More than 85 percent of survey respondents plan to invest in customer data management solutions within the next 24 months. Fueled by the need to create a more effective operational foundation for data analysis and decision-support, senior business line executives intend to become more involved in the selection process. Aberdeen research reveals use of timely, complete and accurate information leads to improved customer service levels, reduced operational costs, increased revenues and higher customer satisfaction and retention rates. In short, it's all about revenues and customers - growth and retention. Above average performers attained >20 percent annual improvements in these key metrics:
- Customer retention rates (84 percent)
- Revenues (56 percent)
- Data accuracy/match rates (76 percent)
- Partner/customer satisfaction rates (68 percent)
Building the Business Case for CDM Investment
Calculating a precise return on investment has become less elusive. Our benchmark data demonstrates that organizations primarily measure the value of CDM in one of two ways - downstream benefits (key performance indicators - KPIs) and data effectiveness. Leaders are two times more likely to measure performance on a quarterly basis.
Unexpectedly, less than 15 percent of companies measured both types of metrics. Among above average performers, approximately one-half measured ROI through KPIs and the other half through data effectiveness. Interestingly, there were no significant differences (+/-5 percent) in annual Y/Y performance improvement in each of the four key metrics. Survey results revealed that IT led selection and deployments measured data accuracy and effectiveness rates while line of business measured the downstream benefits of customer data management.
In benchmarking survey respondents, Aberdeen found 84 percent of above average performers utilized one or more categories of CDM providers (listed in Figure 1) except those deploying enterprise MDM solutions. As most organizations begin deployment with a single application of MDM, such as CDM or product information management (PIM), and then refine the approach before moving towards full enterprise deployment, we believe it premature to benchmark MDM performance against CDM.
Selection and Investment Priorities
Presented with various choices, each a subset application of master data management, organizations seek to understand the tangible benefits, total cost of ownership, resource allocation and business processes necessary for successful deployment. In contrast to earlier data management practices, 89 percent of line-of-business (LOB) executives intend to participate in the decision-making process. Technology and service options include:
- Data quality (DQ) and profiling (DP)
- Customer data integration hub (CDI)
- Customer data integration platforms
- Integrated customer management (ICM)
- Outsourced service providers: MSP, SI, consulting firms
- Software as a service (SaaS)
- Master data management (MDM)
Respondent's investment priorities will give equal attention to configurability of business processes and robustness of products or services. However, average and below average performers are more likely to focus on tactical selection criteria such TCO or compatibility with existing architecture than leaders. Flexible business process configuration capabilities, ease of use for multiple stakeholders and rapid integration timelines are valued by above average performers. Leaders choose to focus on operational LOB issues rather than IT productivity or cost reductions.
Figure 1: Top Selection Criteria: CDM
Expertise in management of cross-functional CDM, (also known as data stewardship) is an early adopter capability at most organizations. More than 85 percent of respondents plan to selectively engage with out-sourced service providers for specific projects or to leverage best practice expertise in data profiling, business process workflow and data synchronization. For services beyond deployment and implementation, only 32 percent of leaders plan to utilize the professional services team of their technology providers.
The Need for Speed Varies by Department
Across all industries, customer data overload impacts an organization's ability to service, maintain and retain customers - whether those customers are individual consumers, other businesses and/or stakeholders such as trading partners. Each organization has a stake in gaining visibility into timely, accurate and verifiable information, empowering them to make better decisions on how to service, satisfy and retain customers.
Our survey respondents detailed using customer data primarily for either operational and/or strategic use:
- Customer service and support: Operational
- Corporate planning: Strategic
- Product design/enhancements: Strategic
- Business development: Operational
While the departmental requirement for timely updates varies, the need to access and utilize accurate customer information on a consistent basis does not. Not surprisingly, front-office roles such as business development, customer service and support and marketing need to utilize a "single view of the customer" most often in real time. The complexity of multichannel interactions, transactions and/or data synchronization fuels this need. Other departmental usage is primarily daily or weekly - including compliance for both government and HIPPA regulations.
Figure 2: Departmental Need for Data Synchronizations/Updates
Recommendations for Action
In addition to adopting the strategies and tactics of above average performers, companies should evaluate technology and service providers based upon proven ROI calculations.
For the full report, log onto: http://www.aberdeen.com/summary/report/benchmark/RA_CI_CDM_LA_3168.asp
Leslie Ament is an experienced consultant, researcher and presenter. She advises clients on business issues relating to precision marketing, customer data management and customer relationship management strategies. She may be reached at lament-ruder@att.net.
