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LETTERS TO THE DEAD AND OTHER TALES OF DATA DERELICTION A retailer once launched a targeted customer marketing campaign that had but one tiny flaw: a fifth of the intended recipients were dead. The letters for them – addressed, with impeccable accuracy, to ‘Dear Mr Deceased’ – urged them to ‘wake up’ to what the company had to offer. This mailshot mishap is part of a nightmarish list of corporate data blunders drawn up for the Financial Times by Detica, a business and information technology consultancy. It includes the tale of the insurance company that was intrigued to discover the majority of its customers were astronauts – until further investigations showed that lazy sales staff eager to close deals had simply chosen the first option available on the pull-down menu of jobs. Whether grotesque or hilarious, the bloopers have a unifying theme that any business ought to note. As companies develop ever more sophisticated ways of using data to help win new business and cut costs, the risk is that they pay too little attention to the quality and organization of the underlying raw information. At best, this damages efficiency; at worst it can destroy relationships and hamper efforts in crucial areas such as fighting fraud. ‘Firms have always seen the data as the water that flows around the system’, says Philip Powell, professor of information management at the University of Bath’s School of Management. ‘They have invested a lot in the system – the water pipes – without really recognizing the value of the water’. It is a problem that has come increasingly into focus as technological advances have opened up new methods of collecting, combining and storing data. Managers have greater quantities of information than ever before, but are in some ways less well-informed because they do not order it well. Bill gates, Microsoft chairman, claimed last year that almost a third of information workers’ time was spent searching for data, costing $18,000 per person per year lost productivity. Those hundreds of forgone hours are in part a consequence of the explosive growth of the space available for information storage. While a bulging filing cabinet is a daily reminder of the need for data discipline, electronic file dumps can grow to gargantuan proportions unseen. They are monitored and cleansed only by computer experts, rather than by information management professionals applying a librarian’s discriminating eye. Information is sometimes duplicated or out of data. A common fault is that companies lack a single docket on each customer, supplier or employee, instead spreading information across files held in numerous places by many departments. In the absence of a master copy, updating is done piecemeal, generating horrors such as the ‘Dear Mr. Deceased’ letters.
TRƯỜNG ĐẠI HỌC NGÂN HÀNG TP.HCM KHOA CÔNG NGHỆ THÔNG TIN MÔN HỆ THỐNG THÔNG TIN QUẢN TRỊ BÀI TẬP TÌNH HUỐNG HỆ ĐẠI HỌC CHÍNH QUY TP.HCM - 2010 BÀI TẬP TÌNH HUỐNG - MƠN HỆ THỐNG THƠNG TIN QUẢN TRỊ - Hệ Đại học quy CASE STUDY 1.1 LETTERS TO THE DEAD AND OTHER TALES OF DATA DERELICTION A retailer once launched a targeted customer marketing campaign that had but one tiny flaw: a fifth of the intended recipients were dead The letters for them – addressed, with impeccable accuracy, to ‘Dear Mr Deceased’ – urged them to ‘wake up’ to what the company had to offer This mailshot mishap is part of a nightmarish list of corporate data blunders drawn up for the Financial Times by Detica, a business and information technology consultancy It includes the tale of the insurance company that was intrigued to discover the majority of its customers were astronauts – until further investigations showed that lazy sales staff eager to close deals had simply chosen the first option available on the pull-down menu of jobs Whether grotesque or hilarious, the bloopers have a unifying theme that any business ought to note As companies develop ever more sophisticated ways of using data to help win new business and cut costs, the risk is that they pay too little attention to the quality and organization of the underlying raw information At best, this damages efficiency; at worst it can destroy relationships and hamper efforts in crucial areas such as fighting fraud ‘Firms have always seen the data as the water that flows around the system’, says Philip Powell, professor of information management at the University of Bath’s School of Management ‘They have invested a lot in the system – the water pipes – without really recognizing the value of the water’ It is a problem that has come increasingly into focus as technological advances have opened up new methods of collecting, combining and storing data Managers have greater quantities of information than ever before, but are in some ways