CDI: Harnessing the Value of Enterprise Data Part 6

Published in TDAN.com April 2005
Articles in this series – Part 1, Part 2, Part 3, Part 4, Part 5, Part 6

In the first five articles of this series, we discussed some of the essential building blocks of customer data integration, the importance of data quality, how to select the right data quality
solution to meet your organization’s unique business needs, how to implement your data quality solution in a way that achieves both technological and business objectives, and the critical role
data quality plays in successful regulatory compliance.

In this final article, I would like to position these data quality building blocks against the broader perspective of where we currently are with CRM, and why it has not fully realized the
industry’s expectations. I will also present a new vision of enterprise customer-centric intelligence – one that surpasses traditional CRM objectives – and describe a realistic approach to
implementing that vision.


Today’s CRM Model

As an industry, we’ve been working on getting CRM right for over a decade. Data quality best practices have been established. There are a variety of vendors who can deliver the sophisticated data
quality processing capabilities required to meet the demands of high-level CRM.

When a customer contacts an organization – by phone, through the Internet, or in person – the organization should be able to immediately identify all of that customer’s individual and household
relationships, as well as their purchasing history and certain marketing preferences. If they are recognized as a “high-value” customer, the company should be able offer them an increased level
of personalized service. In addition to completing their transaction promptly and courteously, the company should be able to anticipate the customer’s needs and suggest products and services that
they did not even know they wanted.

That’s what we’ve been educating customers to expect – both individual and commercial. But what is the reality? Let me relate a recent experience I had with a major, regional,
“customer-focused” financial institution.

I would consider myself a good, multi-relationship customer of this institution. In addition to a variety of joint accounts with my wife, my name also appears on Uniform Gifts to Minors Act (UGMA)
accounts with each of my three children.

My two older children had opened checking accounts at this bank in their own names when they were in their mid-teens. My youngest wished to do the same thing, but was advised by a teller that he
had to be at least 18, and was turned away. There was no apparent recognition of our family’s total relationship with the bank, and no consideration of the possibility of overriding the policy.

Needless to say, I was a bit surprised. What happened, I wondered, to the personalized attention and customer relationship-based decision-making that were supposed to be the hallmark of today’s
customer-focused CRM?

My son and I investigated some other local banks, for his checking account as well as our family’s accounts. I eventually went back to the bank that originally turned him down, talked with a
manager who was relationship-oriented and had the discretion to override the policy, and my son was permitted to open his account. While the situation was finally resolved in a positive manner, my
family’s relationship with the bank had been put in jeopardy.

A recent experience of one of my colleagues demonstrates another form of CRM breakdown. She ordered an outfit for her child from a major clothing chain recognized for quality and customer service.
The order was placed over the Internet. When the outfit arrived, it didn’t fit correctly.

As a technologically sophisticated consumer, my colleague naturally assumed she could return the outfit and obtain her refund at the company’s retail site in a local mall. That’s what today’s
era of coordinated customer service is supposed to be about, isn’t it?

Not exactly. While she was able to return the garment at the store, she had to receive her refund through the mail. It turns out that the company’s Web-based sales were distinct from the brick-and
mortar operations. Again, what happened to the promise of seamless, customer-focused service that we’ve been taught to expect?

These two customer experiences were clearly less than optimal. Instead of reinforcing the organization’s relationship with the customer and presenting an opportunity for a potential cross-sale,
they introduced dissatisfaction and substantial risk into the relationship.

In today’s environment, customers expect a customer-centric experience. They know their total relationship with an organization, including all of their interactions by business line or channel.
But since the organization does not have the same integrated perspective on the customer, the two parties of the relationship are not on level footing, and it may lead to a lose-lose scenario.

A decade ago, those of us involved in data quality and customer information management were confident that before the end of the millennium, such experiences would be things of the past. Why isn’t
it happening?


Resistance to Change

As experience has demonstrated, among the major obstacles to CRM success is cultural and political resistance. Large organizations – and the people who manage them – don’t always embrace change.
Change brings insecurity. Those in positions of authority are hesitant to support new systems or programs until they are convinced that they will benefit from them.

