“What is truth?” asked Pontius Pilate two thousand years ago.
Delegates at the 2005 Teradata Partners User Group Conference and Expo being held in Orlando, Fla. this week should be able to answer that one.
A key focus area of the conference was the importance of a single, consistent view of the truth…about customers, sales, and revenues. And that, it was determined, has far more value than disjointed bits of information from different business units.
Three thousand delegates representing some of the biggest companies across the globe attended the event. All use Teradata’s enterprise data warehouse (EDW) systems to improve their businesses. A division of NCR Corp., Dayton, Ohio-based Teradata is a vendor of enterprise data warehousing, analytic applications and data warehousing services.
Now in its 19th year, the conference offers many candid customer sessions that provide lessons learned from some of the earliest data warehouse pioneers, such as St. Paul, Minn.-based 3M Corp.
3M implemented its first data warehouse back in 1996, so the company has almost a decade’s worth of experience and battle scars to share.
The company originally implemented data marts within its organizational silos, said Mark Lahr, manager of IT integration services at 3M, who presented the session. Renowned for developing the ubiquitous sticky note, the company actually has seven major business areas in health care, transportation, and communications, in addition to office products.
Initially, the business case for the data warehouse was to develop better customer focused marketing, driven by a business issue 3M was struggling to resolve. Different 3M subsidiaries were competing against each other on price – the same product sold in one division had a different price in another, creating odd situations where customers shopped around the same company for the best price. The company wanted a single view of its customers and consistent pricing of the products sold to them.
From there, the business case has evolved over the years as the business landscape changed and new uses for the information emerged. For example, product data – descriptions, fact sheets and pricing – developed in the first data warehouse was used to populate 3M’s first website.
The data warehouse evolved to tackle new issues, such as compensation for its sales force. A company such as Ford, for example, might buy 3M products from both direct and indirect channels, but 3M lacked accurate indirect sales data that could allow it to manage and compensate its sales divisions appropriately.
In 2001, 3M’s goals changed when the economy turned, and a new mood of fiscal conservatism descended on major American businesses. Pointed management questions such as: “How much business do we do with Texas Instruments annually?” resulted in several different answers.
Cost reduction was the order of the day, and the company realized further consolidation of the data warehouse into an EDW would be necessary. Indirect costs – defined as costs not directly associated with creating a product – became a target of intense management scrutiny.
The company developed an EDW to generate consolidated reports showing the results of cost reduction efforts across divisions, with drill down views within each division clear down to the departmental level. This was cost reduction via public embarrassment, joked Lahr, which worked wonders. The EDW helped the company sniff out about $700 million in savings over the 2001-2003 period.
Senior executives and business users are sold on the utility of the EDW and very supportive, said Lahr, but oddly enough, it is the infrastructure IT group that remains to be convinced. In spite of the glowing news about ROI and cost reductions, his traditional and more technically-minded IT peers view the EDW as a big capital expense.
Going forward, implementing a system of data governance to ensure consistent data management and quality – another recurring theme at the conference – and populating 3M’s recently acquired PeopleSoft system with sales data are the company’s new goals for its EDW.