The Federated Approach to Customer Data Integration
A fast, cost-effective way to create a single customer view.
Posted Oct 1, 2006
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When it comes to corporate data, companies often rely on an unruly collection of standalone source systems and databases dispersed across the enterprise. Typically, these disparate systems lack integration and thus the ability to share customer information across various business units and divisions. Yet in today's business world, customer data integration (CDI) often provides the key to competitiveness and profitability, industry experts say.

According to Gartner Research, "Through 2010, the creation of an accurate, timely and rich single view of the customer across channels and lines of business will be a key enabler for reducing costs, managing risk, and increasing revenue and profitability in customer-centric organizations." ("Magic Quadrant for Customer Data Integration Hubs, 2Q06")

Providing a single view of the customer enables companies to offer superior service and take advantage of new opportunities like cross- or upselling that they couldn't otherwise accomplish.

Selecting the Right CDI Model
The question for the enterprise interested in CDI then becomes, "What is the system best suited for the task?" A transactional hub system, which physically stores customer data from multiple source systems in a centralized database and shares it with users throughout the enterprise, offers a solution, but implementation can take years and millions of dollars to complete. Integration is a complicated process that requires redesign of data systems, data models, and data flow, plus restructuring of data ownership.

However, a federated approach to CDI enables enterprises to implement a system much faster. For many businesses, such a solution provides a more flexible and cost-effective alternative, especially for enterprises that want a solution that incorporates aspects of centralization, while enabling individual units to retain local control for security, regulatory compliance, and other business purposes.

Additionally, a federated deployment, which includes the ability to act as a hybrid model, provides companies with the option of evolving to a centralized transactional hub over time, while delivering a rapid return on investment. Companies that want a centralized system can migrate one source system or line of business at a time, or evaluate enterprise-wide data use patterns to determine the need or most effective way to centralize data to support business objectives.

Federated Architecture
A federated CDI system establishes a central enterprisewide master index that includes accurate information about customers derived from heterogeneous data sources maintained by separate but affiliated systems or organizations. The federated system unifies and distributes data in real time, but only the information that is needed for any given customer interaction in accordance with privacy, access control, data ownership, and other company policies.

Unlike a transactional hub approach, a federated solution does not require replication, migration, or modification of preexisting customer data. Legacy systems that maintain customer information continue to function as originally intended; the model does not modify processes running on systems throughout the enterprise. Instead, the system leaves data intact in central and remote servers (enabling individual business units to maintain data ownership for security and compliance purposes) and links data to its master index.

Rules are generated to govern data selection, qualification, and filtering to ensure only the appropriate information is presented to any given user via any client application. And, because rules are established using a software interface, administrators can alter them at any time to accommodate new business requirements and regulations. This capability provides the flexibility enterprises need to ensure their CDI system meets current and future business requirements.

Federated Feature Selection
Businesses interested in implementing a federated system must implement a solution that provides the comprehensive feature set necessary for effective CDI. In general, enterprises should choose a system that provides the following features and capabilities:

Flexible architecture: The federated system must allow companies to organize customer data according to their business requirements and priorities, whether they want to centralize all or some data and store the rest remotely.

Accurate identification: The system must resolve duplications and discrepancies among disparate and redundant data sources, and retrieve accurate details to provide a complete, single customer view.

Standardization: The system must provide consistent information about each customer regardless of the computing platform or application that uses it within the enterprise.

Real-time capability: The system should deliver responses in real time, enabling employees and support personnel to deliver fast, accurate information to customers and determine customer data quickly.

Scalability: The solution must scale to support hundreds of millions of records to accommodate future growth and expansion; it must continue to provide accurate information as the system scales; and it must accommodate new processors to support revised computing requirements.

Final Thoughts
While there are multiple ways to implement CDI, a federated model provides a flexible and nondisruptive solution for many enterprises. Companies that choose this method can preserve their existing data structure and leverage their investment in legacy infrastructure as they add new customer data integration capabilities that allow them to become more competitive and increasingly profitable.

About the Author
Scott Schumacher serves as chief scientist at Initiate Systems. Please visit www.initiatesystems.com

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