Experiences Gained Implementing a Data Warehouse at a Large Retail Company

Transcription

1 Experiences Gained Implementing a Data Warehouse at a Large Retail Company Anders Lissola, Niklas Data AB One of the abiding principles of sound business practice is: Know your customer; know your market. The objective, of course, is to gain competitive advantage by building sustained customer loyalty, with products and services meeting, quite precisely, the demands of closely-defined markets. Sir Colin Marshall Chairman, British Airways, and President, Chartered Institute of Marketing Introduction There has been a lot of fuzz about Data Warehousing the last couple of years, but what does it really mean to the company in terms of increasing sales, reducing costs, etc.? This paper will discuss the questions above from a real-life example. The customer, Bonnierförlagen AB, is a leading book publisher in the Scandinavian countries. They have chosen the SAS System as a strategic tool and Niklas Data as a strategic a partner for implementing Data Warehousing. The decision implies that all statistics and analysis will be performed using the SAS System. Furthermore, we will also take a closer look at the implementation phase experience and the benefits of having a close partnership with the customer. The following definitions will be used in this text; customer or partner refers to Niklas Data s customer, member or consumer refers to Bonnierförlagen AB s customers.

2 Niklas Data Group Niklas Data Group has for the last 10 years been 100% focused on supplying tailor made business solutions for our clients, using the SAS System. Our business idea, to be the leading SAS Quality Partner in Europe, has been very successful and Niklas Data Group is a rapidly growing organisation with more than 100 dedicated SAS consultants. A key issue for success is understanding the conditions under which our clients operate. We therefore have a business oriented organisation split into five main sectors: Manufacturing and pharmaceuticals Banking and insurance Trade and service Public sector Telecommunications Niklas Data s current business solutions fall into four major categories: Data warehousing Data mining IT service Systems integration To fully utilize prior experience as well as stay in the forefront in our field, we maintain internal competence developments teams in each of these areas. Our long term commitment to quality has been recognized by both our clients and SAS Institute. We were certified as one of the first SAS Quality Partners in 1994 and we are a charter member of SAS Institute s Rapid Warehousing Program (initiated in 1995). In the increasingly international business environment of today our work becomes even more global. Many of our clients are large multinational corporations with the need for business partners that can support them independent from national boundaries. Our European headquarters is located in Amsterdam and we currently have offices in Sweden (3), Norway and Finland. With this geographical spread, Niklas Data is within a couple of hours from any of our customers in Europe. There are several new offices planned currently for other countries in Europe. The real-life example The example used to exemplify these issues is Bonnierförlagen AB which is a leading book publisher in the Scandinavian countries. The business involves publishing houses, music/film clubs and book clubs with approximately a 60 % market share of the Swedish market. The operation revenues are 2500 MSEK (1995) with more than 1000 employees. Bonnierförlagen AB operates in a mature and stagnant market characterised by a competitive market resulting from new media and competition for customer/consumers time. Given the competitive nature of this business, the demand for increased knowledge of the market and customers is paramount.

3 The scenario leads to a need to focus on increasing profitability, reducing costs and a change of IT-strategy as well as a new type of organisation. Why the SAS System and Niklas Data? The customer has chosen the SAS System as their strategic tool for data warehousing and Niklas Data AB as their strategic consultancy partner for implementing Data Warehouse solutions. The key issues for the customer, included selecting a external partner for implementing the data warehouse and utilising the SAS System as the tool were: A comprehensive solution The SAS System together with a experienced consultancy, Niklas Data, could deliver a comprehensive solution (a one-tool-solution). Experience Niklas Data has documented experience in project management and implementing data warehouses. Transfer of knowledge The customer emphasised the need to manage the warehouse themselves after the implementation phase. This is also something that Niklas Data recommends. In practice it means that the delivery and production phase must be carried out in a very close co-operation to ensure that the customers have the necessary skills and understanding to manage the warehouse in the future. Reliable and profitable partners The need for a profitable and a long-term partner was crucial to the customer. Both SAS Institute in Sweden and Niklas Data AB have an established reputation in the market. Another important aspect was the need for a partner with a capacity to meet the customer s demands in terms of consultants etc. Support independent of national boundaries Since the customer operates in all of the Scandinavian countries, support on site is a major concern. Niklas Data meets the geographical requirements of the customer. Even if the warehouse is developed at the head office it is important to have a on-site support when it comes to specific adjustments for each country. Why a data warehouse? Due to a market situation discussed previously, the need for increasing profitability for existing members, decreasing the cost for recruitment of new members and increasing returnon-investment has become clear. The data warehouse provides the organisation with a tool for handling these challenges. There are two major issues at this stage.