less well-informed because they not order it well Bill gates, Microsoft chairman, claimed last year that almost a third of information workers’ time was spent searching for data, costing $18,000 per person per year lost productivity Those hundreds of forgone hours are in part a consequence of the explosive growth of the space available for information storage While a bulging filing cabinet is a daily reminder of the need for data discipline, electronic file dumps can grow to gargantuan proportions unseen They are monitored and cleansed only by computer experts, rather than by information management professionals applying a librarian’s discriminating eye Information is sometimes duplicated or out of data A common fault is that companies lack a single docket on each customer, supplier or employee, instead spreading information across files held in numerous places by many departments In the absence of a master copy, updating is done piecemeal, generating horrors such as the ‘Dear Mr Deceased’ letters Trang / 40 BÀI TẬP TÌNH HUỐNG - MƠN HỆ THỐNG THƠNG TIN QUẢN TRỊ - Hệ Đại học quy Bridget Treacy , partner at Hunton & Williams, the law firm, says companies are sometimes ignorant of basic facts about information they hold, who has access to it, and what it is being used for ‘If people are not paying attention to it, of course there are going to be blunders’, she says A more suitable snare facing companies is their failure to consider the various possible meanings of the information they gather The classic example is the sales spike that causes marketing people to sniff an opportunity, when a risk manager would scent danger For instance, a customer starting a credit card splurge might receive an offer for an upgraded deal, when a better response would be to launch an investigation into card theft and fraud In other cases, companies embarrass themselves because their data storage systems have not kept pace with the complexity of the information they hold One Detica story concerns an insurer that was unable to store separate addresses for a couple holding a joint account When the wife left her violent husband, she sent her new address to the company, which promptly wrote a confirmation note to her old home, where her ex-husband was living The company had to pay to rehouse the ex-wife in a new, undisclosed location The need for companies to improve their data management is becoming increasingly urgent as the flow of information quickens and the uses to which it is put become more complex Businesses must manage an increasing amount of ‘unstructured data’, such as voice recordings and pictures Above all, the challenge for the companies is to make sure they – and their employees – use information in ways that make them look clever rather than ignorant, or event heartless Death, says David Porter, Detica’s head of security and risk, is the great test of a company’s data deftness After all, no one wants to emulate the company personnel department that punctiliously sent out a slew of cheques for £0.00 to its ‘pension leavers’, causing distress to the relatives of all those ‘ who had ‘ left’ (Michael Peel, FT.com site, published September 2007) Questions: The case study identifies a number of problems with the way companies store and mange information Using your own words, identify and describe these problems According to the case study, Bill gates has claimed that almost a third of information workers’ time is spent searching for data Why you think this is ? What are some of the consequences of relying on inaccurate information ? Refer to the case study in your answer Trang / 40 BÀI TẬP TÌNH HUỐNG - MÔN HỆ THỐNG THÔNG TIN QUẢN TRỊ - Hệ Đại học quy CASE STUDY 1.2 SUPPLY CHAIN: DEMAND FOR MORE DATA HAS WIDE IMPACT For US electronics retailer BestBuy, having the right data really matters Research carried out by the company found that if a product’s height was wrong by as little as half an inch, customer returns increased by 3.4 per cent For a company such as BestBuy, the trend towards flat-screen TVs – which customers often want to mount on a wall – has turned product descriptions that most shoppers once ignored into a dealbreaker It is part of a wider trend for consumers to want to know much more about the products they are buying From food to electronic goods, pharmaceuticals to cars, consumers are demanding far more information on a product’s origins, its ingredients or materials, how it was shipped and even its impact on the environment But this information is absent from many companies’ supply chain management systems- or worse, it is information they simply not have The problem is all the more acute because regulators are asking companies to retain more information about the products they sell, in some cases for six years or more But extended supply chains