Let's get real about building a better customer data model

"Companies are scrutinizing their ERP [enterprise resource planning] investments and finding that it's not enough just to implement the software," says Erin Kinikin, research director for enterprise applications at Santa Clara, California-based Forrester Research.

"You have to implement the business processes that go with the software," Kinikin emphasizes. "For example, if the people who take the orders can't interact with the people who process them and take the cash, your order-to-cash process is probably going to be suboptimal.

Integration between different applications is critical, to ensure that all information is shared and available. Yet all this sharing doesn't really help the business if there's no common customer view."

Customer data is notoriously difficult to use. "Regardless of how centralized you are, you probably have multiple sources of customer information," says Kinikin. "Not only is each source probably duplicative and not clean but also when you try to combine them and look, for example, across sales and marketing to do lead optimization, suddenly you're not even speaking the same language."

Turning on a Dime
With Oracle's new Oracle Customer Data Hub, companies such as Network Appliance Inc., Telecom New Zealand, and Master Lock are automating their business processes across the enterprise more effectively, accessing better business information, and ensuring that all departments and partners have the same consistent, accurate view of each customer.

In the high-technology sector, for example, Network Appliance survived the downturn by targeting and winning an entirely new customer base. "We needed to replace our technology customers with more-stable, less-cyclical customers," says Scot Klimke, CIO of the US$892 million manufacturer of network-attached storage systems in Sunnyvale, California. "About 75 percent of our revenue now comes from six new key vertical markets and industries."

How did Network Appliance turn things around so quickly? The company implemented the Oracle E-Business Suite and the Oracle Customer Data Hub, which provides a meta customer directory, where customer profile information is consolidated and reconciled, that's accessed by all of the company's transaction systems.

The Oracle Customer Data Hub has worked well in three ways. "We had a very fragmented view of the customer, with one system showing the support phone calls and another containing information about shipping, billing, and invoicing," says Klimke.

"So when a customer called, our employee didn't have access to all the information needed to answer the customer's questions. The second benefit is lower cost," Klimke adds. "Whereas most companies typically have 1 database administrator for every 10 databases, our ratio is 1 to 40.

And we also now have better real-time information, which enables better decision-making. Understanding our customers' purchase history and requests for support allows us to market our products better and provide better service."


The Oracle Customer Data Hub identifies and reconciles duplicate data, cleans the data, and sends it back to the source systems in near real time. Two additional components, Oracle Customers Online and Oracle Data Librarian, provide customer management, viewing, consolidation, and data quality tools.


Opening Up the Enterprise
Because the Oracle Customer Data Hub is built on an open information architecture, the Oracle Customer Data Hub can be used with applications from other vendors such as SAP, Sage Group, and Lawson Software.

In fact, Oracle recognizes that some companies want best-of-breed products from different vendors whereas others must deal with highly decentralized purchasing across various departments, so moving to a suite may not be possible for many years or, in some cases, ever. So integration is available at all levels, from application-to-application integration to integration between applications and business processes.

After consolidating basic customer information such as name and ID number from multiple sources into a single repository into which transactional applications are integrated, the Oracle Customer Data Hub identifies and reconciles duplicate data, cleans the data, and sends it back to the source systems. Everything is done in near real time.

Two additional components—Oracle Customers Online and Oracle Data Librarian—provide customer management, viewing, consolidation, and data-quality tools. "Oracle has done a good job of defining an end-to-end customer hub that addresses creating the customer, enriching the customer data, handling changes to that customer, and monitoring and managing the quality of customer data over time," says Forrester's Kinikin.

Breaking down barriers between applications and creating a clear picture of each customer will be a big benefit for companies that have invested in best-of-breed applications, are experiencing the challenges of mergers and acquisitions, have created multiple data silos across the enterprise, or are trying to go to market with new products and services.

Companies that are moving into the global marketplace, have given individual departments free rein when it comes to purchasing software, or allow untrained users to add information into their systems will also benefit.

Keys to Success
"Integration is critical for companies, regardless of industry," says Brian Wood, research director of corporate performance management at Gartner Inc., in Stamford, Connecticut. "It's especially valuable for B2C companies such as telecom and financial services, which have large amounts of data and huge numbers of customers. B2B companies also benefit from integration but tend to focus more on collaborative applications."

At the world's largest padlock manufacturer, both integration of information and agility in the marketplace are essential. "Whether our customers want customized products, packaging, or merchandising, we have the flexibility to meet those requirements," says Rick Kolaczewski, chief financial officer at Master Lock, in Oak Creek, Wisconsin.

Recognizing that sustained growth required the consistent delivery of better products and services, Master Lock decided to reorganize its business around customers, by improving customer service, offering more product innovation, and controlling costs more effectively. The company chose Oracle E-Business Suite as a key element of its strategy and for its integration, flexibility, scalability, availability, and process- driven approach.

"Our business is growing quickly, but we've minimized fixed-cost investments to support that growth," says Kolaczewski. In fact, having a flexible and scalable integrated system working with a world-class supply chain has allowed the subsidiary of the US$6 billion Fortune Brands to improve customer service as well as efficiencies across the enterprise.

The cost of IT maintenance has been reduced by 40 percent. Delivery time of customized products has been cut by two weeks, with work in process (WIP) reduced by 70 percent. The number of product inquiry calls has dropped by 25 percent, and pay-on-delivery (POD) inbound calls have dropped by 14 percent.

And the financial close cycle has been reduced by two days. "The biggest benefits have yet to be realized," says Jim Johnson, Master Lock's director of IS. "This is a foundation that will continue to be leveraged for cost- effective business growth."

Expert View
What are the technology and business issues to consider if you're thinking about trying to integrate your various applications with the Oracle E-Business Suite and take advantage of the Oracle Customer Data Hub?

The Big Picture. "Think not so much in terms of what to integrate but how to exploit integration to handle business processes more efficiently," says Benjamin Grosof, assistant professor of information technology at the MIT Sloan School of Management. "Otherwise, you lose the best opportunities to boost productivity."

"CIOs should review their corporate architecture every year and ask themselves, 'What do I want it to look like three years from now?'" says Bruce Richardson, senior vice president of research at AMR Research, in Boston, Massachusetts.

Getting Buy-in From Users. Breaking projects into discrete chunks and beginning in areas in which there is clear user demand ensures a smoother transition, according to Richardson. "For example, companies may want to start with portals or data analytics, where their users can see the benefits more easily."

Technical Detail. "Companies should be aware that in a few years, the big tool for data management will be XML data management engines— so they should start building their expertise now," says Grosof.

In a dynamic company in which business information changes frequently, linking business services rather than investing in customized coding will be more effective, asserts Judith Hurwitz, president of Hurwitz Consulting, in an April 22, 2003, column in CIO magazine.

"Companies considering the Oracle Customer Hub should look at their existing middleware strategy and determine if there is a standard, whether that standard integrates with the Oracle Application Server 10g, and whether it is used purely for messaging and data integration or for process integration," adds Gartner's Wood.

Return on Investment. Of course, it's always valuable to consider ROI. "Exploiting this integration can be seen as a good dividend on the amount of time and money you spend implementing your ERP system," says Grosof. And leveraging your IT investment is always good—especially when you're on the rebound.