October 22, 2006

Webinar: Competing on Analytics

Tom Davenport's doing a free webinar titled: Competing On Analytics: Move Faster, Accomplish More, and Avoid Mistakes by Learning From The Best on October 31.

The agenda:

- What data-driven marketing is (and isn't)
- How marketing visionaries are using analytics for competitive advantage
- What specific tactics these early adopters believe are essential to their success (and what they'd do differently next time)
- How you can personally succeed as a marketer during these tumultuous times

What are you waiting for? Go sign up!

October 12, 2006

Mastering the Threat Matrix

Is your organization smartly managing its information security risks? In other words, is it applying risk intelligence to ensure the threats it now faces are managed in a disciplined way?

"IT groups face a barrage of demands from CEOs, CFOs, auditors, and boards to ward off new information-security risks such as subtler viruses, evolutionary hacking algorithms, and strategies that exploit wireless connectivity," write David Apgard, author of the new book Risk Intelligence: Learning to Manage What We Don't Know. "With resources already stretched thin, IT security executives will have to do ruthless triage. They must discern which security risks pose the most substantial threats, which are small enough to postpone taking immediate action, and—perhaps most important—which are threats for which IT lacks sufficient risk-evaluation abilities."

He urges us to take a disciplined approach to risk -- one that helps us evaluate all the discernable information security risks that we now face. Current approachs to risk assessment revolve around measuring the loss associated with worst case scenarios and the costs associated with mitigating them.

The problem with this approach is that aggregated risks that may be severe at an enterprise level may be different from those that show up at a business unit level. We also are biased -- or predisposed -- to focus on certain kinds of risks. These risks may or may not represent a prioritized threat to our organizations.

What are the biggest information security risks to organizations now?According to the Computer Security Institute, the ones that represent the greatest loss are:

=>VIrus Attacks.
=>Unauthorized Access.
=>Stolen Laptops or Mobile Hardware.
=>Intellectual Property Theft.

Phishing scams, in which a hacker misrepresents an email message in order to collect consumer data and passwords, also are costly to companies from a brand standpoint. Deloitte Consulting reports that the number of brands hijacked through such scams was up 18% from June (over May). In July, 157 online brands were attacked by such campaigns, according to its report.

Given the circumstances and the stakes, information security professionals are challenged to introduce disciplined ways of identifying and managing such threats.

Apgard urges such security leaders to "ask which risks your organization is skilled at determining. Then, separate high-risk intelligence projects from those for which the organization has low risk intelligence before deciding which to pursue first."

While Apgard's method is discussed in greater detail here, the critical factor to understand is that enterprises need methods not only to identify and measure their immediate risks but ways to evaluate the emerging threats that they don't yet understand as well. Risk intelligence helps us prioritize the threats that can truly hurt us.

July 27, 2006

Dirty Data: Calculate the Cost

Smart companies know there's a cost to dirty and defective data. Now, there's a tool offered by Baseline Magazine that helps you calculate just what that cost might be. "As a first step, you need to adopt standard definitions for metadata—the data about data—to guide the processing of all data inputs, regardless of whether they come from legacy or already transformed applications," it writes.." This worksheet will help you calculate the price your organization pays for incomplete, inconsistent and inaccurate records."

July 26, 2006

Analytical Competition

One company that is actively promoting the power of analytics and intelligence is Cary, N.C.-based SAS Institute. It is now actively running a campaign, dubbed "Competing on Analytics," that features management guru Tom Davenport. The campaign is designed to entice prospects with a promise that left-brain, analytical approaches might differentiate them and drive revenue growth.

Davenport, who has been named one of the most influential consultants by Consulting Magazine, is a recognized thought leader for his work in knowledge management, business process reengineering and the economics of attention (to mention a few of his works). Now, he has turned his attention to the power of analytics as a force for competitive differentiation. In fact, Tom tells me that his recent piece on the subject in Harvard Business Review has generated more reader comments and feedback than any other article he has ever written.

One wonders whether the interest in this sphere might fade a little bit, though, now that the economy has revived. Seems like companies get most interested in number crunching during downturns, and mostly because they are weighing an M&A deal. Hopefully, such campaigns can help fuel investment in the analytical realm.

July 09, 2006

The Database of Intentions

It's a notion that is elegantly presented in John Battelle's new book The Search. He calls it "the database of intentions." The idea is that every search entry with an Internet search engine contributes to a pattern that can be analyzed and used for prediction. Each search, he notes, offers a of what an individual wants to accomplish -- an itch to scratch, a problem to solve, a desire to fulfill.right

Aggregate the data from those searches and, pretty quicklly, you are able to see what trends are emerging (or fading out). Marketers, whose mouths begin to water, see it as a way to forecast what consumers will buy. The Internet, in other words, can see the future. As a recent article in the New York Times put it:

When people went to the home page of Google or Yahoo and entered a few words into a search engine, what they were really doing, he realized, was announcing their intentions. They typed in "Alaskan cruise" because they were thinking about taking one or "baby names" because they were planning on needing one. If somebody were to add up all this information, it would produce a pretty good notion of where the world was headed, of what was about to get hot and what was going out of style.

