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Do-It-Yourself Customer Data Integration Hubs: Advantages and Disadvantages

When it comes to tackling home improvement projects, people tend to fall into distinct categories. Some wield a sledgehammer and power saw as casually as a knife and fork, while others scarcely pound a nail before calling in backup. Still others take a different approach - gathering research, analyzing the project and planning accordingly.

This article is for those in the latter group.

There are a number of ways to tackle customer data integration (CDI) in your business. Like many large-scale home improvement projects, CDI initiatives can add value and streamline processes. But companies must decide whether they are going to tackle CDI themselves, or whether they are going to take a full-service approach and let somebody else handle the job. Or, companies can customize a third option by developing a hybrid of the two.

The Basics: Customer Data Integration

Today, CDI initiatives are included in most customer relationship management (CRM) and master data management (MDM) plans for achieving a single view of customers across many disparate databases. The information includes customer recognition data along with promotion history, demographic data, etc.

This single view helps businesses consistently communicate with their customers by always referencing the same information, and by communicating any changes to that information across all lines of business. It also enables a more detailed understanding of customer needs, leading to more effective merchandising, privacy management, and customer support and service.

Do-it-Yourself CDI Advantages

For many people, taking on a challenging project has inherent appeal. From choosing the right tools to adding the finishing touches, do-it-yourselfers enjoy maximum control. From a business standpoint, early adopters are interested in do-it-yourself (DIY) CDI hubs for several reasons, including:

Sense of security. Sensitive client data can remain within the facility. Compliance. Some governmental regulations require strict control over enterprise data. IT departmental control. It might be worth the additional cost and overhead to control the process and adhere to customer contact. Ubiquitous access. All sales, customer support and other channels might be able to tie directly to this hub. DIY CDI

Disadvantages

A process of this magnitude is not without its challenges. There are many factors to contend with, and - as any homeowner knows - a project that seems manageable can quickly take on a life of its own. Consider the intrinsic problems with DIY CDI hubs, which include:

Resource constraints. Human resources are required to design, build, implement, adjust and track results. These skills are not easy to find, or to replace.

Isolated internal data. Without external linking or human contact, true and objective source-of-the-truth data becomes outdated.

Missing data. Businesses must contend with limited ability to complete, correct or augment an address or update a telephone number.

Do-not-mail and privacy . Some privacy packages today do not include updated do-not-mail, phone or email information, nor do they recognize prank, bogus or incorrect data. In addition, new privacy legislation is passed every day.

Rigid views. Businesses are faced with limited ability to create and maintain multiple groupings or views of the customer.

Throughput and scale-out limitations. Hub technologies may optimize real-time performance, but have limited capability to process large files quickly in a batch process. This directly affects the build process and ongoing maintenance. Accuracy, complexity and costs. Each hub vendor provides varying levels of customer information hygiene, matching and linking. Many use third-party provider software products for hygiene and linking, adding complexity and potential costs. Coordination of stakeholders. It takes time to gain buy-in from all business stakeholders, determine what hierarchy to use for the single view, develop business rules, build the hub and spokes, and integrate the third-party software. Time to market: on-your-own implementation times are usually so drawn out that it takes too long to show ROI to the organization. Consider the costs. A DIY CDI solution is not a short-term, turnkey business investment providing instant ROI. Early attempts to establish DIY CDI hubs have often failed to account for the long-term, unforeseen costs that can occur.

When forecasting the total investment for DIY CDI, consider these costs:

  • Software license fees may range from $200,000 to $600,000 or higher.
  • Annual software maintenance is as high as 30 to 40 percent of the initial purchase price; might be based on the regularly increasing list price of a software license.
  • The ever-degrading value of isolated, internal, transaction-based customer data.
  • Initial hardware costs.
  • IT processing costs and data center overhead.
  • Database development costs.
  • Database maintenance costs.
  • People resources can reach 10 to 30 full-time equivalents, depending on the project.
  • Questionable accuracy of information and redundancy.
  • Lack of in-house CDI expertise.
  • Outside consulting.
  • External data or reference data.
  • Lost time to market.

