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CDI: The missing piece to the CRM puzzle

While CRM is finally gaining momentum, it still can't seem to deliver on its promise of "one single view of the customer." But customer data integration technology (CDI) promises to change that -- and plenty of vendors want to get in on the action.

These days customer relationship management (CRM) success stories are a dime a dozen. Company X has seen a 60% decrease in order errors. Company Y has automated marketing processes and is generating better leads. Company Z has seen a 20% increase in customer satisfaction ratings. On the whole, it seems like CRM is finally getting some praise.

But don't be misled. CRM still has a long way to go before it reaches its full potential.

In fact, the sad truth is that many large enterprises still don't know their customers very well. In most cases, businesses have amassed wads of customer data. Trouble is, they can't use it effectively because it's spread throughout the enterprise, fragmented among proliferating databases -- many of which can't even talk to each other. As a result, every department has a different piece of the customer puzzle…and the business has no way to fit them all together.

Enter Customer Data Integration, or CDI, the new darling of CRM.

The value of CDI is that it provides a "360-degree view" of the customer by bringing together data from disparate sources throughout the enterprise. A central component of CDI is an integrated master customer reference database (a.k.a. "the customer data hub") with built-in data quality, correction and correlation capabilities.

With CDI, for example, a customer can walk into a bank and the teller can instantly check that customer's profile across other departments like insurance, financial planning and credit cards. The teller can then identify whether that customer would be an ideal candidate for additional product offers.

CDI also promises to help organizations better comply with federal regulations like the Can Spam Act and "do not call." Armed with a complete and accurate customer record, marketers and call center agents are far less likely to make costly compliance mistakes.

A Market Ready to Explode

Earlier this year, Gartner validated the importance of this emerging technology with its first "Magic Quadrant for CDI Hubs." According to Gartner, the CDI market is so immature that no single vendor currently leads the pack. Amazingly, the analyst predicts that we aren't likely to see a leader emerge until at least 2007!

Until then, everyone will be scrambling for a piece of the action -- and there ought to be plenty of action.

The CDI Institute, a San Francisco-based IT research firm, estimated that more than two-thirds of the Global 2000 are evaluating CDI applications and each expects to spend an average of more than $1.2 million on CDI in the next year. The CDI Institute also found that from 2003 to 2004, spending on CDI technology and services grew 135% -- from $85 million to almost $220 million.

Indeed, the vendors smell opportunity. Large, well-known CRM players like Siebel, SAP and Oracle hastened to launch CDI products and evangelize the importance of "a single view of the customer." (Not surprising, since collectively they saw their CDI revenues grow 35% from 2003 to 2004). But there are also best-of-breed vendors like DWL, Initiate and Siperian, who have quietly built momentum and developed strong track records in banking, healthcare and pharmaceuticals, respectively.

One thing is for sure: CDI is fast becoming a mission critical initiative for enterprises. CRM, while contributing important strategic and operational achievements, still can't seem to deliver on the promise of "one true customer view." CDI might just change that. If it does, CRM will truly pay dividends.

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