Or, as Battelle has put it, Web searches are "a place holder for the intentions of humankind — a massive database of desires, needs, wants, and likes that can be discovered, subpoenaed, archived, tracked, and exploited to all sorts of ends...Such a beast has never before existed in the history of culture, but is almost guaranteed to grow exponentially from this day forward."

The NYT piece noted that the database of intentions has become ever more real with Google's recent announcement of a new offering called Google Trends. You can check the popularity of any term using this tool. And you can match the popularity to geography. Now, one town mayor -- in Elmhurst, Ill. -- is stuck explaining why more people in his town type the word "sex" into their search engines than in any other place. But forget about sex for a minute. As the piece points out:

It's the connection to marketing that turns the database of intentions from a curiosity into a real economic phenomenon. For now, Google Trends is still a blunt tool. It shows only graphs, not actual numbers, and its data is always about a month out of date. The company will never fully pull back the curtain, I'm sure, because the data is a valuable competitive tool that helps Google decide which online ads should appear at the top of your computer screen, among other things. .

But Google does plan to keep adding to Trends, and other companies will probably come up with their own versions as well. Already, more than a million analyses are being done some days on Google Trends, said Marissa Mayer, the vice president for search at Google.

When these tools get good enough, you can see how the business of marketing may start to change. As soon as a company begins an advertising campaign, it will be able to get feedback from an enormous online focus group and then tweak its message accordingly.

Clearly, the database of intentions offers some promise to marketers. Expect to see Yahoo and Google begin to show linkages between searches and the searchers (demographics and psychographics). The challenge, however, is that searches are supposed to be anonymous. I imagine they will be less so in the future -- as the search engine folks offer enticements to encourage searchers to share data about themselves. That will help the search engine companies close the loop. Perhaps they will transform marketing. Perhaps they will merely predict the future.

June 07, 2006

Death of a Model?

It's interesting how the business models that were so enthusiastically lauded in the 1990s -- and, to some extent, throughout the recent downturn -- now seem to be under incredible stress. Consider the plight of Microsoft, Intel, Dell and now Wal-Mart. right

Microsoft is fighting a war on all fronts. On the desktop, it is under assault by Google, which just announced plans to launch a new spreadsheet. In the enterprise, it is threatened by Linux and the whole open source movement. And, on the consumer gaming front, I personally experienced the disarray surrounding the X-Box 360 when we tried to download a patch so my 10 year old son could play a prior version of Star Wars Battlefront II. (The X-Box 360 version is still not out and the process of trying to download a fix to a gameplayer from my modem was a 4-hour tour through virtual hell. Long story short: we discovered -- along with Microsoft tech support -- that you cannot sign up with an AOL email address.)

Intel, meantime, is completely bereft of vision, according to one senior technologist I know who works there. They have to put 50 people in a room to make a single (minor) decision. The business people -- who live in a world of PowerPoint projections -- can no longer communicate with the technologists because they no longer have an interest in or a technical grasp of the issues associated with the actual silicon. The company also is bogged down in India, hiring cheap labor to do stuff that doesn't really need to be done. HR, which is stretched thin all over the globe bringing the company's newest laborers up to speed, is an absolute no show in an organization that needs cultural resusitation. And did you hear? Dell just announced it would be collaborating with AMD, ending Intel's chip monopoly on this critical channel.

And speaking of Dell. It just missed its numbers just in time to see HP blow theirs out. The famed Dell model is under extraordinary pressure as IT buyers look for "trusted advisors" that can guide them through complex IT decisions. That isn't Dell. It is all about selling boxes cheap. But what happens when a big company stops fixating on cheap boxes because it has decided to virtualize the corporate data center and wants a strategic partner that can provide critical assistance throughout the whole delicate process? (Ugh, is this Bangalore I am speaking with?) Nor can the hip new Apple ads lampooning the weaknesses (and squareness) of the PC be good for business. Remember the good old days when Dell was considered the Wal-Mart of the PC industry?

Which brings us to Wal-Mart. It is taking blows from Target and Costco and Amazon, of course. But now we hear about a new threat. UK-based Tesco threatens to do to Wal-Mart what it has done to all its other competitors in Great Britain: kill them. In fact, it has blown away Wal-Mart-owned Asda. Tesco's UK market share in groceries has climbed to 31%, nearly double the 16% held by the Asda chain, according to market-research firm Taylor Nelson Sofres. Unfortunately for Wal-Mart, Asda accounts for about 10% of its overall business and 45% of its international sales.

Andy Bond, Asda's chief executive, stated last December that the unit is "operationally failing." As Mike Duke, the chief executive of Wal-Mart's international division, put it: "We took our eye off the customer." Wal-Mart says Asda sales were "slightly negative" and profits were "below plan" in 2005.

