SEATTLE – Companies that want to avoid “”data paralysis”” should consolidate information about their business into a single view made accessible across the enterprise as a strategic weapon against the competition, executives told the the Teradata User Group conference Monday.
Attendees at Partners
2003 also heard statistics from the University of California at Berkely that indicate there will be more data created in the next two years than was created in the past 40,000 years combined.
“”That means there will be a decision-making crisis,”” said Mark Hurd, CEO of NCR Corp., speaking to an audience of about 2,700 people. “”The number of decisions executives will have to make daily is doubling and tripling.””
And if companies weren’t already snowed under with information about their customers and partners, it means organizations are headed for an information avalanche forcing them to eliminate information boundaries to avoid bad decision-making.
“”We are going to see an information explosion like we’ve never seen before and what will separate the winners from the losers is how they navigate the business paradox,”” said Hurd, referring to the need to manage increased amounts of data, while reducing costs and boosting revenue at the same time.
Part of the increase in information is attributed to indications that the Web will touch every aspect of business, including the management of physical assets and the tracking of a complete lifecycle of a product directly with Internet devices.
“”When you talk of enterprises today, roughly 30 per cent of the global 3000 companies are positioned to have one view. The other 70 per cent have their information organized in silos. Most companies think in terms of silos. It’s counter to how they are used to thinking. For example, banks tend to think in terms of mortgages, mutual funds etc.,”” said Hurd.
The challenge for the CIO is to “”connect the dots””, something that is difficult to do when what he/she wants to do is get rid of organizational boundaries. “”In the end, it all comes down to the leadership of a company that is willing to interrupt the status quo,”” said Hurd.
“”The CEO will always get good data, but the challenge is making it available to the masses. That’s the challenge, how do you democratize decision-making?”” said Eric Berg, chief administrative officer and former CIO at Goodyear.
And while technology is often touted as a means to an end, it is senior management that must decide what approach will best deliver one view of a company’s data.
“”Technology can’t do the driving, we have to do that ourselves,”” said Mark Lahr, manager, IT data warehouse with 3M Corp. “”As race car driver Mario Andretti once said, ‘If everything seems under control, you’re not driving fast enough’. Today every company is an information company but not all are prepared to deal with it.””
It wasn’t until the early 90s that 3M, which makes products ranging from pharmaceuticals to sandpaper and Post-It notes, realized it did not have a central view of its data warehouse, Lahr said.
“”We would ask a question about a customer and get several different answers,”” said Lahr. “”The first thing was to define the business goal and that was to have one single view of the enterprise. We also had to deliver measurable ROI.””
Lahr said the result was cost reductions and money-making opportunities at the same time. To date, 3M has seen US$800 million in worldwide savings and US$500 million in sales.
“”We couldn’t have done it without consolidating systems. We learned it’s important to keep the data warehouse close to the day-to-day business. Users get data in a format that is easy to use such as point of sale information, supply chain, price comparison – all online.””
Hurd also spoke about the “”enterprise paradox”” which sees organizations dealing with double and even trip amounts of data and at the same time increased pressure to reduce costs in terms of managing the data and creating one view of the enterprise without causing data paralysis.
“”The CIO is being hammered by the CEO about bringing down costs,”” said Hurd. “”You have to improve decision-making in an era of information explosion. CEOs and CFOs can no longer tolerate decisions based on multiple views.””
He said CEOs, CFOs nd CIOs are concerned about getting an enterprise view of their organizations. Some of that concern is driven by legislation, but it is also due to the demand to lower costs and produce higher ROI.
“”To avoid data paralysis you need leadership. The role of corporate leadership is to set a vision and direct decision-making and that is where processes and technology come into play. If someone asks what your data warehouse does, your upper management team should be able to answer that question,”” said Lahr.
Customers gathered at Partners 2003 this week, such as Mary-Jane Jarvis-Haig, senior manager of data warehouse with the Hudson’s Bay Company, say they are using data warehouse technology to better understand what customers want to buy and which stores should receive what products.
Retailers, such as Hudson’s Bay and Wal-Mart are considered front-runners in using customer and supplier data to their advantage and are among those “”paranoid about their marketshare””.
Gartner Group has predicted that by the end of 2006, if companies haven’t consolidated their data into one view they will no longer be considered competitive in their market. However, Teradata executives predict “”the game will be way over by then.””
To answer customer needs, Teradata senior vice-president Michael Koehler said the company will be increasing the number of engineers it has by 10 per cent to focus on creating products that focus on price/performance improvements as well as enhancing and simplifying integration and greater business continuity support.
As well, the company announced a 10 per cent increase in industry consultants and account executives. It will also focus on knowledge management to help customers determine best practices and business value modeling tools and greater analytic applications.
The conference continues Tuesday.