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Intelligence In The Here And Now

To deliver a decisive competitive advantage, data intelligence must impact the customer right now. Harrah's and Churchill Downs profit by applying data warehousing and predictive analytics to marketing and high-touch opperations.

It's the moment of truth: Your customer is about to complete a transaction. Will this be the beginning, middle or end of a beautiful customer relationship? Does this transaction — and this customer — fit your organization's strategic vision of how it will prosper in the marketplace?

The pressing need to answer such questions has become a huge driver behind data warehousing and business intelligence (BI). As Jill Dyche discusses in "Get Your Customer in Focus," BI analytics are redefining customer relationship management (CRM); companies are finding that, unless coupled with fruits of timely data analysis, CRM applications fall short of delivering competitive advantage. "Without analytics, how can I say which of our customers is most likely to come back to us?" says Atique Shah, vice president of CRM and technology solutions at Churchill Downs, one of the largest owners of race tracks and off-track betting parlors in the United States. "CRM by itself can't give you the expected return on investment."

Just as important as analytics' contribution to CRM, however, is how CRM is altering the priorities of the supporting data warehousing infrastructure. Strong interest in marketing applications — software purchases are rising 13 percent annually, making it the fastest-growing segment of the CRM market, according to Gartner — is increasing the focus on BI, predictive analytics and other means of applying data smarts to improve the efficiency and effectiveness of marketing campaigns. Conventional historical analysis and the extract, transform and load (ETL) activities essential to gathering and preparing the data are obviously important. But the drive to improve the timeliness and lasting value of marketing applications is becoming a magnet pulling BI, data warehousing and data integration toward actionable, "real-time" intelligence.

Let's look at how IT organizations are addressing key issues of performance, data integration and predictive analytics to support CRM objectives.

Less Latency, More Opportunity

The time lag between market analysis and action in the form of new campaigns or other activities adds up to lost opportunity. Credit marketing organizations even have a measure for campaign latency, called "days not yet in the mail." Reducing the time by a day or two can mean thousands if not millions of dollars, both in savings due to process efficiency and potential revenue gained by reaching customers at just the right time.

Automation is changing the face of marketing, giving organizations the ability not only to coordinate a larger number of campaigns, but also to better allocate resources to the processes most important to customer-centric business goals. Multichannel campaign management is increasingly blurring the distinctions between offline and online channels; automated processes enable more event-driven marketing, where customer behavior triggers relevant offers that are delivered through the most appropriate channel. And, lest we forget, latency is the target of grander, extra-enterprise visions of end-to-end process management. Organizations would like to transmit event information — that is, the customer's response to an offer — to demand-driven manufacturing operations, which then "pull" products and services from suppliers and business partners in real time to fulfill orders.

Therefore, customer data analysis must keep pace with the new marketing machine. Some organizations are using business rules to develop customer intelligence and express that knowledge in a way that process management understands. Faced with a daunting number of account holders and records on file, for example, a large financial services company might use customer data to inform business rules management software, such as Fair Isaac's Blaze Advisor, Ilog's JRules or Pegasystems' PegaRules. The rules engine would manage the automated logic behind the modification of marketing and sales strategies. Without rules and process automation, it could be hugely labor intensive to repeatedly query the data through BI tools to decide on the most profitable business strategy. Along with time and cost savings, the rules would express in process logic the metrics defined by the company to achieve business performance goals. In this way, the business rules help align business goals with the overall execution of CRM strategy.

Speed for the Masses

Customer and market analysis involve both a large volume of queries as well as significant query complexity to gain insight into multiple attributes. The speed with which analytic tools can identify, profile and segment customers often depends on the computing power available. Thus, the cost of reducing latency has been high, usually requiring massive investment in an array of data warehousing software, servers and often a parallel processing infrastructure. Typically, this price tag gives a decisive competitive edge to large organizations with big IT budgets. It's clear that Wal-Mart, for example, owes a good deal of its continuing growth and success to strategic investments in customer intelligence. The company reportedly has more than 450 terabytes of data stored on NCR/Teradata systems.

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