Tesco, on the other hand, is leveraging customer data and its Clubcard loyalty program to present its customers with extremely targeted offers and keep them coming back. While Wal-Mart relies on aggregated data about customer purchases, Tesco knows exactly what its individual customers purchase and prefer. "Its big weapon is information about its customers," as the Wall Street Journal puts it. "Tesco has signed up 12 million Britons for its Clubcard program, giving cardholders discounts in exchange for their name, address and other personal information." Here's one telling vignette in this week's Journal story:

Tesco statements mailed to Karen Masek, an actor and mother of two in London, reflect her preference for fresh produce, environment-friendly cleaning products and organic meat. "They definitely know your shopping habits," she says. "They've never sent me anything totally off the mark."

Recent mailings to Ms. Masek, 43, have included coupons for new vegetables, cooking sauces, and nuts or seeds. Ms. Masek, who made sure her nanny had a Tesco loyalty card as well, says she often redeems the coupons and uses Clubcard points to pay for video rentals.

Through its work with Dunnhumby, a research firm in which it has a majority stake, Tesco analyzes individual customer buying patterns and presents targeted offers. In fact, 80% of its customers are ClubCard members. The data, quite clearly, is an enormous competitive advantage.

So there you have it. The new models -- Google, AMD, Apple, Tesco -- are now strolling down the runways, showing off the newest fashions. By contrast, yesterday's models -- Microsoft, Intel, Dell, Wal-Mart -- are looking rather haggard and worn.

May 18, 2006

Dealing with Defective Data

Data quality isn't a terribly riveting concept on its face. But poor data is a problem that can contribute to many other corporate problems, particularly as data and analytics become increasingly critical to strategy.

"Bad data remains a major cause of botched marketing campaigns, failed CRM and data warehouse projects, angry customers, and lunkhead decisions," according to InformationWeek. "Despite all we know about the importance of data scrubbing and quality management, many companies are still using data that's redundant, incomplete, conflicting, outdated, and just plain wrong."left

Recognizing the risks they run and the costs they bear, many companies are now investing big money in efforts to get a better view of their data, integrate it and ensure it is scrubbed for quality. They recognize the interconnectedness of data quality and corporate performance. "Our marketing effectiveness leads to our sales effectiveness, which leads to our service effectiveness. Data quality is key to the success of that," says Chuck Scoggins, VP of customer solutions at Hilton Hotels. "If you don't have quality data, that whole chain breaks down."

As corporate managers become ever more dependent on performance management scorecards and dashboards, they start to see the critical importance of the data underneath. As the article suggests, the greatest hurdle associated with addressing the problem is the tendency to point fingers of blame. Business managers see data quality as an IT problem -- even though IT doesn't control the business processes that generate bad data in the first place. "Business has to accept the fact that it has primary responsibility for data quality. Data is a business asset," says Nigel Turner, a manager for data quality programs at BT Group (formerly British Telecom) in the late '90s.

How big is the problem? Stamford, CT-based Gartner contends that more than 25% of important data within large enterprises is inaccurate or incomplete in some way. Business result? One survey of 750 IT managers and business executives by the Data Warehousing Institute in 2005 found that 53% had experienced losses or increased costs due to data quality problems.

But there's no reason to throw up one's hands. BT found a way to address the challenge:

Rather than create a top-down, companywide program, Turner targeted line-of-business operations and identified a data quality "champion" in each to lead an information management forum. The groups targeted specific projects with demonstrable returns on investment, such as improving names and addresses in marketing data to reduce the number of letters sent to the wrong people and improving private-line inventory record keeping to increase the number of disconnected circuits returned to stock for reuse.

"We had to prove to BT that these things were worth doing," Turner says. "Data quality isn't very sexy." The original budget for the data quality efforts was a measly $30,000. As the project expanded, Turner's group developed a data quality methodology incorporating best practices gleaned from inside the company and from outside experts, and centralized data quality management. Recognizing that errors will creep into databases despite its best efforts, BT uses data profiling and cleansing tools from Trillium to identify and remove errant data.

The efforts have paid off: BT has realized as much as $800 million in aggregate savings by improving inventory management, boosting productivity through improved automated interactions with suppliers and customers, and reducing revenue leakage through more accurate billing. BT has parlayed its data quality know-how into a consulting business headed by Turner.

Other companies are putting data quality under broad "data governance" programs. The objective is to establish best practices managing, securing and using data. "It requires establishing a formal set of business processes and policies to ensure that data is handled in a prescribed fashion," according to the magazine. "Data governance includes standard definitions for data elements to be used throughout a company--just what a 'lost customer' is, for example--and metrics for measuring data quality, says Terry Haas, director of the enterprise data management practice at PricewaterhouseCoopers. Data governance also defines the data management roles and responsibilities of managers and employees and limits the ability to change data to designated 'data stewards.'"