Analysis & Commentary:

INTERVIEW WITH SCOTT NELSON, VP & RESEARCH DIRECTOR, GARTNER
by Alan Beck, editor-in-chief

Gartner's Scott Nelson presented a keynote address at TDWI's Anaheim Conference entitled "Data Warehousing and CRM: Fad or Future of the Industry." Following is an exclusive interview with Mr. Nelson:

DSstar: What are the most crucial errors that businesses make when synthesizing their CRM and data warehousing efforts? How can these be avoided?

NELSON: I actually have a note that I am working on this subject. The top 10 reasons for CRM failure are as follows. As you can see, they have nothing to do with technology. That is because CRM is a business strategy, not a technology:

1. Management has little customer understanding or involvement
2. Rewards and incentives tied to old, non-customer objectives
3. Staff culture does not have a relentless focus on the customer
4. Limited or no input from the customers' perspective
5. Thinking technology is the solution
6. Lack of specifically designed, mutually reinforcing processes
7. Poor quality customer data and information
8. Little co-ordination of multiple departmental initiatives and projects
9. Creating the CRM team is left to last and lacks business staff
10. No measures or monitoring of benefits and lack of testing

DSstar: How can small and mid-sized businesses economically integrate their CRM and data warehousing technologies?

NELSON: This is a tricky problem. The simple answer is to use the ODS (operational data store) provided by the vendor's solution. The problem is that this can be very limiting, and in some cases, inadequate for the needs of the firm. The key for any firm, regardless of size, is to have a plan that is accurately sized to the needs of the firm, then stick to that plan. Think strategically and invest tactically. That will allow you to not overspend, and to not reach a technology dead end.

DSstar: Are there any ways that CRM and data warehousing do not complement one another? Why or why not?

NELSON: Yes. Much of CRM is operational in nature. Much of data warehousing is analytic in nature. CRM needs analytics, and analytics needs operations to use the info. But often if a CRM project tries to use data directly from the warehouse, it is too old, too inaccurate (even small mistakes are noticed at a customer level), or too slow in coming (in real time environments). As such, you need to have an architecture that leverages the warehouse for analytic purposes, and can support and enterprise ODS for operational needs.

DSstar: What are the best ways firms can address privacy concerns when synthesizing CRM and data warehousing?

NELSON: Best way to do this is be committed to privacy, and be quick to listen to customer concerns. Much of privacy is perception, but if the customer is fearful, it is a valid issue. We recommend that clients have privacy officers to watch this area. In addition, opt in and opt out strategies should be used to protect clients interests. Clients also do well to communicate clearly what their privacy policy is. None of this is unique to a warehouse, but the warehouse is a good vehicle to make sure all data comes from one source, which can be a gatekeeper to make sure that privacy is not violated.

DSstar: How will CRM and data warehousing mutually impact one another as they evolve? What will the future of these technologies look like?

NELSON: Data warehousing, like business intelligence, is a technology in search of a problem. CRM is that problem. CRM needs warehouses to feed their insatiable data needs. DW needs CRM to generate the ROI to justify these investments. In the long run, I don't believe any serious CRM project will exist with an DW, and the vast majority of new warehouses (80%+) will be built primarily to support CRM.

DSstar: What else should DSstar readers know in order to handle CRM and data warehousing together?

NELSON: That about handles it. Come to the presentation to see how it all fits together.