The CDI Full-Service Model

The utility and subscription CDI service models are a good alternative to populating and maintaining a do-it-yourself CDI hub. A full-service CDI model combines:

  • Managed data quality;
  • Managed hardware and software;
  • Dedicated resources and customer data integration expertise, sometimes more than 20 years of expertise and experience;
  • Contact change management;
  • Contact-data cleansing based on premium, fully licensed USPS processes and proprietary products that are not available through the USPS;
  • Extremely large, dynamic knowledge base for optimum deduplication, matching and completing or correcting information;
  • Externally provided data (suppression, marketing, telephone, e-mail)
  • Industrial-strength data center throughput and scalable databases that are accessible via real-time transaction or batch;
  • Quality assurance;
  • Significant, on-going investment in marketing data and management;
  • Host for CDI hub or transitional services to migrate to on-site processing hubs; and
  • Expertise in focusing on the ever-changing privacy rules, governmental compliance and cultural mores for the target market.

But is there a compromise? One that allows you to keep sensitive client data within the facility, abide by governmental regulations, please your IT gods and still take advantage of a large external knowledge base and outside expertise? Can you take what is good about doing it yourself and still subscribe to outside help and processing where it makes the most sense? Can you embed or build a pipe connecting your DIY work to the best CDI processing out there? In a word - yes.

Developing a Hybrid Solution

Hybrid solutions might provide the ideal balance. In the July 2006 DM Review article "Everybody Wants to be Clean but Nobody Wants to Take a Bath," AmberLeaf President Larry Goldman drives the point even further.

Goldman stated, "Leveraging off-the-shelf technology and customizing it for your specific needs will be starting from scratch compared to using an outsourcer ... The bottom line is that most outsourcing vendors will be able to streamline initial development and have you up and running in a production environment long before an in-house solution will be ready."

The most astute CDI solution experts have provided integrated hygiene, linking and recognition-processed information for several of the CDI hubs, including those from leading industry providers. Businesses who are behind in their own manual consolidation processes might request plug-ins for their DIY hubs, utilizing external resources that cannot be matched in-house.

As new transactions come in via a call center or Web site, these businesses use their matching logic to identify the individual in their hub. If the individual is not found, the business might then send the transaction to the external resource for linking. Such a business might also rely on a service provider's robust database to augment their own client recognition data, as well as to conduct analytics and segmentation.

This relationship with an external provider can yield great benefits that are otherwise unavailable to a business. For instance, a grid-based infrastructure can support substantial amounts of a company's data in a "bulk-batch" environment, resulting in one of the most efficient methods to apply external data, data quality and external linking capabilities. Many companies expect to shorten build times by up to 50 percent by relying on an external service provider to handle these complex and cumbersome processes.

A Note on Security

When considering an external service provider, businesses must ensure that all data remains secure in transit. Many safeguards exist within the industry, and the right external provider can offer layers of data security. Dedicated private circuits are available for file transfer, and File Transfer Protocol (FTP) can provide additional flexibility.

Although inherent FTP security risks do exist, protective measures can be used to enhance security. External providers might offer services that include denying anonymous access, granting client access only through dedicated service representatives, and assigning unique user IDs and passwords to client accounts.

Additionally, clients and agents should use encryption for all data. There are several forms of industry standard encryption methods for the protection of data transferred over the Internet, including Secure FTP and Secure HTTP (HTTPS) for network encryption and PGP/GPG for file encryption, along with a number of business-specific encryption solutions.

There are distinct advantages and disadvantages to both the do-it-yourself and full-service approaches to CDI. The ideal solution might be found somewhere between the two, with a hybrid approach that combines the control and access of do-it-yourself endeavors with the speed, experience and benefits of a full-service provider.

The idea of using the best processor is not new. Personal computer providers have been doing this for decades. The idea of bringing in an expert to help you with the toughest, most important parts of your DIY project is not new. Truly successful DIY-ers have been doing this for decades.

Ultimately, businesses must weigh the pros and cons of all available approaches - whether rolling up their own sleeves, bringing in the professionals or choosing a hybrid approach - to determine the solution that best meets their needs. Perhaps it is time for you to look at the options and consider all of your CDI alternatives.


Lance Osborne is Acxiom's Solutions Marketing leader. He oversees the CDI Solutions Marketing team, which manages the company's services and software-based approaches to cleansing, linking and delivering accurate customer data. He is one of Acxiom's thought leaders focused on partner-based integration with customer relationship mangement and master data management solutions, market trends in using customer data and data governance. He may be reached at lance.osborne@acxiom.com.

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