Create a Single Customer View With Customer Data Integration


Archived Published: 07 October 2004 ID: G00123563

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Summary

You can reduce costs, manage risk and increase revenue with customer data integration. CDI provides the accurate and timely single view of the customer that CEOs need to run customer-centric businesses.

Table of Contents

Analysis

CEOs around the world are demanding the "single customer view" to enable their organizations' customer-centric growth strategies. But, for CIOs, the task is rarely as simple as the directive.

To successfully target, acquire, develop and retain customers, organizations rely on accurate, comprehensive, up-to-date customer information and insight. However, the subject of the single view usually varies as widely as the customers. Companies may target a consumer, a business, a citizen, a taxpayer, a physician, a patient or even intermediaries, such as insurance agents. Adding to this complexity, creating the single customer view can be hindered by dozens of internal barriers. Internal politics, organizational "silos," lackluster executive sponsorship, mergers and acquisitions, data-quality problems, heterogeneity of operational IT systems, lack of closed-loop integration between operational and analytic systems, and the inability to generate and leverage customer insight all contribute to project complexity.

Although political and organizational barriers are the biggest obstacles, you can tackle the technical barriers to the single customer view with a relatively new range of technology, processes and services — customer data integration (CDI). Begin with a strong business justification featuring cost savings, a revenue upside and an understanding of the issues behind the executive requests.

Through 2008, the creation of an accurate, timely and rich single view of the customer across channels and lines of business will be a key enabler for reducing costs, managing risk, and increasing revenue and profitability in customer-centric organizations (0.8 probability).

Single view of the customer — the business issues

Customer relationship management (CRM) projects usually require organizational units to work together around a shared single view of the customer and shared end-to-end processes. Without the right customer information at the right time, it is difficult to achieve CRM goals — regardless of company size, market leadership, or merger and acquisition history. Creating and leveraging a single customer view for operational, marketing and analytical purposes addresses these critical CRM requirements, and provides a base for:

  • Delivering cost reduction by providing a platform for consolidation (for example, the number of call centers) and standardization of processes

  • Delivering cost reduction by fixing data-quality issues that create a need for manual reconciliations and lead to wasted sales and marketing expenditure

  • Gaining an improved ability to handle risk exposure across product and functional silos

  • Gaining potentially large revenue and profitability upside in terms of improved customer cross-selling and retention

  • Delivering a better, more-consistent and more-valued customer experience

These issues haven't been resolved

The concept of single customer views and managing a master record of customer information are not new issues. Although the introduction of enterprise and CRM suites greatly improved the available data, functionality and processes, it did not totally solve the single view of the customer challenge. Most enterprises have heterogeneous environments extending well beyond the capability of a single vendor. The need for integration of customer information remains.

"Integrate Your Data to Create a Single Customer View" addresses this issue and explores the varied forms of integration. Different forms of integration play a role in incorporating customer information and supporting business processes, but each form is unique in some way. Different characteristics can lead to different applicabilities. There are also various places in the technology stack where customer data integration can take place. Within the stack, there are also different characteristics, applicability and levels of maturity. Due to the immaturity of solutions for achieving the single customer view, and the aftermath of mergers and acquisitions (which means you might have multiple customer information systems), most companies continue to operate at or below their potential in terms of cost, revenue, profitability and customer loyalty.

Leading companies in financial services accepted the need for a single system of record many years ago, and can provide guideposts for CDI projects. Major banks built customer information files, but the complexity and ongoing enhancement costs are making them revisit their "build vs. buy" decisions in favor of increasingly capable CDI "hub" products, based on modern, mainstream development environments, and application and integration servers. For more detail, read "Three Database Approaches to a Single View of Your Customer."

CDI and its constituent parts

Gartner defines CDI as the combination of the technology, processes and services needed to create and maintain an accurate, timely and complete view of the customer across multiple channels, business lines, and potentially enterprises, where there are multiple sources of customer data in multiple application systems and databases.

"Six Steps to Creating Accurate, Rich Customer Information" details the steps involved in creating a body of accurate, rich customer information — customer data refinement, address hygiene, matching and linking, grouping, persistent identification and data enhancement. Standardizing the customer's name improves consistency and aids in matching. In addition to address standardization, organizations need to validate the address, perform change-of-address processing and enhance the address with geographic data. Data matching requires sophisticated algorithms and rules to determine whether data should be linked together — a process that often relies on business judgement, not just technology. Having reached this stage, the assignment of a persistent global identifier provides a sound basis for the future recognition and assembly of data. Grouping reflects relationship structures, whether within households or within hierarchical groups of companies. Finally, by tracking buying habits in consumer, business or vertical-specific industry data, you can greatly enhance the ability of sales and marketing departments to recognize opportunities for customer acquisition or development and better manage risks, such as customer churn or apathy.