With this in mind, the way we typically tried to implement CRM in the past was bound to create resistance. Too often it was simply imposed on the organization, with little effort to “sell” the
concept to department heads and application managers.

The organization’s CRM advocates had a vision of seamless customer communication and relationship management that would generate steeply climbing sales curves and prevent customers from ever
defecting. Those not directly involved in CRM perceived that their established business processes and routines were being changed, and they didn’t have any say about it — and they didn’t like
it. Worse yet, the power balance between the CRM faction and other business units seemed to be shifting.

Given this environment, when a CRM implementation did not proceed exactly as planned, or didn’t achieve the level of performance expected, there was limited enthusiasm for giving it a second
chance. Without broad organizational support for pursuing CRM excellence, many organizations settled into a compromise that combined pre-CRM processes with scaled-back CRM capabilities.


Application Integration vs. Data Integration

Another significant factor in the failure of CRM to realize its full potential is that we approached it in the wrong way. We called it “data integration,” but what we in fact tried to implement
was “application integration.”

To successfully achieve its objectives in the most efficient manner, each business application must define “customer” in its own way. It needs certain elements of data about the customer that
enable it to perform its unique business function. Risk Management’s needs are different from those of Accounts Receivable, which are different from Call Center, which are different from Target
Marketing.

When we tried to make all the different applications adapt to a standard, shared, customer view, we forced them to change the way they were accustomed to doing business. Since they could no longer
define customer in their unique way, they had to create new processes for performing their duties. No wonder the single customer view generated resistance. And in the end, it didn’t even improve
customer service that much.


A Better Solution: Symbiotic Customer Data Management

With the genius of hindsight, we can now recognize that customer data integration should be just that – integrating the customer data itself – not the applications that use it. True CDI recognizes
the dual levels at which customer data should be managed: the macro level of the customer’s identity and relationships, as well as the micro level of individual applications’ business functions.

This can be achieved by creating what I will refer to here as a Customer Master Registry of the enterprise’s core customer information. Within the Customer Master Registry, each customer profile
will include such critical identification and marketing information as name and address, marketing preferences, privacy preferences, product relationships, relationships with other customers and
groups, and the time dimension of all those relationships.

The Customer Master Registry will then coordinate and share this core information with all of the organization’s applications and business units, without requiring them to alter their customer
definitions or the way they do business. This kind of true customer data integration – as opposed to application integration – actually empowers the business’ various systems and processes to use
the enterprise’s data in the way that best meets their own needs and objectives.

This holistic approach to data management releases the full potential of the organization’s data. Now it serves not just CRM, but virtually all of the enterprise’s functions: customer service,
marketing, compliance and – most importantly – strategic planning and decision-making. Utilized in this way, data truly becomes one of the organization’s most valuable assets.

And before anyone jumps to a wrong conclusion, please note that the Customer Master Registry that I am describing is not just another form of a data warehouse, data mart or CRM system. It operates
along side these systems, complementing them and supporting them.

Now the question is: How do we create this Customer Master Registry and enable symbiotic data management in the real world?


Prove the Concept – Then Roll Out Incrementally

Again we have the benefit of hindsight. This time around, we know we don’t want to impose on the enterprise a massive “Big Bang” implementation that disrupts operations, creates internal
resistance, and plays havoc with customer communications.

But we are faced with a dilemma. As we discussed in an earlier article, a smooth, effective implementation requires a balance of tactical and political considerations. It takes planning, adequate
budgets, realistic timetables, a software solution capable of meeting the organization’s needs, and an executive-level sponsor who is invested with sufficient authority to enforce the stated
timetables and budgets.

At the same time, a successful implementation requires buy-in and support from the executive suite and board room through the managers whose applications and operations are affected. Because of
past experience, we must also realize that we will be faced with significant organizational skepticism. There will inevitably be a response of, “Been there. Done that. It isn’t worth it.”

Given this situation, my suggestion is that we first prove the concept using a single application, build confidence across the enterprise as managers see that the Customer Master Registry is
working, then integrate the enterprise slowly, one application at a time.

