Why corporate IT groups can’t ignore customer data platforms

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Customer data platforms are packaged software that collects customer data from multiple source systems, combines it to create a complete view of customer, and makes the resulting database available to other systems. It’s a relatively new category: the term was coined in 2013 but few firms adopted the label until about two years ago.

Since then, expansion has come quickly. A report this month https://cdpinstitute.org/DL873-CDP-Update-0118 from the CDP Institute www.cdpinstitute.org found more than 50 CDP vendors, double the number from one year earlier. The industry’s employee count doubled as well. The increase was the combined result of growth among existing vendors, entry of new vendors, and repositioning of existing products as CDPs.

Despite this growth, many IT managers are still unfamiliar with CDPs. Most have been purchased by marketing departments and many run as services with little involvement by corporate IT. Even IT departments familiar with CDPs are often content to let marketers take the lead in selecting and managing them. This makes sense: marketing analysis and personalization are the main uses of CDP data. And many marketing departments have spent the past several years building their own marketing technology staff, reducing dependence on corporate IT resources.

Some trends within the CDP industry reinforce the separation of CDPs from the rest of the corporate IT infrastructure. The most prominent trend identified by the latest CDP Institute report was expansion of CDP functions from simply creating the unified customer database to also providing analytic and customer engagement capabilities, such as segmentation, predictive models, and personalized message selection. (Delivery of the personalized messages is still usually handled outside the CDP by systems such as email engines, Web content managers, or mobile apps.) Since these added functions are used only within the marketing department, systems including them more clearly belong under marketing control.

But other trends may pull corporate IT more deeply into the CDP picture. These include:

Broader use of customer data

Sales and customer service departments also need a complete customer view to do their jobs as well as possible. Data science, finance, planning and other departments want to include customer data in their own analyses and operational decisions. Company-wide access to customer data becomes even more important as digital transformation projects span departmental boundaries to create a consistent, superior customer experience. Although it’s technically possible for non-marketing users to take advantage of a marketing-run CDP, it makes obvious organizational sense for the central IT group to take responsibility for a system that supports departments across the company.

Regulatory requirements

The fast-approaching May 28 deadline for compliance with the European Unions’ General Data Protection Regulation (GDPR) for handling personal information has concentrated new attention on managing, protecting, and accessing customer data. CDPs can play an important role in meeting GDPR requirements by providing a central connection for all systems that gather or use customer information. But the high stakes and corporate-level responsibility built into GDPR make it likely that companies will want a corporate group to manage these functions. That’s likely to be corporate IT, not the marketing department.

Better technology

CDPs are by definition packaged software. That is, they contain preassembled components that deliver a complete set of customer data management functions. This contrasts with traditional data warehouses or data lakes, which corporate IT departments build by assembling or creating such components on their own. The packaged nature of CDPs is one of their greatest strengths: as with any build vs buy decision, it’s usually more cost-effective to buy an existing package unless truly unique corporate requirements exist. In most cases today, buying a CDP will be a better choice than running a custom development project. But new data management technologies continue to reduce the cost of key tasks such as incorporating new data sources, connecting customer identities, and letting external systems access the assembled customer data. This could start shifting the balance back towards custom systems built by corporate IT.

Whether corporate IT buys an existing CDP or builds an in-house alternative, there’s an increasing probability that IT will end up responsible for the resulting customer database. So it’s a good idea for IT managers to familiarize themselves with the options, even at companies where the marketing department has taken ownership of creating unified customer data. At a minimum, this will equip IT to help the marketers make sound choices. And if IT is eventually asked to take charge, it will help them to hit the ground running.

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