and a growing use of contract manufacturing are making it hard for companies to say, with certainly, what is in their wares ‘Senior executives are trying to understand the risks to their business, for example ingredients that can cause an allergic reaction but are not correctly identified’, says Bryan Larkin, director of strategy for retail and CPG industries at data synchronization company GXS ‘Bad data can result in brand damage’ Improving data quality, on the other hand, can bring immediate benefits to profits Mr Larkin, for example, cites research showing that suppliers to US retailers lost the equivalent of per cent of gross sales to compliance-related penalties Typically, data errors cause companies to ship the wrong product or quantity, or to charge the wrong price Reducing penalties by half of percentage point in a business with 10 per cent margins means a per cent boost to the bottom line Then there is the time taken up resolving both supply disputes and product recalls.’ Handling disputes takes up a lot of money,’ says Jon Chorley, vice-president for supply chain execution and product lifecycle management strategy at software vendor Oracle ‘You also have to be able to track the genealogy of the products, which means getting that information out of the supply chain’ Businesses that want to improve data quality face two hurdles, however The first is how an item is described and measured A household chemical could be delivered to a factory in a tanker measured in gallons, bottled in containers measured in centiliters, packed in cartons by the dozen, transported in 50 cases on a pallet and then sold in a store as a single bottle Each organization in the supply chain could hold the correct data for their part of the process, but still be unable to share it with the others The second problem is ensuring that the right parties hold the right level of information ‘There is a cost to every piece of information, so you have to understand the value of that information, its granular quality Trang / 40 BÀI TẬP TÌNH HUỐNG - MƠN HỆ THỐNG THÔNG TIN QUẢN TRỊ - Hệ Đại học quy and frequency’, says Jeff Wacker, futurist at system integrators EDS.’ You need sophistication to ensure that the information adds value to the decisions being made’ Manufacturers might not want to share an entire recipe or bill of materials with a retailer, but the retailer will want to know that the manufacturer can call up that information on a batch-by – batch basic, for example if there is a product recall or a health scare Retailers are also under pressure from consumers to provide more data, either at the point of sale, online or in catalogues But there is a strong chance that the financial and technical burden for gathering and storing such data will fail mostly on producers and manufacturers; as has largely been the case with electronic data interchange and more recently, RFID ‘Retailers will only something if they have to’, suggests John Davison, a vice-president at analysts Gartner ‘You could improve the operational efficiency of your company, but retailers are most likely to act if it improves product availability on shelves’ (Stephen Pritchard, FT.com site, published 19 September 2007) Questions: ‘Bad data can result in brand damage’ Explain this statement with reference to the case study The case study discusses a number of problems caused by poor quality information Identify and describe these problems with reference to the attributes of information quality Why you think customers are starting to want know more about the products they buy ? Trang / 40 BÀI TẬP TÌNH HUỐNG - MƠN HỆ THỐNG THƠNG TIN QUẢN TRỊ - Hệ Đại học quy CASE STUDY 2.1 VOLVO TRUCKS’ VALUABLE EARLY WARNING SYSTEM For any manufacturing company, in-warranty failures represent a significant expense There is the cost of the repair or replacement itself, administering the process and, often, a loss of customer good will But an efficient warranty system can cut these costs and more Customer satisfaction is higher if any warranty issues are handled efficiently and quickly The manufacturer ties up fewer resources handling the repair, and goods are turned round more quickly The product itself can even be improved, if the warranty system can feed data into both the manufacturing process and suppliers And a good reputation for handling inwarranty repairs will even justify a price premium in some marketplaces These are some of the benefits identified by Volvo Trucks, the heavy goods vehicle manufacturer, which created a new quality and warranty analysis tool (QWAT) a year ago The system is based around SAS Institute’s Warranty Analytics software and an Oracle relational database The scale of warranty operations at Volvo’s trucks division is significant The company currently builds about 100,000 trucks – mostly tractor