4 The first issue is to analyse the consumer s behaviour and preferences and thereby be able to characterise the customers. The objective with the approach is to gain satisfied and more frequently buying customers (refer to picture 1). Successful segmentation is the product of a detailed understanding of your market and will therefore take time. Segmentation is appropriate for those markets where it is essential to combine individual customers/consumers together into larger buying 'units' to ensure your marketing activity is both cost effective and manageable." Malcom McDonald and Ian Dunbar The second issue is to create more effective and less expensive customer recruitment campaigns with a higher return-on-investment. This is achieved through the data warehouse where you can pin-point the target groups (targeted marketing) for the campaigns in a more efficient way (refer to picture 1). The cost of recruiting new members is thereby reduced and better return-on-investment per campaign is achieved through better knowledge of which consumers are more likely to be profitable in both the short and long term. Prospects New customers OLTP Increase profitability Control Offers Campaign Groups Decrease Costs Data Warehouse Analysis Selection Activity Groups (active members) Analysis OLAP, reports etc. Optimising recruitment by selection Picture 1. The Implementation The use of the SAS System today (already implemented or under construction) Recruitment - targeted marketing - create campaign groups/mailing lists - avoid duplicate memberships

5 Statistics - book club memberships - sales, consumer behaviour etc. Forecasting Statistical analysis - recruitment of new members - categorisation of members - data mining The experience The major experiences obtained during the implementation phase were: The need for a new organisational form. The customer has set up a new department for marketing analysis to support the business operations. Cost/Benefit Work with prototypes. Specify the system s functions in detail. Involve committed employees. Interest users by creating data sets in an early stage to be used by SAS standard modules such as SAS/INSIGHT software etc. This approach will not only raise the users interest but it will give you early indications if the production system contains incorrect data. Focus the projects on the appropriate business area. Work with releases instead of having a never ending project. Work with clean data. Data validation should be a separate project (if possible), especially when you are dealing with older production systems. The reasons for this is if you cannot deliver a system with reliable data, the user will most certainly start to mistrust the system. You will also have a project with problems in meeting the deadline if you build the system based upon invalid test data and constant changes in the programs will have to be made. The amount of effort it takes to ensure this can not be underestimated when working with older production systems.

6 The benefits The benefits besides the objectives mentioned in the Why a data warehouse section are listed below: A decreased dependency of the IT department. The ability to focus on the information you need and not what you have. An example is the most frequent common enormous paper reports. The ability to increase profitability by supplying means for better control of the production system through analysis. A faster access to relevant information. Partnership Significant for the implementation, as well as all the initial work, is that it has been conducted in a close partnership between the customer and Niklas Data. The foundation for the partnership between Niklas Data and the customer is based on several corner stones. Some have been mentioned in the Why Niklas Data? section, and include Niklas Data being a reliable and profitable company and having the ability to support the business partners independent of national boundaries etc. The key is We help each other to reach our goals. We were invited at a very early stage to discuss future projects. The benefits for both the customer and Niklas Data are many. While the customer receives notification that the project plan is possible, Niklas Data has the opportunity to plan the appropriate staffing of the project. Furthermore, long-term partnerships guarantee knowledge of the customers business. This reduces the development expenditure while making joint efforts more efficient. The last and most important cornerstone foundation of the business experience is TRUST. This facilitates an open environment for future and continued discussions. In the end a long-term partnership with the customer leads to MORE PROFITABLE business for both the customer and Niklas Data. By Anders Lissola Niklas Data AB P.O. Box 1192 S SUNDBYBERG SWEDEN Phone Fax SAS is registered trademark of SAS Institute Inc., Cary, NC, USA. Niklas Data and the Niklas Data logo are registered trademarks of Niklas Data.