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10/21/2004
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Rick Whiting
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Data Demands Respect

Acxiom has quietly made a billion-dollar business out of handling data; it's a learning experience

But a lot of the data Acxiom manages belongs to other companies. More than half of its revenue is generated by data-related services, such as building and hosting data warehouses, integrating and cleaning customer data, running customer-relationship-management applications, developing customer marketing lists, and analyzing data or providing clients with the means to analyze it themselves. Clients typically store three years of complete customer-history data with Acxiom, CEO Morgan says, but that's expanding to five years of data. "We like to think that these customers look at the Acxiom data center as an extension of their own data centers," he says.

Citizens Bank in Providence, R.I., hired Acxiom to manage its customer data, processing it on a daily basis to confirm and correct names, addresses, phone numbers, and birthdays, and remove duplicate names created when customers use multiple Citizens services. "Customers today have complex relationships with the bank--it's not just a checking or savings account," CIO Bill Wray said in an interview earlier this year, when connections between the bank's customer database and Acxiom's IT systems were being built.

Acxiom isn't satisfied with just managing other companies' data; it wants to manage their data centers as well. Last month, Acxiom signed one of its most significant IT outsourcing deals, with Information Resources Inc., which collects and sells terabytes of retail point-of-sale and consumer spending data. Under a contract potentially worth hundreds of millions of dollars, Acxiom will run IRI's data-center operations and build a real-time content delivery system for the company.

THE UPSHOT

Acxiom is one of the largest data aggregators and database managers in the world, with more than 20 billion customer and prospect records, the company says




Acxiom is targeting data-center outsourcing as a growth opportunity, in particular for potential clients in data-intensive industries, where it can deliver value-added services over and above conventional outsourcing rivals



The company has found itself at the center of privacy and security controversies, such as whether, and in what way, companies should provide customer data to government agencies




Outsourcing isn't a new venture for Acxiom. Its first data-center-services customer was Norman Vincent Peale's Guideposts organization some 15 years ago. Acxiom's outsourcing division was created officially in 1998 following its acquisition of May & Speh Inc., an information-management services provider. Outsourcing deals now account for a quarter of the company's sales.

Acxiom sees outsourcing as a growth area, targeting companies in data-intensive industries such as consumer packaged goods, financial services, and retail, where its data-management expertise and technology give it an edge over IT-services stalwarts such as IBM and EDS, says Lee Hodges, chief operations leader. Acxiom holds up the IRI deal as emblematic of the company's outsourcing strategy. IRI collects huge amounts of product-sales data from supermarkets, pharmacies, and other retailers, as well as from 70,000 volunteer households, and sells it to packaged-goods manufacturers. As part of the deal, worth $25 million to $30 million a year for up to 15 years, Acxiom is developing a content-on-demand system to process retail data in near-real time, combine it with demographic data, and sell it to IRI's clients to identify and exploit consumer buying trends as quickly as possible. IRI and Acxiom are developing applications, due in February, that will help retailers and manufacturers manage new product introductions, analyze price and promotion effectiveness, and track products that are out of stock.

Key to the IRI deal is Acxiom's grid-computing technology, known as the Customer Information Infrastructure, which accounts for about 10% of Acxiom's overall IT resources (see story below). IRI was swayed by the grid strategy because it offers lower processing costs than mainframes or big multiprocessor servers and yet will allow IRI to get new information products to market faster. Despite operating two Hewlett-Packard Superdome servers in its own data center, IRI lacked the processing power and the expertise to turn huge volumes of data into useful business intelligence, says Marshall Gibbs, the company's chief technology officer. "Acxiom has the domain expertise, and we saw grid computing as the answer to the muscle problem," he says. Acxiom takes that as validation of its grid strategy. "We had a better mousetrap and a cheaper mousetrap," boasts chief operations leader Hodges.

Acxiom is looking to integrate--and thereby better leverage--the data products, services, and IT outsourcing facets of its business, which in the past operated mostly autonomously. "We're trying to get away from the idea of different divisions selling data and services," CEO Morgan says. "That's our strategy, to create an integrated-services value proposition."

In April, Acxiom reorganized around a shared-resources approach to serving its customers. While sales and client-management staff remain dedicated to specific clients, IT resources--database programmers, for example--are pooled and deployed wherever needed. Acxiom says its grid technology helps make that possible. The reorganization allowed Acxiom to trim its workforce by 5.4%, or about 230 employees.

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