units for semi-trailers or rigs – each year The standard European warranty on these vehicles is one year, with some vehicles covered by a 300,000 km warranty ‘With current production levels, and some good will campaigns, 200,000 to 300,000 trucks could produce a warranty claim or produce a problem that ends up in the analytics system’, says Micke Rydbeck, project manager for warranty systems at Volvo Truck Corporation To add to the complexity, in Europe the vehicle could be taken to any one of 1000 service points or, in North America, one of 350 sites Added to this, the vehicles Volvo produces are simple, commodity items Within the annual production total, perhaps as few as two vehicles might be identical, such is the range of variants and configuration options available to customers An in-warranty failure might be the result of a particular, and quite possibly very rare, combination of components The new system is much more effective at narrowing down the list of vehicles fitted with a particular part to those that are most likely to have problems ’It might not show up as a battery problem on each and every truck, but only when two parts are used in combination’, says Rydbeck The business case for Volvo’s project was based on achieving more efficient warranty claims, reduced fraud, better reporting and improved recovery of warranty costs from suppliers The warranty tool acts as a valuable early warning system, helping to pick up any potential faults before they occur in a truck Improved trend analysis is a valuable feature of the new system: previously, quality control staff had to use three main tools and three data sources in what was still, largely, a manual process But the earlier the company identifies a problem, the cheaper it is to fix Advanced warning allows more vehicles to be examined and Trang / 40 BÀI TẬP TÌNH HUỐNG - MƠN HỆ THỐNG THÔNG TIN QUẢN TRỊ - Hệ Đại học quy repaired during regular servicing This reduces Volvo’s costs but critically, keeps customers’ trucks on the road for longer The system also helps Volvo to give customers a wider range of configuration options without compromising on the manufacturer’s standards or increasing support costs ‘ We need to have a situation where we can produce trucks built to customers’ specifications that still nurture our core values of quality and safety’, Mr Rydbeck explains Another important part of the analytics-based approach to warranty management is that it helps Volvo’s design and manufacturing teams react to after-market problems with the trucks, and prioritise design or production changes These are all important benefits for Volvo customers The project has had a significant impact on Volvo’s after-market costs : cutting them plays a key part in keeping the manufacturer competitive ‘Our warranty costs have fallen by 40 to 50 per cent in the past couple of years’, says Mr.Rydbeck ‘But it becomes progressively harder to lower these costs and harder to find the problems that cause them Our warranty costs are now about the industry average, but were higher’ He believes that the new warranty management system, and in particular its analytical capabilities, will allow Volvo Trucks to deliver above- average service to vehicle owners while cutting its prices and increasing per- vehicle margins.’ If we can reduce our warranty costs, it gives us room to increase our margins while also being competitive on price’, he says Volvo is also using its system to detect unusual or potentially fraudulent warranty claims The analytics tool can go through historical claims data and identify claims that need to be checked Rather than send a team of auditors to look at a dealer’s books, picking random samples, it can focus on claims that arouse specific suspicions ‘During an audit we can focus on three, five or 10 claims that we are really interested in, rather than picking 20 at random Dealers are getting the message, and we are at much less risk of fraud now’, says Mr Rydbeck The system is also being implemented at US truck maker Mack and at Volvo’s bus operations The next step for Volvo is to extend the warranty analytics system to key suppliers, a process it started in June this year ‘We are opening up the system and showing suppliers information relating to them Previously we reported to suppliers twice a year, but now we can show quality information to them and they can improve products immediately’, says Mr Rydbeck ‘Because we can share our information, we can have better conversation with suppliers’ (Stephen Pritchard, Financial Times, 19 September 2007) Questions: What are the benefits of Volvo’s warranty management system ? In general, how does the warranty management system help Volvo to be more competitive ? Trang / 40 BÀI TẬP TÌNH HUỐNG - MƠN HỆ THỐNG THƠNG TIN QUẢN TRỊ - Hệ Đại học quy CASE