DATAWAREHOUSING: NEED FOR THE DAY
For business management, detailed information is very important to make better decisions
By Tabish Sabah, Account Director,
Oct 23 - 29, 2000
Nowadays Information Technology is considered to be a success word not only in Pakistan but also across the globe. E-commerce, Call Centers better call it Contact Centers cuz now it handles emails and web chat as well, Datawarehousing, Customer Relationship Management Solutions are considered to be the buzzwords. All these words are considered to be the success words for organizations, but selection and implementation of these solutions is not an easy task. We keep on hearing quite a number of times these statements, "My DBAs spend the bulk of their time tuning. We don't have time to tune every query, but if we don't, response time is unacceptable." Some of smart DBA feel this way, "I Know I shouldn't do this, but business people bring questions directly to me, with hopes that I can get in the queue faster" and some feel this, "there aren't enough hours in the day to handle rapidly expanding number of questions from the Business Management." This is just a glimpse of the difficulties most of IT Manager are facing these days.
For business management, detailed information is very important to make better decisions, and if they will not get the information at the right time, the decision which is supposed to be taken today will not be same for tomorrow, hence the emphasis is on timely available information and one can only get it if the organization possesses detailed information about their customers. Lets see what the Business People feels, " Long-range planning used to be simple. Now we need detailed information so we can order materials on a just in time basis." Some strategist feels like this, "It's a war zone out there. We must provide our most valuable customers with outstanding services. To do that, we have to know who they are." "We have a lot of data about our customers. I wish we could leverage it to outmaneuver our competition." This research guy feels, "the DBAs will expect favours and gifts when we ask them to give us the report or information immediately."
The entire scenario is revolving around availability of Information, which we normally get from Data, as we have learned that meaning full data can be referred as Information. The concept is to have detailed data and when we are talking about availability of detailed data, we are talking about Datawarehouses. By just browsing the net, one can find all those fancy definition of Datawarehouse, so let's stick to the simplest one as "Data warehouse is a complete repository of corporate data extracted from transaction systems that is available for ad-hoc access by knowledge workers." There are certain terms used in this definition, like ad-hoc access, this certainly means that because the business people don't know the question in advance, hence one can not really build a set of reports for them, if the DW is not able to answer any question at anytime and at any place, than there is no point of establishing this, if the business users knows what they want to know in advance, how simple it will be for the IT Division. There is another term in the same definition as Complete Repository of Corporate Information. I don't like this part of the definition, because first it will take years for huge organizations to first setup their Central Transactional Database and then start to analyze their customers. It is often said that, Datawarehouse is a Process and not a product, which one cannot buy off the shelf. In fact DW is not a technology issue; it is a process of providing information delivery to organization for better decision making. It is very important to distinguish between an Operational Database and a Data warehouse, the former takes care of only the transactional Data, which requires to run the business, for example in ATM, one doesn't need a data in an operational database for more than 2 years because it is only required to run the business, whereas an Analytical Database is normally 10 times more than the transactional database because it involves both the Historical Data as well as the Transactional Data. The main purpose of DW is not to run the business, but to help the Management in making effective and better decisions. Datawarehousing keeps detailed data. Normally organization PERGE their data after l or more year because to them it is not important, because they don't need that data to run the business. The Operational Database must have an ability of 7 X 24 basis, whereas for DW, it can be 6 X 12, because the DW is not running the business but helps the business in making better and efficient decisions keeping in view their individual customer's need.
Datawarehousing as mentioned is a process that provides a Single Version of the Customer/ Organizations. It is important to understand what exactly we meant by Single Version of the customer. Let's understand a real example that happened with my Uncle. He is an account holder of one of a large bank in Pakistan. One day he got a letter from the bank, that the bank will start charging, if he will not maintain the minimum balance requirement. He was maintaining another account with the same bank under a belt of Sole Proprietor that has more than Rs. 20 million. My uncle discussed the situation with me as I used to work for a financial institution and knowing the tradition, I asked him to deposit some money into the account otherwise, the bank might debit his account. Despite my sincere advice, he overlooked it and when he got the bank statement, the bank debited some amount as the customer (to be more precise, uncle) was unable to maintain the minimum balance requirement, and he got really angry and the first words which he said to me, that I am thinking of changing my bank, because my bank doesn't know me. He was right, because the bank was treating him as two different customers.
I realized that how many of us have been sick and tired of receiving mail shots from different organizations about their products. Most of us don't even read and throw it in the waste bins. The cost involved in printing, courier, and follow ups, increased the expense side of the company who is promoting their product, and normally the outcome is less than 1 %. The focus of marketing has changed from targeted marketing to one to one marketing. When the organization knows, who their customers are and what their needs are; they can come up with a separate marketing technique for each of them. It is like there is a cricket match between Pakistan and India and the stadium is packed to capacity, as there are 70,000 people watching the match. The question marketers should ask who are open to buy our product now? Imagine it is only 0.2%, which means 140 people? Now the questions are:
• who are these 140 people (Speed)
• what do they want to buy (Relevance)
• How much time do you have to sell (Timing) Speed, Relevance and Timing are the most important ingredients in one to one marketing, because the organization have to understand that these 140 people have different needs, and one can only sell productively, when he knows in detail about their customers.
The world is moving towards Customer Relationship Management Solutions, as it helps many banks, utility companies, airlines in making individual rather event based marketing, because they know who are their profitable customers, what kind of service they need, Do they prefer to do banking with ATMs, Call Centers, or OTC. The cost of doing an OTC transaction is 95% more than doing a transaction via ATMs or Call Centers or Web Banking. If a customer is not a profitable customer of a bank and he is doing all the transactions via OTC, since the bank knows now that he is my less profitable customer, they can charge a fee if the customer can make an OTC transaction. The institution possesses huge data about their customers that should be used effectively and efficiently. It is often estimated that 25% of the customers generate 75% of the revenue, but we don't know who these 25% customers are? Are we treating them alike? Lets go back to my Uncle's example, the bank doesn't know him, and now he is doing banking with some other bank and that bank has realized that he is their important customer, but don't know how much he is generating to the bottom line of the banks. So they are sending him tons of brochures about their products and I have seen him throwing away. Customer Relationship Management builds better relationship with the customers, and one can only build better relationship, when they know who are my customers, are they profitable, what are their likes and dislikes, do they prefer to sleep during a journey, do they prefer a window seat. What marketing promotions were in effect when each product was purchased? CRM answers such questions very easily, as they require complex analysis as well.
The beauty of Datawarehousing can be related in such a way that it provides an expected Return on Investment (ROI) and in majority of the cases ROI/Payback is less than one year. It is often estimated that the return on investment is more than 400%. For successful implementation of DW, Business Managers together with the IT, has to drive the project. Let's understand and know about our customers.