This is a much safer, organization-friendly approach, and the data management capabilities of the Customer Master Registry make it a viable alternative. Most importantly, it gives us the
opportunity to prove the Customer Master Registry’s value to the rest of the organization and win their support — with minimal disruption to normal business operations and processes.

In selecting an application for the pilot, there are several factors we should consider. First, it should have sufficient visibility to attract enterprise attention – including that of the
executive suite and boardroom. It should reflect the level of demand that will be made on the Customer Master Registry, so it should share information with major analytic and operational
applications.

However, because this is still a road test, it should not be on the frontline of business operations. That’s too dangerous. There may be delays. There may be unforeseen complications. And we do
not want those glitches to interfere with customer relations or critical business functions.


Compliance: A Good Road Test Candidate

With these considerations in mind, Compliance seems like a logical selection for the pilot. It is becoming increasingly high profile because the government mandates it. The executive suite has
become very aware of the demands of Sarbanes-Oxley and public accountability, as well as meeting the requirements of the Office of Foreign Assets Control (OFAC) and the U.S.A. PATRIOT Act.

Compliance shares information with a wide variety of applications, but it is not part of front-line business operations. If there is a substantial problem or delay, the impact on operations,
customer relationship management and profitability probably will be minimal.

The Compliance road test will be used to work out most of the kinks in implementation, training, operations, and interfacing with other applications. When the pilot proves the concept, and the
enterprise sees how the Customer Master Registry can support an individual application’s success, then another application can be implemented. Success builds on success, generating increased
confidence and buy-in.

As executive support grows, budgets are more easily approved, an executive-level sponsor is more willing to take on the responsibility, and increased authority is assigned. Step-by-step, the
enterprise Customer Master Registry is built, and the enterprise CDI implementation is successful.


Realizing the Promise of CRM – And More!

Once the Customer Master Registry is installed, all of the organization’s applications will be using synchronized customer data that reflects a customer’s total relationship. Frontline personnel
will have at their fingertips the information they need to make exceptions to rules. They will have the extended relationship data to justify overriding a checking account policy – or at least to
justify considering such an exemption.

The enterprise Customer Master Registry will also provide the CDI framework for coordinating a retailer’s Internet and brick-and-mortar operations – permitting a customer returning an Internet
purchase to receive a refund at a local store.

More importantly, as it coordinates and “synchronizes” key customer information, the Customer Master Registry will provide the level of customer-centric intelligence required to support more
focused and effective enterprise planning and strategic decision-making.


CDI: An Enabler, Not a Panacea

Do I believe CDI and a Customer Master Registry offer valuable enterprise and shareholder benefits? Absolutely. But while I am a strong advocate of CDI, I also recognize it has some limitations.

The Customer Master Registry is not a silver bullet for CRM or enterprise success. It is an enabler that supports all the other elements in effective CRM and enterprise strategies.

I like to compare CDI to the sheet music used by an orchestra. Each of the instruments has its own sound and its own part to play – and each and every one of them is important to the quality of the
orchestra’s performance. But it is the sheet music that synchronizes all the individual sounds and helps them to harmonize. Recognized and used in this way, customer information truly is the
organization’s most valuable asset.

I believe the era of the Customer Master Registry is virtually inevitable. Customers have been taught to expect the kind of personalized service that it enables. Like my colleague and I, consumers
are increasingly frustrated that the service we receive is still fragmented — and policy-driven rather than relationship-driven.

The customer-centric intelligence created by CDI can benefit the enterprise and build value in a myriad of ways. However, in the real world, it is probably customer demand that will drive CDI’s
implementation, because the organizations that are first to satisfy that demand are the ones that will succeed. The higher-level enterprise strategic and decision-making benefits will be realized
only as the power of the Customer Master Registry is increasingly understood.

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About Jeffrey Canter

R. Jeffrey Canter is EVP, Global Marketing and Operations, at Innovative Systems, Inc. He oversees research and development, product management, global marketing and communications, and client service and support.  Since joining Innovative in 1990, Canter has applied his business and technical expertise to the successful development of customer information projects for clients in a variety of industries, including financial services, hospitality and telecommunications.  Prior to his current position, he served as senior consultant and director of R&D for the company.  Canter is a regular speaker and author on topics related to managing and integrating customer data.

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