STUDY 2.2 AIRPORT CHECK-IN: BOARD YOUR FLIGHT BY MOBILE PHONE Ubiquitous and well entrenched as mobile phones may be, some potential uses have yet to catch on in a big way Such is the case with mobile check-in at airports A passenger survey at the end of last year by the International air Transport Association (lata) found only per cent of respondents had checked in via an SMS (text message) on their mobile phones But that number looks certain to rise as more airlines introduce mobile check-in – those that already have are as enthusiastic about the service as are their passengers ’To have your boarding pass on your mobile should be something that really excites the customer’, says Patrice Quellette, Air Canada’s director of customer service platform, e-commerce Last June the airline launched mobile check-in for customers on domestic flights without baggage Between one and 24 hours before departure, passengers can enter basic details about themselves and their flight into their mobile phones, then print out their boarding pass from a self-service kiosk at the airport In the next few weeks, Air Canada plans to start pilot testing an ‘E-Boarding passes’ service, in which 2D barcodes would be sent directly to mobile devices of customers checking in at Montreal for domestic flights The customers participating in the pilot would scan their device at airport security and proceed to the gate Elsewhere, mobile check-in has inevitably established a foothold in countries where mobile users have been keen to try innovative or experimental services, pushing the devices beyond simple calling and texting Finland and Japan are two good examples In October 2004 Finnair claimed a first in international air travel when it launched SMS check-in for frequent fliers Customer feedback has been extremely positive, it says, reflecting the fact that the airline takes a proactive approach – it sends a text message and the customer needs only to reply On average, says Finnair, about 75 per cent of customers that receive a message go ahead with the SMS check-in The system has become the third self-service channel, along with internet and kiosk check-in, and is now comparable in popularity, with sage falling only when there is less business travelling In Japan, mobile phones can be used as part of Japan Airlines’ ‘Touch and Go’ system, which was developed in-house for use on domestic routes, and introduced in February 2005 The system allows IC (integrated circuit) cardholders to board domestic flights without a physical ticket or boarding pass From three days before departure and up to one hour before the flight, passengers can make or change a seat selection and check in via their computer or mobile phone All relevant data for the booking are recorded automatically on the IC card, which can then be touched or swiped at machines in front of the airport security check points and then at the boarding gate The number of Touch and Go users has been steadily increasing since the system was introduced, says Ko Yoshida, JAL’s vice-president for domestic marketing planning, and has already run into millions Users tend to be individual business travellers Trang / 40 BÀI TẬP TÌNH HUỐNG - MÔN HỆ THỐNG THÔNG TIN QUẢN TRỊ - Hệ Đại học quy At rival airline ANA, check-in via computer or mobile phone has been possible for two years for domestic flights, and if the phone has an RF (radio frequency) chip it can used to pick up a boarding pass from a self-service kiosk at the airport Last August, the airline introduced an enhancement known as Skip, allowing passengers who have paid for their tickets and reserved their seats – using their computer, mobile phone or at a travel agent – to skip check-in One touch of their RF chip-enabled mobile phone, credit card, ANA Mileage Club or 2D barcode to a sensor at security prints a receipt with the customers on board and a boarding pass is then printed for final seat number verification Skip is used by 10,000 – 15,000 customers a day Individual airlines have taken the initiative on these developments and are pushing for an industry standard that would help widen the usage of mobile check-in, lata says this is a major activity for its barcoded boarding pass (BCBP) team this year – currently North America, the European Union and Japan each have a preferred 2D barcode to use on mobile phones for ticketing and other applications, and the challenge will be to agree one global standard There are other obstacles, too The biggest challenge, says Finnair, is the airport authorities’ requirements for paper boarding passes at the airport service points ’In Finland, the airport authorities and customs have accepted our text message confirmation as proof of travel’, says the airline ‘At most of the airports in the world that is not the case Air Canada, meanwhile, is