An Acxiom White Paper Do-It-Yourself Customer Data Integration Hubs: The Advantages and Disadvantages

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1 An Acxiom White Paper Do-It-Yourself Customer Data Integration Hubs: The Advantages and Disadvantages

2 Do-it-yourself Customer Data Integration hubs: the advantages and disadvantages Acxiom pioneered the term Customer Data Integration (CDI) in 2000 based on the technology and service capabilities we developed. At that time, Acxiom defined CDI as creating a single, consistent and updatable 360 view of customer information across multiple, overlapping data sources. Today, CDI initiatives are included in most Customer Relationship Management (CRM) plans for achieving a single view of customers across many disparate databases. The information includes customer recognition data along with promotion history, demographic data, etc. This single view assists companies in communicating with customers consistently by always using the same information and communicates any changes of that information across all lines of business within the company. It also enables a more detailed understanding of the customer s needs, leading to more effective merchandising, privacy management, and customer support and service. Companies must decide whether they are going to tackle CDI by doing it themselves or whether they are going to take a full-service approach. For companies considering doing it themselves, they must weigh the pros and cons. Do-it-yourself (DIY) CDI advantages Early adopters are interested in DIY CDI hubs for several reasons, including: Sense of security Sensitive client data may remain in their facilities. Compliance Some governmental regulations require strong governance of enterprise data. IT departmental control May be worth the additional cost and overhead to control the process and adhere to customer contact. Ubiquitous access All sales, customer support and other channels may be able to tie directly to this hub. DIY CDI disadvantages Some inherent problems with the DIY CDI hubs include: Resource constraints Human resources are required to design, build, implement, adjust and track results. Resources with these skills are not easy to find or replace. Data challenges Isolated internal data: Without external linking or human contact, true and objective sourceof-the-truth data becomes outdated. Missing data: Limited ability to complete, correct or augment an address, or update a telephone number. Do-not-mail and privacy: Some privacy packages today do not include updated donot-mail, phone or information, nor do they recognize prank, bogus or incorrect data. In addition, state, federal and international governments are passing new privacy legislation every day. Rigid views: Limited ability to create and maintain multiple groupings or views of the customer. Throughput and scale-out limitations Hub technologies may optimize real-time performance but have limited capability to process large files quickly in a batch process. This directly affects the build process and on-going maintenance. Accuracy, complexity and costs Each hub vendor provides varying levels of customer information hygiene, matching and linking. Many use third-party provider software products for hygiene and linking, adding complexity and potential costs. Coordination of stakeholders The process can be lengthy to gain buy-in from all business stakeholders, determine what hierarchy to use for the single view, develop business rules, build the hub and spokes, and integrate the third-party software. Time-to-market On-your-own implementation times are usually so drawn out that it takes too long to show ROI to the organization.

3 What are the total costs of DIY CDI? Today, a do-it-yourself CDI solution is not a shortterm, turnkey business investment providing instant ROI. Early attempts to establish DIY CDI hubs have often failed to account for the longterm, unforeseen costs that may occur. When forecasting the total investment for DIY CDI, consider these costs: Software license fees (can be as much as $200,000 to $600,000 or higher) Annual software maintenance (as high as 30-40% of the initial purchase price and may be based on the regularly increasing list price of a software license) Initial hardware costs IT processing costs and data center overhead Database development costs Database maintenance costs People resources (can reach full-time equivalents based on the size of the project) Questionable accuracy of information and redundancy Lack of in-house CDI expertise Outside consulting What is the CDI full-service model? The utility and subscription CDI service models are a good alternative to populating and maintaining a do-it-yourself CDI hub. A full-service CDI model combines: Managed data quality Managed hardware and software Dedicated resources and customer contact expertise Contact change management External links Data (suppression, marketing, telephone, ) Industrial-strength data center throughput and scalable databases that are accessible via realtime transaction or batch Quality assurance A significant, on-going investment in marketing data and management A host for a CDI hub or transitional services to migrate to on-site processing hubs Expertise in focusing on the ever-changing privacy rules, governmental compliance and cultural mores for the target market External data or reference data Lost time to market

