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Summary
New research from Ventana Research finds that companies seeking to create and maintain a single source of customer data are taking various approaches but often find barriers in their way. The first and foremost is the sheer number of systems that contain customer data. More than one-fourth of respondents to our benchmark research estimated that they have between 10 and 20 different types of systems containing customer data. In trying to reconcile them, companies variously create a customer data warehouse, nominate one application as their master source, create a customer data hub or launch a full-blown initiative in master data management (MDM). The benchmark results also show that companies recognize that establishing a single source goes beyond deploying technology, also requiring changes in how people work and business processes.

The benchmarking research findings indicate that most participants agree on the two key drivers for building the single source. The top reason is to improve business intelligence (BI) about customers and the business they do with the company. The second most important is that they must improve the quality of their customer data to survive and prosper in today’s intensely competitive and more stringently regulated markets.

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Ventana Research’s benchmark on “Customer Information Management: Business and Technology Trends” (sponsored by DataFlux and media sponsors BI Review, Business Intelligence.com and DMReview) reveals that the top priority for companies within their information management strategy is to gain better business intelligence. Within the context of customer information management (CIM), this translates into the need for a complete “360-degree view” of the customer, which most companies (68 percent) use as the basis of the business case for changing how they handle data about customers. Using such a view, they expect to make better decisions as they strive to improve customer satisfaction, do better business planning and lower the ongoing costs of maintaining multiple data sources.

When asked about technologies they’re interested in acquiring, participants cited two most often: tools to improve data quality, closely followed by tools to support data integration. Tools to support data matching, profiling, monitoring and enrichment scored much lower, re-affirming that companies focus most strongly on integrating and reconciling data from different sources. One finding is quite revealing: Although MDM was selected as number one choice by the highest number of respondents (32 percent), when all choices were factored in it came only third, suggesting that while it may be companies’ longer-term aspiration, their short-term goals are much more limited. We also found that although participants were familiar with the term, master data management is not fully understood in many companies.

The results reveal barriers that hinder companies beginning any CIM initiative. From a business perspective, lack of resources – people and systems – (50 percent) rather than lack of budget (34 percent) was the number-one business issue standing in the way. Although companies recognize the importance of improving their insights about customers, they haven’t yet made making the changes needed to gain those insights a high priority. A related finding shows that they have not looked into the costs and other negative impacts of having bad customer information. Participants who work in IT are closer to this issue and recognize the problem more often than do those on the business side.

Participants working in IT also recognize more often than do business participants the scope of the challenge of creating a single source of customer data, which requires persuading individual users to stop using their own methods and tools and adopt a common, centralized approach. In response to a question about which vendors associated with MDM products respondents were most aware of, the most often cited were the vendors of enterprise application products: Oracle, Microsoft, IBM and SAP, in that order. The next most often cited were BI offerings from established vendors Business Objects, Cognos and Hyperion.

The hot-button issue of data integration also influenced research results. Companies looking to build an in-house solution named Informatica, which has profiling, extraction and integration tools, most often after the application and BI product vendors. The results show a small number of companies that have looked beyond these broad enterprise tools to more specialized ones from suppliers such as DataFlux and Siperian. These tools contain the core functionality required for CIM, but the vendors still have to convince many potential customers that they have capabilities to support data integration. Cost of technology, as usual, remains a factor. Participants overall, but particularly those working in IT, indicated that they find the total cost of ownership of the needed software products too high; here again, we suspect that many companies have not considered as a counterbalancing factor the true costs of bad customer data.

Assessment
This research benchmark project and others by Ventana Research show that improving the quality and consistency of customer data is now a priority for companies. But the results also show that most companies haven’t taken the step of calculating the true costs to the business of bad customer data. We believe that most companies would be staggered to learn the costs of customer churn, missed sales opportunities, excessively expensive marketing campaigns and damage to their brand and image. We therefore recommend that companies work with vendors to carry out such an exercise as a prelude to building a business case for investing in new processes and technology that can help them manage customer data as well as they need to to succeed.