data warehousing supports corporate strategy at first american corporation rich egan pirun...

Data Warehousing Supports Corporate Strategy Data Warehousing Supports Corporate Strategy at at

First American CorporationFirst American Corporation

Rich Egan

Pirun Srimandakul

Stanley Lambert

SummarySummary Motivation Motivation Value / ContributionValue / Contribution Critque / AnalysisCritque / Analysis ConclusionConclusion ReferenceReference

AgendaAgenda

1990-1998, First American Corporation (FAC) 1990-1998, First American Corporation (FAC) changed its corporate strategy from a traditional changed its corporate strategy from a traditional banking approach (product/service oriented) to banking approach (product/service oriented) to a customer relationship-oriented strategya customer relationship-oriented strategy

Data warehouse called VISION helped make it Data warehouse called VISION helped make it happenhappen

SummarySummary

FAC in 1990FAC in 1990 lost $60 millionlost $60 million operating under letters of agreement with operating under letters of agreement with

regulatorsregulators

FAC in 1998FAC in 1998 profit over $211 millionprofit over $211 million innovative leader in the financial services innovative leader in the financial services

industryindustry

Summary ...Summary ...

Tailored Client Solutions (TCS)Tailored Client Solutions (TCS) FAC’s customer relationship-oriented strategyFAC’s customer relationship-oriented strategy customer at the center of all aspects of the customer at the center of all aspects of the

company’s operationscompany’s operations redesigned every aspect of its operation to meet redesigned every aspect of its operation to meet

its client’s needs as well as its own profitabilityits client’s needs as well as its own profitability shift in sales cultureshift in sales culture change business process and the incentives change business process and the incentives

related to themrelated to them pursued by five separate groups concurrentlypursued by five separate groups concurrently


VISIONVISION Data warehouse that stored information about Data warehouse that stored information about

client behaviorsclient behaviors 1980s - early 1990s, FAC had not made 1980s - early 1990s, FAC had not made

significant investment in IT. So, it was an significant investment in IT. So, it was an enormous catch-up effort.enormous catch-up effort.

First attempt fail because Internal IT seriously First attempt fail because Internal IT seriously underestimate the size and complexity of the underestimate the size and complexity of the projectproject


VISION ...VISION ... Second attempt, FAC contract with NCR (leader Second attempt, FAC contract with NCR (leader

in the data warehousing field) in the data warehousing field) to provide hardware, software, and consulting to provide hardware, software, and consulting

services.services. transfer knowledge to FAC employeestransfer knowledge to FAC employees VISION project use increment approachVISION project use increment approach


VISION ...VISION ... VISION architecture VISION architecture

data warehouse platform using NCR 5150M data warehouse platform using NCR 5150M configured with five SMP nodes running the Teradata configured with five SMP nodes running the Teradata Relational Database Systems (1.5 TB)Relational Database Systems (1.5 TB)

37 rolling months of history of analysis37 rolling months of history of analysis utilized over 100 source files that were extracted from utilized over 100 source files that were extracted from

26 legacy applications26 legacy applications


VISION ...VISION ... The process of populating the data warehouse The process of populating the data warehouse

took approximately 10 business daystook approximately 10 business days All data could be analyzed at any level of All data could be analyzed at any level of

aggregation, from bank-wide or line of business aggregation, from bank-wide or line of business down to individual account of client relationship.down to individual account of client relationship.

New system development processes to ensure New system development processes to ensure that changes to legacy systems not disrupt the that changes to legacy systems not disrupt the flow of data to the warehouseflow of data to the warehouse


Data warehouse TeamData warehouse Team required data warehousing skills changed over timerequired data warehousing skills changed over time

Design phaseDesign phase good data architecture backgroundgood data architecture background good logical data modelling skillgood logical data modelling skill strong understand of businessstrong understand of business

Build phaseBuild phase strong project managementstrong project management technical (programming) skillstechnical (programming) skills

Exploit phaseExploit phase strong technical backgroundstrong technical background excellent analytical skillexcellent analytical skill ability to translate the analysis into marketing planability to translate the analysis into marketing plan


Data warehouse Team ...Data warehouse Team ... faced problem with the key person leaving at critical faced problem with the key person leaving at critical

times resulting in delay of projecttimes resulting in delay of project attractive retention program attractive retention program

bonuses for completion of the projectbonuses for completion of the project commitments for additional trainingcommitments for additional training

contract to hirecontract to hire


Using VISONUsing VISON 20 marketing and 30 finance analysts were given direct 20 marketing and 30 finance analysts were given direct

access to data warehouseaccess to data warehouse marketing areamarketing area

use Cognos Corporation’s tools to create multidimensional use Cognos Corporation’s tools to create multidimensional cubes of datacubes of data

finance areafinance area use Cognos cubesuse Cognos cubes use Data mart created in an Oracle RDBMSuse Data mart created in an Oracle RDBMS

