After a wisely cautious start, data warehousing is finally poised to become a revenue opportunity for businesses of all sizes and a convenience for everyday life. The magic new ingredients are individual e-services, which provide intelligence and data assets that are creatively packaged both for traditional in-house users and new, paying audiences.
Though data warehousing has become essential to certain companies, it hasn't yet hit the "tornado phase" for three reasons. First is the complexity inherent in building data warehouses. DM Review tracks more than two dozen categories of tools to create data warehouses; and it's unreasonable to expect beleaguered IT staffs to find the time to apply, assess and effectively integrate that many tools, though prepackaged solutions for vertical markets are making the task somewhat less daunting.
The second reason is that the average data warehouse can take four years to build. When you consider that some companies reorganize themselves and update the corresponding operational services every six months to reflect a shift from a geographic to a product-based P&L, for example the start-up time is simply too long to be practical.
And the third impediment to traditional data warehousing is human nature specifically, our kindergarten-style reluctance to share. It's typical for multiple groups in a company to believe, for example, that they "own" the master customer file. When that ownership appears to be threatened by incorporation into a data warehouse accessible by all groups, the resulting organizational behavior can sometimes be bizarre.
The Internet: Chapter 2
Chapter 1 of the Internet was about Web storefronts, a battle for eyeballs and IT departments as cost centers. The appeal to consumers was more choice in vendors and faster gratification when information was requested. As the Internet enters Chapter 2, the goals for building data warehousing systems are changing, making some of the previous barriers irrelevant. No longer is the goal simply to maintain up- to-date data that end users figure out how to apply, but rather to intelligently apply that data through intelligent services.
Most of today's Web-enabled ERP installations, for example, are intended simply to explain the what and how of a business. They reveal the pieces in the supply chain and how to move inventory from place A to place B. The more advanced installations also focus a bit on the why of the business by using tools such as data mining. Now, as we approach Chapter 2 of the Internet, a higher level of intelligence makes it possible for the solution to actually perform services on behalf of the company or consumer. Businesses can actually make money by making their assets (data, services and intelligence) available for consumption on the Web.
Examples of E- Services
The building blocks of new sophisticated, intelligent data warehousing applications are intelligent e- services. An e-service is any asset made available via the Internet to drive new revenue streams or create new efficiencies. In Chapter 2 of the Internet, it's likely that your business will either be a provider or consumer of e- services. Examples include:
Travel arrangements: Rather than visiting separate Web sites and filling out multiple forms for airline ticketing, hotel and rental car, you visit a single travel Web site and complete a questionnaire of your travel preferences. When you provide travel dates, the service selects the optimum options for flight, hotel and rental car, according to your preferences. If one of your flights is canceled, the service even contacts you automatically via your PDA or cell phone with the alternative travel arrangements.
Supply chain optimization: If one of a manufacturer's distribution points is short of inventory, the optimizer uses intelligence to select another ship-from location. The optimizer considers not only the ship-to location, but also the current weather conditions. If the closest alternative is snowed in, for example, it is more efficient to order from a more distant ship point with good weather. Note that this form of e- service considers both structured (distances) and unstructured (weather map) data.
Food distribution to charities: ResourceLink is an Internet- based collection of e-services that connects companies that have food to donate with the homeless shelters and disaster-response centers that need it. One e- service on the site lines up transportation companies to deliver donated items while they're still fresh.
Hospitality: A family vacationing in a foreign country wants dinner. Using a PDA, the mother contacts a travel service that detects the family's location via a GPS in the PDA, speaks English, identifies nearby restaurants that serve the type of food requested and recommends the one with the shortest wait either by consulting a report of average waits for this day of the week or tapping into the restaurant's POS system.
Figure 1: E-services include data, competencies and intelligence.
The Intelligence Behind E- Services
What makes e-services valuable is not only the immediacy of the service, but also the intelligence behind the service. In the scenarios detailed earlier, examples of intelligence include selecting the most economical travel services, lining up transportation for donated food and selecting the restaurant that would serve the family the soonest based both on its proximity and wait times.
In the early days of data warehousing, intelligence meant simple business rules and simple queries. For example, an inventory application might select the best supplier based solely on location or cost. A banker might query the database for the age and ZIP codes of its most profitable customers. Intelligence in Chapter 2 will be much more sophisticated. The inventory application will consider not only location, but weather conditions that might affect shipping. The banker won't have to guess that age and ZIP code affect profitability, but can simply ask, "What are the characteristics of my most profitable customers," and possibly discover attributes about which she never would have thought to ask.
Combining intelligence with e-services promises exciting business opportunities, some of which are already offered:
Retailing. Amazon.com is a master of e- intelligence, sending push e-mails to customers who have purchased spy novels when a new spy novel is available. Its e-services are its customer purchase histories, a database of books and mass e- mail capabilities.
Cross- selling. A bank that offers a home loan can combine e-services for weather prediction, landscaping and credit to offer a loan for landscaping to customers who purchase new homes. As a value add, the offer would include suggestions of the type of landscaping suited to the season and current weather conditions.
Intelligent Web agents. Pharm- aceutical companies hesitate to develop new drugs for small populations because it's difficult to recoup the high cost of R&D when some 85 percent of new drugs fail in clinical trial. To leverage other research and cut R&D costs, pharmaceutical companies could use a Web agent to comb the Web for the latest university research results.
Improving Customer Relationship Management (CRM). There's a danger in defining CRM too narrowly. Some companies regard CRM as simply recommending products based on the customer's purchase history and known preferences. But what if you recommend a product that's not in stock? An intelligent e-services application not only determines which products the customer might want, it also checks with the inventory data warehouse or the supply chain to make sure it's available.
In short, adding intelligence to e-services will allow companies to differentiate themselves based on service.
The emergence of e-services and e-intelligence is affecting the business landscape in the following ways:
Emergence of specialized portals. Savvy companies are combining related e-services and making them available on specialized portals. Examples are the Internet Travel Network (www.itn.com), which provides airline ticketing, hotel and rental car services, and Ariba.com, which provides corporate purchasing functions. As more of these convenient, intelligent e- services become available, companies will increasingly take advantage of them for all tasks outside their core competencies.
Emergence of new kinds of brokers. Packaging assets to create an attractive e-service for the travel and purchasing mentioned earlier, for example requires a broker. The broker assembles assets to create the best bid. The broker probably will supplant the reseller in today's three- tiered distribution model distributor, reseller and consumer.
"Apps on tap." Rather than installing applications on client PCs or corporate services, companies will lease these applications from e-services providers. For example, different e-services providers might offer services for data extraction, data cleansing, data mining or operational reporting. A consulting firm might package them on a single portal. The e-service provider will bill a certain amount of money per minute, query or transaction. The implication for platform vendors is that companies which provide these services will need highly scalable, reliable equipment that operates in a secure environment. Companies that prefer to host their data at their own sites can take advantage of storage area networks to access the services elsewhere.
Intelligent e- services are advancing the Internet from Chapter 1, where we had to work to take advantage of the Web, to Chapter 2, where the Web works on our behalf. For businesses, the chief implication of e-services is the ability to "pay as you go" for high-powered applications such as ERP. The implications for ISVs are that they'd better watch out! If they don't look beyond the software license transfer business model, they'll be challenged on their revenue fronts by dot- com ISVs who adopt the apps-on-tap model.
This is the first of a series of articles that will focus on the impact the next phase of the Internet is likely to have on business intelligence. The second article in this series will appear in a February issue of DM Direct. To subscribe to DM Direct, DM Review's electronic newsletter, please visit http://www.dmreview.com/edito rial/dmdirect/.
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