How KKR Used Data Mining For Competitive Advantage

When CIOs elect to build software from scratch, analytics systems are a popular project. The hope is that companies can find new insight and competitive advantage using data they already have. (For more on building software in-house, see “The Secret to Successful Software Innovation Projects.”)

Kohlberg, Kravis and Roberts (KKR) built such a system. It analyzed the private equity firm’s overall financial health by aggregating data from its portfolio of companies. The new system enables managers to react to current events—like unemployment trends—by adding new metrics. For example, the system can look at employee turnover data from all of KKR’s companies, or just a selected slice, and compare those findings to other data points already in the system, says Ed Brandman, CIO. “When we were making decisions [about starting this project] three years ago, vendors didn’t understand what we wanted to do,” he says.

The system won KKR a 2011 CIO 100 award. The award recognizes projects that advance business strategy through the innovative use of IT. Business intelligence and data warehouses were among the most popular technologies used by this year’s winners. Louis Gutierrez, a consultant with the Exeter Group and a CIO 100 judge, thinks this shows that sophisticated data analysis can differentiate companies. “The very essence of business differentiation and innovation is doing core stuff in new and value-adding ways,” Gutierrez says.

Although KKR started with Crystal Reports, a reporting tool, and MySQL, an open-source database, developers used Java to write code for the particular kinds of queries and types of data the company wanted to use, Brandman says.

Kevin Horner, CIO of Alcoa, says custom code yields the most strategic value from business intelligence. When companies augment templates and report writers with unique analytics tools, “The data is all yours, and so is the way you choose to use it,” he says.

Follow Senior Editor Kim S. Nash on Twitter: @knash99.