Data were organized around the customerData were organized around the customer slicing and dicingslicing and dicing

required different and more advanced skill set analystrequired different and more advanced skill set analyst existing analyst either move to other position or left the companyexisting analyst either move to other position or left the company


Application of VISIONApplication of VISION Client InformationClient Information

customer preferences and profilescustomer preferences and profiles share profile probably share preferencesshare profile probably share preferences better understand the preferences of high value customersbetter understand the preferences of high value customers

Flexible Product LineFlexible Product Line product profitability analysis for seniors accountsproduct profitability analysis for seniors accounts redesign product to create value both FAC and customerredesign product to create value both FAC and customer


Application of VISION ...Application of VISION ... Consistent ServiceConsistent Service

contact management systemcontact management system one-to-one relationship with customerone-to-one relationship with customer consistent and seamless serviceconsistent and seamless service representative can access the same customer information at any representative can access the same customer information at any

branchbranch

Distribution ManagementDistribution Management Distribution Management System (DMS)Distribution Management System (DMS) DMS calculate the best way to distribute product to customerDMS calculate the best way to distribute product to customer replace 22 higher cost hubs with 30 lower cost spoke locations replace 22 higher cost hubs with 30 lower cost spoke locations

with the same customer need, but over 20% return on with the same customer need, but over 20% return on investmentinvestment


Transformation at FACTransformation at FAC Major organizational transformationMajor organizational transformation

shift in mindset, thinking and cultureshift in mindset, thinking and culture VISIONVISION who can’t adapt to change left the companywho can’t adapt to change left the company 25-30%/3yrs turnover to 100%/1yrs turnover25-30%/3yrs turnover to 100%/1yrs turnover OO + NT = COOOO + NT = COO merely implementing a data warehouse would not merely implementing a data warehouse would not

solve FAC’s problemssolve FAC’s problems stated a goal of joining the “Sweet 16” financial stated a goal of joining the “Sweet 16” financial

services organization that lead industryservices organization that lead industry


DiscussionDiscussion FAC is remarkable becauseFAC is remarkable because

transform both technology infrastructure and transform both technology infrastructure and organization itself to implement a strategic visionorganization itself to implement a strategic vision

Henderson and Venkatraman argue thatHenderson and Venkatraman argue that the effectiveness of the strategic management of IT the effectiveness of the strategic management of IT

depends on alignment of four domainsdepends on alignment of four domains


Discussion ...Discussion ... FAC’s path in strategic alignment modelFAC’s path in strategic alignment model

Business Strategy --> Organizational InfrastructureBusiness Strategy --> Organizational Infrastructure Business Strategy --> IT infrastructureBusiness Strategy --> IT infrastructure IT infrastructure --> IT StrategyIT infrastructure --> IT Strategy

Kotter suggest that to succeed in an organizational Kotter suggest that to succeed in an organizational transformation we need to follow eight critical steps.transformation we need to follow eight critical steps. FAC’s success because it’s transformation followed FAC’s success because it’s transformation followed

Kotter’s prescription almost exactlyKotter’s prescription almost exactly


Discussion ...Discussion ... Ross et al argue that organization must invest in three Ross et al argue that organization must invest in three

IT assetsIT assets IT infrastructureIT infrastructure the relationship between business management and ITthe relationship between business management and IT IT human resourcesIT human resources

FAC successful implement in spite of its weak IT FAC successful implement in spite of its weak IT assets becauseassets because exceptional clear business visionexceptional clear business vision critical technical infrastructure : VISION and etc.critical technical infrastructure : VISION and etc. IT knowledge : understand existing business application and IT knowledge : understand existing business application and

generic data warehouse knowledgegeneric data warehouse knowledge


Discussion ...Discussion ... New IT strategyNew IT strategy

Data warehouse was different technology that would Data warehouse was different technology that would have to be managed in a different fashionhave to be managed in a different fashion

New system development processes to ensure that New system development processes to ensure that changes to legacy systems not disrupt the flow of data changes to legacy systems not disrupt the flow of data to the warehouseto the warehouse

Installing a data warehouse may be easily imitable but Installing a data warehouse may be easily imitable but transforming an organization clearly is not.transforming an organization clearly is not.

