In previous articles, I have written about the "Market Intelligent Enterprise" and how a customer data warehouse (CDW) is a key enabler for companies to successfully implement customer relationship management (CRM) solutions. At the same time, we continue to see CRM as being a strategic imperative for companies across many industries around the world.

A few challenges must be addressed to successfully implement a customer data warehouse. While many of these will be familiar, it is more important than ever that these principles be applied in building your CDW as it is likely that this will be the largest, most complex and most important data warehouse that your organization will implement. The following insights are based on first-hand experience and, when instituted, will contribute greatly to your CDW and CRM success.

1. Senior Management Involvement. This may sound like a trite warning, but unfortunately it is too often missing in even the largest scale projects. Without senior management support, what begins as an exciting strategic project loses momentum as priorities change. Often, a CRM initiative will begin in a single functional area (e.g., sales, customer service, marketing) and will gain enough approval and budget to begin the project. However, this support will not be adequate to sustain your efforts once the full scale and breadth of the project becomes clear.

2. Balanced Approach. Experience on these engagements suggests that it is critical to take a balanced approach which combines technology, process and organization. When any of these areas are not adequately addressed, it significantly decreases your chances for success. Most often overlooked are the business processes that support the organization. Embracing a CRM philosophy at a senior level and building the technical infrastructure with the best tools will not bring the value that is expected unless you are prepared to begin some process reengineering. The traditional way of marketing and customer management must change from the entrenched business processes currently in place to a much more open, collaborative customer-centric approach.

3. Top-down, Bottom-up Approach. Most companies begin with a single CRM application (e.g., target marketing, churn analysis, etc.) in order to address a high-priority need. This approach also helps ensure the delivery of short-term, tangible results. However, it is imperative that the first project be undertaken with a view toward how this application will become a part of your company's overall CRM architecture. This is a significant issue as we continue to see executives struggle with the lack of data integrity, data redundancy, unsupported technologies, etc., associated with multiple, non-integrated customer data marts.

4. Integrated CRM Architecture. To be effective, the CRM architecture must bring together all of the relevant information about a single customer or household. Typically, this involves information from your sales force automation (SFA) system, customer care, marketing and ERP systems, as well as external information such as customer demographics. Herein lies the value of the customer data warehouse as it serves as the central repository responsible for collecting accurate customer information. At the same time, once collected and integrated within the CDW, this information must be made readily available to every customer touchpoint throughout the enterprise. This is the only practical way to implement a "one face to the customer" program. It is only through the successful implementation of a CDW containing integrated customer information from all of the front-office systems that companies are able to gain the full value and benefit from front-office technology investments.

5. A Solid Foundation. Although you may expect any major project to include requirements analysis as the logical first phase, it is often overlooked in CRM because the organization believes that they already know what they want and that everyone has a common understanding of these priorities. First, this is rarely the case. Second, there are a few key factors necessary for good requirements analysis that you should consider:

  • A good analysis for CRM must have business people leading it with IT playing a supporting role. If you do not have broad and deep functional expertise actively involved, you cannot complete this phase.
  • The requirements definition is not a wish list. While you do want to gather all requirements, you must balance this with the core functions of the system to ensure an acceptable cost-to-benefit ratio and confirm that the requirements are designed with the organization's priorities.
  • Incorporate best practices from outside your company and your industry. There are many excellent examples of companies that have achieved tremendous results through CRM. You should integrate these ideas and best practices into your analysis and design, as appropriate

6. Technical Performance. Again, this may sound incredibly obvious, but it is a challenge particularly relevant to customer data warehousing projects. By its very nature, when a large retail bank, insurance company, airline, telecommunications company, retailer, etc., contemplates storing information at a customer level, the CDW will be quite large. In fact, it is not uncommon for a single marketing data mart to be several terabytes in size. This is further complicated by the fact that the CDW is not like a financial reporting system where reports are generated monthly and can take hours to run. This CDW system will be the heart of your customer management system and, as such, you will need to be able to access up-to-date information to address immediate customer opportunities and issues that call for near real-time communication across the enterprise. Therefore, planning for a flexible, scalable technical architecture from the outset will pay big dividends in the long run.

7. Skill Sets. It is not realistic to expect that all of the staff you currently have in customer-facing roles possess the skill sets necessary to use the new functionality or the new way of thinking that is required. The current popularity of CRM and data warehousing has turned these into "hot market skills," increasing the challenge of recruiting trained resources even more. There are two basic options to address this internal skill shortage: 1) hire individuals with the requisite skills, or 2) train or re-tool your in-house staff. You should be aware that it is not easy or inexpensive to find experienced CRM professionals, especially those with relevant DW experience. Training your current employees should begin early in the project life cycle as part of a formal communications and change management process. Many companies also engage consultants to assist with these projects and help fill some of these skill set gaps. In these cases, you should ensure you are maximizing the transfer of knowledge from the consultants to your staff.

8. Preparation for Post Imple-mentation. Whether this is a project that is being undertaken entirely in house or you are using external resources, you should be well prepared for the implementation phase. Once the core system has been rolled out, some of the project team is likely to be redeployed into other roles as the system functionality is transitioned to the end users. However, it must be recognized that the resources that must be able to effectively use and maintain this system are not always the same as those on the development team. Therefore, this should be planned for well in advance. To further reinforce the importance of this point, I should mention that it has been our experience that CDWs typically require more "care and feeding," including security, than other DWs due to the dynamic and sometimes sensitive nature of this information.

Despite these challenges, companies are implementing CRM solutions and CDWs at an unprecedented rate. In fact, many firms view these solutions as being the enabling technology necessary to implement their corporate strategies. When implemented successfully, these companies are achieving a fast payback on their investments as well as effecting an entirely different approach to interacting with their customers. For those organizations that have a data warehouse in place or are building one, CRM represents a significant opportunity to demonstrate real value for your investment. A CRM initiative is a truly strategic undertaking. By incorporating the principles described, you can contribute to making your company a customer-centric organization focused on delivering the "right service" to the "right customer" through the "right channel" at the "right time."

David Harberson, a principal consultant in PricewaterhouseCoopers' CRM practice, was a contributory author for this month's column.

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