A range of other technology functions and processes also store master customer information in an in-house database, and are involved in integrating and synchronizing customer data with the variety of other internal systems. The data model and the database comprise the core of the CDI hub. The data model must reflect the complexity of the different customer or party relationships of the business, and should reflect the customer information requirements of the entire enterprise. In addition, this database and data model combination should be scalable and must provide the necessary levels of performance. CDI hubs depend on middleware for integration with source systems, and also need functionality to manage matching, linking and publishing processes.. In many CDI hubs, a layer of business services that can provide a consistent business-oriented interface and a platform for future service-oriented architecture applications protects the data model.

Different approaches to CDI

CDI architectures differ in nature. The four main styles, as described in "Learn the Four Styles of Customer Data Integration," include :

  • External reference provides a reference database of the entire consumer or business population and enables a company to absolutely identify a customer. It is complementary to the other three styles.

  • Registry maintains a central register of global identities; it links to master data in source systems and holds transformation rules. At runtime, the CDI hub accesses the source master data and assembles a point-in-time single customer view.

  • Coexistence enables the coexistence of established systems’ applications and the new system of record, and harmonizes the master data across these heterogeneous systems. It creates greater consistency and data quality across systems and rapid access to what is usually a read-only single customer view in the center of the federation of databases.

  • Transaction hub is the most-sophisticated model. The enterprise "bites the bullet" and decides that the new CDI hub is the primary repository of customer reference information for operational applications. It has a major role in the enterprise’s architecture and new service-oriented architecture applications are built on it.

The CDI market — main vendors and maturity

"Competition Heats Up the CDI Market" answers this question by starting at the birth of the term CDI and outlining factors relevant to vendor selection.

The term CDI started with marketing service providers Acxiom and Experian. The two firms used it to describe the services, based on reference databases, that they provide for cleaning, linking and grouping consumer information and for recognizing and uniquely identifying consumers. This category of CDI remains a strong and healthily growing sector. However, during 2003, the term CDI rose to greater prominence, and started to move up the CRM Hype Cycle, based on the desire of large organizations with inherently heterogeneous application architectures to create an in-house master customer information database for operational purposes. See "Hype Cycle for B2C CRM Technologies, 2004" by Gartner's CRM analysts for more detail.

Overall, the CDI market is still immature and fragmented with no clear leaders. However, a variety of vendors are approaching the market from different directions, each with their own interpretations of CDI. Offerings by these vendors exhibit assorted gaps in their capabilities, as well as varied strengths in different industries and different scenarios. Enterprise and CRM application suite vendors such as Oracle, SAP and Siebel Systems have accepted that, in most operational environments, customer information will stay fragmented, requiring a system of record to enable the single customer view. They have, in essence, validated the CDI market by entering it. The established, specialist CDI hub vendors, such as DWL, Initiate Systems and Siperian, although still small, continue to leverage their strengths in specific industries and attempt to become more-generic vendors.

Evaluating CDI products

Different CDI products suit different situations, depending on each company's requirements. Before evaluating CDI products, perform a thorough requirements analysis and create an objective, weighted set of evaluation criteria, as described in "Assess Your Criteria for Customer Data Integration."

Sufficient internal preparation, combined with the right set of evaluation criteria, provides a firm basis for gap analysis and enables an objective rating of products. Key functionality evaluation criteria include:

  • Data model — Matching the data model to its purpose remains the most-important criterion in selecting CDI products. The model must be able to handle complex relationships and should map to the master customer information requirements of the entire organization, not just selected areas.

  • Information quality and consistency — Look for well-integrated facilities for cleansing, matching, linking and identifying data from different sources.

  • Integration and synchronization capabilities — If necessary, the CDI product should support the bi-directional transfer of data between the central system and peripheral systems.

  • Performance, scalability and availability — Ensure that the offering supports proof points of transaction- and batch-processing capabilities.

  • Business services layer — More-mature implementations will want to use the CDI hub as the basis for new service-oriented architecture business applications.

  • Technology base for the product — Should reflect mainstream application server and development environment technologies and standards.

Finally, seriously review vendor viability and conduct rigorous due diligence and reference checking.

Creating the single customer view is a key goal for solid business reasons. There are several routes to achieving that goal, but the emergence of a market for CDI packaged software, accompanied by the requisite processes and services, offers a good opportunity to strategically address the challenge. If creating the single customer view for operational and marketing purposes is a critical initiative for your business, begin building a financial model to support a strong business case. Understand and demonstrate where and how you can deliver cost savings and revenue enhancement. Then, investigate the ability of CDI to solve this single view of the customer challenge and deliver potential return on investment.

© 2004 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Reproduction and distribution of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Although Gartners research may discuss legal issues related to the information technology business, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The opinions expressed herein are subject to change without notice.

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