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Building a CDI business case takes careful planning

Customer data integration has enterprise-wide benefits, but finding funding and executive support can be a challenge.

While customer data integration (CDI) is rapidly grabbing the attention of enterprise companies seeking a holistic view of all customer records, these projects require funding, cooperation and enterprise-wide support, which aren't always easy to come by with an IT project. Building a solid business case is essential, according to one expert.

There are four common scenarios that have driven CDI at early-adopter companies, according to Aaron Zornes, founder and chief research officer for the CDI Institute, a San Francisco-based analyst firm. For example, companies that want to up-sell, cross-sell, or engage in e-mail or telemarketing often require CDI to integrate disparate databases and understand privacy preferences, Zornes said. The promise of the 360-degree view of the customer improving sales is a common reason for implementing CDI.

Companies are also motivated by customer retention and satisfaction. Customers are expensive to acquire, Zornes said.

"The bar has been raised for customer service expectations. You want your customer sales representatives and call center people to have a current view of who the customer is," Zornes said. "Customers expect that these days. If you don't have that, you're damaged."

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Moreover, Sarbanes-Oxley and other regulations have driven many CDI implementations. Fed up with being unable to get an accurate count of customers, revenues and risks, chief financial officers are spearheading the CDI initiatives at some of the companies that Zornes has worked with, he said.

Finally, acquisitions are also driving CDI initiatives as firms suddenly need to integrate new billing systems, product catalogs, and customer databases, Zornes said. CDI achieves economies of scale by consolidating disparate systems for these companies.

These aren't the only reasons companies are jumping into CDI projects, however. When RxHub LLC began operations and designed its infrastructure in 2001, CDI was an integral part of its business plan. The business depended on the ability to match and identify individuals across databases, and there was no debate over whether or not to purchase a CDI system, explained J.P. Little, chief operating officer of the St. Paul, Minn.-based company. Using CDI technology from Chicago-based Initiate Systems Inc., RxHub takes in pharmacy eligibility requests from doctors and locates patients' benefit information, stored in any one of the multiple databases maintained by pharmacy benefit providers.

"We sit in the middle of the entire industry. The ability to accurately and quickly determine a patient's benefit information by matching information across databases is really what we're all about," Little said. "[CDI] has been a core part of our infrastructure since we went live."

Define CDI phases

Some companies undertake CDI as the first phase of a long-term master data management project, a recent study by Cambridge, Mass.-based Forrester Research Inc. found. Companies are breaking CDI into phases, said study author R. "Ray" Wang, senior analyst. Projects often take a harmonized approach, utilizing software that offers features of both the registry and operational data hub styles of CDI. A project might start in a certain division to show a proof of concept, but teams should plan CDI with the entire enterprise in mind. Implementing CDI in a single department -- with no regard to the needs of the whole organization -- runs counter to the goal of achieving data consistency, Wang cautioned.

Plan for data quality, governance and stewardship

Data quality is critical to CDI, and it can take years to prepare all of the data for a large CDI project, Zornes explained. But once an organization implements CDI, it can often significantly reduce data quality problems, he said.

"A lot of the upfront work [for CDI projects] is in the data prep, data quality, and data profiling. The good news is that with this CDI viewpoint, more of the future data cleansing is self-service," Zornes said.

Once CDI is in place, customers can access Web interfaces to make their own simple name, address and other profile changes. Plus, with operational data hubs, companies can make changes to a customer record once, rather than many times in different applications.

CDI also requires enterprise-wide data governance -- that is, organizational agreement about which department owns, updates and manages different types of customer data. Data governance may not be included in the business case, but companies will ultimately need to address governance for CDI success. Undertaking CDI without taking data governance into account is just a waste of money, because the data issues that caused the problems in the first place will keep cropping up until they are truly solved, Wang said.

Seek executive sponsorship and create cross-functional teams

"A lot of these [CDI] efforts are really IT driven, but they need to be tied to business and be more business driven," Wang said. Business executives should be included in the planning process, and teams should tie CDI to strategic business initiatives, he added.

At RxHub, for example, a cross-functional committee helped oversee the evaluation process of the CDI system and ensured that the technical team chose a tool that would be in line with the company's business goals, Little said.

According to Wang, one major insurance company used a CDI team to successfully launch its project. It consisted of:

  • An executive-level steering committee, composed of vice presidents and general manager sponsors who fund and support the project
  • A customer information strategy group, which considers and plans for enterprise-wide data needs
  • A cross-functional program team, focused on the work of implementing CDI
  • Project teams and data stewards, who address specific technical projects or data quality aspects of the initiative

Budget for professional help

Professional services are a necessity for CDI success, Zornes and Wang agreed. Companies need help with change management, data integration, architecture design, data governance, and internal retooling, Wang said. In fact, his recent study showed that companies often spend three times the cost of software licenses on professional services.

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