Others path in Strategic alignment model can be achieve Others path in Strategic alignment model can be achieve but only Business Strategy seem likely to generate strong but only Business Strategy seem likely to generate strong effect for organizational transformationeffect for organizational transformation


This paper tried to show that This paper tried to show that Decision Supports Systems could help a company aDecision Supports Systems could help a company a

nd make it viablend make it viable BUTBUT merely applying new technology can’t help solv merely applying new technology can’t help solv

ing our problemsing our problems Strategic alignment is significant for implement IT to Strategic alignment is significant for implement IT to

improve organization performance.improve organization performance. Key person is important to enforce successful organKey person is important to enforce successful organ

izational changeizational change -$60 million can become +$211 million with excellen-$60 million can become +$211 million with excellen

t organizational transformation supported by appropt organizational transformation supported by appropriate Information Technologyriate Information Technology

MotivationMotivation

While this paper put forth the idea that DSS helped turn aWhile this paper put forth the idea that DSS helped turn around FAC, it in fact did not show this conclusively. In factround FAC, it in fact did not show this conclusively. In fact, given the time frame of implementation it is doubtful that , given the time frame of implementation it is doubtful that the DSS had much impact and the turn around could havthe DSS had much impact and the turn around could have be due to improved economic climate and the re-enginee be due to improved economic climate and the re-engineering of the firm. The major value of the paper is to point ering of the firm. The major value of the paper is to point out that things do not happen in isolation and in drawing cout that things do not happen in isolation and in drawing conclusions one needs to look at the environment that exisonclusions one needs to look at the environment that exists at the timets at the time

Provide critical steps of Kotter for us to follow when we nProvide critical steps of Kotter for us to follow when we need organizational changeeed organizational change

Good example of effectively use Data warehousing to beGood example of effectively use Data warehousing to benefit organizationnefit organization

Value / ContributionValue / Contribution

I have to say that the paper was well written and I have to say that the paper was well written and provided a wealth of very interesting information about provided a wealth of very interesting information about an organizational re-engineering, but I do not think an organizational re-engineering, but I do not think there is much that can be pointed to, to support the title there is much that can be pointed to, to support the title contention that data warehousing supports corporate contention that data warehousing supports corporate strategy at FAC. strategy at FAC.

In addition, it appears that AmSouth acquired FAC In addition, it appears that AmSouth acquired FAC probably in the late 1999 or early 2000 period. It leads probably in the late 1999 or early 2000 period. It leads one to wonder just why AmSouth acquired FAC and one to wonder just why AmSouth acquired FAC and how much was management involved in that decision.how much was management involved in that decision.

Critique / AnalysisCritique / Analysis

FAC change their future by making radically change in FAC change their future by making radically change in their organization to follow new strategic vision. They their organization to follow new strategic vision. They successfully achieve their strategic vision because they successfully achieve their strategic vision because they transform both technology infrastructure and transform both technology infrastructure and organization with well alignment in four domains. They organization with well alignment in four domains. They follow organizational transformation steps of Kotter and follow organizational transformation steps of Kotter and choose appropriate method to implement new choose appropriate method to implement new technology. Using NCR’s service is also critical key to technology. Using NCR’s service is also critical key to success of FAC’s transformation. However, this success of FAC’s transformation. However, this strategy would have been impossible without a data strategy would have been impossible without a data warehouse called VISION.warehouse called VISION.

ConclusionConclusion

Cooper, B., Watson, H., Wixom, B., and Goodhue, D., “Data WareCooper, B., Watson, H., Wixom, B., and Goodhue, D., “Data Warehousing Supports Corporate Strategy at First American Corporatiohousing Supports Corporate Strategy at First American Corporation”, MIS Quarterly Vol. 24 No. 4, pp 547-567n”, MIS Quarterly Vol. 24 No. 4, pp 547-567

Kotter, J.P., “Leading Change: Why Transformation Efforts Fail,” Kotter, J.P., “Leading Change: Why Transformation Efforts Fail,” Harvard Business Review Vol. 57 #2, 1995, pp 59-67Harvard Business Review Vol. 57 #2, 1995, pp 59-67

Sprague, R., “A Framework for the Development of Decision Sprague, R., “A Framework for the Development of Decision Support Systems”, MIS Quarterly, December 1980,pp 1-26Support Systems”, MIS Quarterly, December 1980,pp 1-26

ReferenceReference

data warehousing supports corporate strategy at first american corporation rich egan pirun...

Documents

summary slide

vision data warehouse

warehouse summary

data warehouse team

data mart

flow of data

project summary

data warehouse marketing