4 What about hybrid solutions? Hybrid solutions may provide the optimum answer. In the July 2006 edition of DM Review, Amberleaf President Larry Goldman drives the point even further. Goldman states, leveraging off-the-shelf technology and customizing it for your specific needs will be starting from scratch compared to using an outsourcer. The bottom line is that most outsourcing vendors will be able to streamline initial development and have you up and running in a production environment long before an in-house solution will be ready. 1 Acxiom has integrated hygiene, linking and recognition-processed information into several of the CDI hubs including those from leading industry providers. Acxiom clients who are behind in their own manual consolidation processes have requested Acxiom plug-ins for their DIY hubs. As new transactions come in via a call center or website, these clients use their matching logic to lookup the individual in their hub. If not found, they may send the transaction to Acxiom for linking. They may also use Acxiom s robust database to augment their client recognition data as well as to conduct analytics and segmentation. Acxiom s grid-based infrastructure can support substantial amounts of a company s data in a bulk-batch environment resulting in one of the most efficient methods to apply external data, data quality and external linking capabilities. Many companies expect to shorten build times by up to 50% by using Acxiom to handle these complex and cumbersome processes. A note on security Whenever possible, Acxiom uses dedicated private circuits (leased lines) for clients to transfer files. Acxiom also supports File Transfer Protocol (FTP) for clients requiring more flexibility. Due to the inherent security risks of FTP, Acxiom has instituted various protective measures including denying anonymous access, granting client access only through their Acxiom client services representative, and assigning unique user IDs and passwords to client accounts. Acxiom s Information Security Policy requires the encryption of all personally identifiable data transferred over public networks. Acxiom also recommends that our clients and agents use encryption for all data, and encryption requirements are part of Acxiom s contract negotiation process. Acxiom supports several forms of industry standard encryption methods for the protection of data transferred over the Internet, including without limitation Secure FTP and Secure HTTP (HTTPS) for network encryption and PGP/GPG for file encryption, and a number of encryption solutions for specific clients. A note on privacy Acxiom is a global thought leader in addressing consumer privacy issues and earning the public trust. We build great relationships with our clients and help them build great relationships with their customers by helping our clients turn their compliance challenges into opportunity. Acxiom fosters trust-based relationships by delivering customer and information management solutions that facilitate privacy compliance and preference management. Acxiom was the first company in the data services industry to appoint a chief privacy officer to advance policies and oversee compliance. Acxiom has a team of privacy specialists dedicated to understanding the complex issues of information flow and consumer choices, as well as creating and enforcing responsible privacy best practices. We continually educate every Acxiom associate about appropriate privacy policies and conduct.

5 Summary Backed by almost four decades of specialization in this industry, Acxiom brings several advantages to the classic CDI full-service model and to a hybrid service-and-hub solution, including: An in-depth assessment of your data accuracy, effectiveness, depth and breadth in the form of a gap analysis and a roadmap for remediation Data-cleansing verification software polished and perfected over the last 35+ years Acxiom is clearly the leader in delivering both fullservice and hybrid service-and-hub CDI solutions we provide guidance to our clients through a utilization of CDI that can help them drive a return on investment directly to the bottom line and help them in their efforts toward compliance with customer privacy preferences. The Acxiom CDI solutions help companies sell exactly what their customers need. Data-quality services that include proprietary address enhancements to create the best address for the client, and advanced algorithms for consolidating, enhancement and linking Change-of-address processing that can find movers who did not register with the *U.S. Postal Service External linking capability that provides true and objective source-of-the-truth data across name changes and different address histories Recognition services that enable business rules for further defining and focusing the single view, or for building household or departmental views The ability to deliver cleansed, consolidated and linked data, either on-site or hosted Consulting services for optimizing storage and efficiently integrating with all channels External data products offering a wide range of variables providing enterprise standards for multiple business applications including marketing propensity indicators and scores, privacy preferences and risk/fraud indicators Tools and expertise to aid in compliance with the USA PATRIOT Act, Fair Credit Reporting Act, and other state and local, federal and international laws and regulations 1 Everybody Wants to be Clean but Nobody Wants to Take a Bath, DM Review, July 2006, Larry Goldman, President, AmberLeaf. *Acxiom is a non-exclusive Full Service Provider Licensee of the United States Postal Service. The following trademark is owned by the United States Postal Service: United States Postal Service Acxiom Corporation. All rights reserved. Acxiom is a registered trademark of Acxiom Corporation. All other trademarks and service marks mentioned herein are property of their respective owners.

6 See how Acxiom can work for you. For more information, visit our website at or call: ACXIOM AC ELEC 1/07