|I am currently a student at college. We have an assignment to do on CRM. We have to develop a CRM and convince the board of directors not to outsource our department (which is the marketing department). Where could I find information on why we should not outsource?|
Sid Adelman’s Answer: The following is taken from Impossible Data Warehouse Situations: Solutions from the Experts published by Addison Wesley, 2002.
A company is making some major changes. They will be outsourcing their operational systems to an application service provider (ASP) and they are considering outsourcing some or all of their data warehouse activities. The new focus is on the customer and they are planning significant customer relationship management (CRM) capability. They have some minor data warehouse capability today, but with this major change, should they start from scratch for their decision support systems? How can the organization be sure the outsourcing organization will deliver the functions and the capabilities needed? What recommendations do you have for how they should proceed?
Sid Adelman: How can the organization be sure the outsourcing organization will deliver the functions and the capabilities needed? The answer is it can’t and it can’t be sure for a number of reasons. In an outsourced situation, contracts are very clear about what will and what won’t be included. The very nature of a data warehouse is that the users are never able to articulate all their requirements upfront that means each new request will require renegotiations and contract changes. By the time these details are worked out, the opportunity will be lost. The data warehouse should not be outsourced!
Joyce Bischoff: The company needs an overall information strategy that should be defined before the outsourcing plan is complete. An evaluation of the effectiveness of the current warehouse should also be performed. One can never be certain that an outsourcing firm will deliver the functions and capabilities needed over the long term. Technology and business changes occur quickly in today’s world and there is no assurance that an outsourcing firm will respond as desired. They may also charge an excessive amount of money for complex changes because there is no competition. Since ideas that are unknown today may need to be implemented, it is difficult to include all of the needed wording in a contract. With this information at hand, a decision can be made regarding the outsourcing of the warehouse.
Chuck Kelley: Outsourcing data to an application service provider (ASP) is dangerous not only for operational systems, but also for data warehouses. Do you really want to trust one of your important corporate assets to live and breathe under someone else and not in your ultimate control? We already know that having data under our own control is not totally secure (ask the Internal Revenue Service), but having someone once removed in control, I don’t think it will be any more secure (and maybe less secure). I would do some serious soul-searching before I would allow my corporate data to be outsourced.
As for this situation where the ASP seems like a done deal, I would look at the current data warehouse and ask, "Does it add any value to the company?" If it does, no matter how minor, I would keep it. During the time where we are building the CRM’s data warehouse, I would look at ways to align my current data warehouse with the data warehouse that will be produced for the CRM system. You know the old saying "If it ain’t broke, don’t fix it."
When you create a contract with the outsourcing company, you need to put in strong Ts and Cs (terms and conditions) that will make sure that the outsourcing company will deliver the functions and capabilities required. Make sure that you have penalties for late delivery or non-delivery. However, this will mean that you will have to come up with a strong understanding of what you want and the timeframe of delivery.
Larissa Moss: I do not believe that starting from scratch is a cost-justified approach, unless there is justifiable reason to do so. One such reason might be that nothing no data, no database, no program, no tool, no technology component can be salvaged from the existing data warehouse environment.
Current CRM capabilities are largely operational and collaborative in nature, not analytical. Any CRM analytical applications will most likely be customized data marts developed by data warehouse consultants and not CRM consultants. These data marts could be merged or added to any existing data warehouse capabilities, unless a completely unsalvageable situation exists as described above.
My main recommendation to this company is not to outsource the strategic and managerial components of data warehousing. One of the benefits of a data warehouse is to give a company competitive advantage. That usually means that a company wants to learn about its own business performance in relationship to customers and business partners in order to maximize on that performance before the competition does. This maximization is a dynamic process and the underlying analytical functionality of the data warehouse should be under the strategic direction and management of the company and not the outsourcing organization.
Clay Rehm: I do not recommend outsourcing the design and development of a data warehouse. The development of a data warehouse is not something that can be purchased off the shelf or done offsite. The true challenges of data warehousing lie in the difficulties of the data, and the business process changes, and the changes to your resources jobs. Simply put, data warehouse projects are systems integration, business process reengineering (BPR) and organizational change management (OCM) projects rolled into one. How can you expect to outsource this?
More specifically, the data challenges include lack of data quality, difficulty in mapping the correct sources to targets, integration, business rules of transformations and derivations, aggregations and reporting. How do you expect to capture all of these requirements offsite?
Bottom line: To really develop a successful data warehouse, one must consider all the aspects that include BPR, OCM, a true understanding of the data and integration of many disparate systems.
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