many years UnumProvident’s CIO forbid his IT staffers from using the CRM word to describe their customer data management plans because of the negative connotations attached to the acronym.

In the Forrester survey, executives acknowledged they were partly to blame for CRM’s bad reputation. They confessed that they had not spent sufficient time on defining data requirements and managing data quality. In another survey by Cutter Consortium, 64 percent of corporations admitted that they lacked a formal strategy for using the customer data they had spent millions to collect.

When the company doesn’t have rules and policies [for data], the data has been largely corrupt," says Anthony Lye, Oracle’s group VP of CRM products.

The Importance of Business Ownership

The first step toward creating an integrated customer data system is to sit down with key business executives and ask them what they want. Do they want to focus on keeping the customers they have or on attracting new ones? Are they concerned more with decreasing lead generation costs or shortening the sales cycle? Once IT knows what the business side wants to achieve, IT can help the business identify which data sources are important and which are not.

Next, the business and IT need to agree on an information management policy: Who has access to what customer information and what can they do with it? How will they access that data? How will they make changes to it?

For CIOs, the key to success is making sure the business takes ownership of customer data. At AmerisourceBergen Specialty Group (ABSG), a $7 billion pharmaceutical supplier, the mantra that "the business owns the customer data" has been critical to the company’s CRM success, says CIO Dale Danilewitz. In 1999, when ABSG broke away from its parent company’s systems, executives articulated what they wanted: more granular, reliable customer information accessible in one repository and accessible in real-time. It was Danilewitz’s job to make that happen. And although Danilewitz initially believed that an off-the-shelf CRM system might do the trick, he found that his business users’ needs didn’t align with what was on the shelf at the time. So IT cobbled together a mixture of applications and systems to form a homegrown CRM system, essentially a conglomerate of custom-built applications and vendor platforms and databases. In the center, tying everything together, is a data warehouse that provides real-time and historic customer data, and is integrated with other data stored in ABSG’s e-commerce applications, financial systems and customer data applications.

Today, Danilewitz says ABSG’s system satisfies users from the sales, call center and marketing sides. And because these business units understand the data’s worth, Danilewitz says, they take pains to ensure that they don’t add data that will "adulterate" their own systems. "The business users check the data, run reports on the data to make sure it’s accurate, and run technical applications to check quality," Danilewitz says.

Data stewards from the business, as well as gatekeepers from IT, compose a CRM team charged with driving new data management solutions. But the business users are always in front.

Describe, Define, Govern

Similarly, when Scott Sullivan joined Pitt Ohio Express, a $238 million mid-market transportation company, as its VP of IT and services, one of the first things he did was sit down with his business users and help them define what exactly the term customer meant to them. Sullivan helped the business narrow its list of customers from 450,000 to 10,000 active consumers of its services. Sullivan also pulled the plug on an ERP system rollout because he thought it wasn’t going to satisfy the company’s needs and was going to take longer than had been originally projected. (The project was greenlighted before Sullivan joined Pitt Ohio in 2001.) Since then, Sullivan has integrated an assortment of existing applications to form a customer management system for the sales and marketing group and the operations department. (For more on the integration challenges confronting mid-market CIOs, see Midsize Companies Have Fewer SOA Plans Than Large Companies, but Need It More.)

Sullivan also spent time ensuring that Pitt Ohio Express’s customer data was clean. Dirty data is hardly a new problem, but the fact that CIOs are still complaining about it, analysts are still noting its prevalence, and vendors are still selling solutions to address it indicates that it hasn’t gone away. Dirty data problems are amplified by the number of systems and users that touch customer data, especially if there are no established governance processes or technology safeguards. For example, Sullivan points to the disconnect in address requirements between the sales and marketing department and the operations division. The sales and marketing group needs exact addresses, whereas drivers can get by with more inexact data. "If the address is ‘the back gate at the Kmart plaza,’" he says, "that’s OK for the driver, but not so great for sales and marketing." And if no one takes ownership of making sure the data is consistent, "there can be up to 10 to 15 different versions of your customers [within your company]," says Tom Reilly, IBM’s VP of master data solutions.

Once your management team has formulated a data management strategy—say it wants to improve the ways in which the company targets and contacts prospects—it’s time to consider the technology options available to integrate all the customer data so that sales and marketing will be going after the most appropriate customers. You can go the enterprise vendor route, or have your CRM systems hosted by an on-demand vendor like Salesforce.com. Or you can integrate existing customer-data systems by building a service- oriented architecture or structure using the Web to knit together all the customer information contained within a company’s business applications. UnumProvident’s Dolmovich decided to go the Web services route. He chose IBM’s WebSphere Customer Center product to pull together the pockets of customer data on account activity, payments and premiums.

Dolmovich says the first data loaded into the CDI hub in late 2005 came from business customers (companies or employers that bought or sponsored UnumProvident’s disability products) and brokers (the independent businesspeople who sell them). With the new system, Dolmovich says, "We are now able to assimilate and display a broker’s entire block of business and create some statistics and a profile of our relationship with that broker." UnumProvident is now working to create individual profiles of employer customers so that every time a new customer account is created or accessed—perhaps to change an address or add new customer information—all employees of the insurance company, regardless of what system they are using, will see that change at the same time.

The New, New Hype

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