working with Canadian authorities on its Montreal “E-Boarding passes” pilot Talks with authorities about starting the pilot on a limited basis in June were successful, and then further implementation would be subject to the results of the test and continued working with authorities Finnair notes other provisos Mobile devices must contain the required features by default, removing the need for customers to install software Secondly, multimedia message service (MMS) provides a method to deliver a 2D barcode to a customer but mobile operators need to read – just their pricing policy, says the airline It says roaming pricing, in particular, can be ‘a real killer’ (Andrew Baxter, FT.com site, published 14 May 2007) Questions: What are the advantages and disadvantages of mobile check-in ? How does being one of the first companies to adopt technologies such as mobile check-in confer competitive advantage? Refer to the concepts covered in BIS and Strategic Advantage in your answer What barriers are there to the widespread adoption of mobile check-in ? Trang / 40 BÀI TẬP TÌNH HUỐNG - MƠN HỆ THỐNG THƠNG TIN QUẢN TRỊ - Hệ Đại học quy CASE STUDY 6.1 IT NEAR ITS LIMITS IN SATISFYING CUSTOMERS The customer experience used to end at the cash register Today, that’s where it begins ‘Woody Diggs, leader of the global customer relationship management practice for the consultancy Accenture, quotes this remark to illustrate how customer expectations have changed in recent years Technology has played a part in this change and if you look for examples, you will find plenty Here are three: The Santiago Bernabeu football stadium in Madrid has installed, in collaboration with Cisco Systems, an intranet that can control remotely not only the turnstiles and lighting but also the loudspeakers and security cameras Epson, the Japanese electronics group, claims a 30 per cent increase in efficiency, a 38 per cent reduction in the cost of handling inquiries and a 1,125 per cent increase in online inquiries after installing Talisma customer relationship management systems in its European call centres Alliance Leicester, the UK-based financial services group, worked with a data capture specialist, Digital Vision, to create a fully automated account switching system, which, it says, has more than doubled the number of customers switching their current accounts in its favour and achieved operational cost savings of 66 per cent The catch is that it is always easy to find the ones that work; the failures are conveniently kept out of sight And customer relationship management (CMR) technology – systems designed to give companies a single, integrated view of their customers and maintain a mutually beneficial dialogue with them – has a patchy record of success Richard Boardman of Mareeba CRM Consulting emphasizes the dichotomy: ‘The brutal reality is that the majority of CRM projects produce, at best, marginal benefits to the purchaser Which isn’t to say’, he adds, ‘that CRM technology doesn’t produce the results; there are also plenty of organizations enjoying very high returns’ As Spanish football fans, electronics aficionados and British bank customers can perhaps testify CRM is a business problem which technology cannot solve, according to Aki Ratner, chief executive of the enterprise software group Attunity He says: ‘It may change the way businesses run, but it does not address the fact that the knowledge that gives a company competitive edge is not held in structured databases or processes but within the people who actually run the business It is people- driven activities, not process- driven ones, that define the real success of an organisation,’ And there are thousands of ways to improve the customer experience, many of them involving little technology and little cost Ed Thompson, a senior analyst with the Gartner consultancy argues that it is a matter of expectation setting, feedback and how organisations deal with these issues He points to the example of Disneyworld, where the introduction of a simple measuring stick meant an end to the disappointment felt by children who had queued for a particular ride only to find they were too small to be allowed on board ‘Another example is Southwest Trang / 40 ... of course there are going to be blunders’, she says A more suitable snare facing companies is their failure to consider the various possible meanings of the information they gather The classic... violent husband, she sent her new address to the company, which promptly wrote a confirmation note to her old home, where her ex-husband was living The company had to pay to rehouse the ex-wife in... and then sold in a store as a single bottle Each organization in the supply chain could hold the correct data for their part of the process, but still be unable to share it with the others The