Data warehousing is growing in capacity, with the promise of getting ever closer to the customer, but cultural barriers continue to stand in the way
Airlines have never exactly been short of customer data and in the present climate it has never been more valuable. The challenge has been in making use of this growing mass of information, in particular for customer relationship management (CRM). Step forward the concept of data warehousing, the fast-developing science of gathering data into one place and then making it available for analysis and application.
The potential dimensions of the data are enormous. The first data warehouse designed to handle terabytes of information - representing one trillion bytes - was unveiled as long ago as 1986. Now the world is approaching the petabyte, equal to roughly a thousand terabytes or about 250 billion pages of text. That could arrive as soon as 2004.
Analytical challenge
But the challenge is more than simply storage. Analysis, both strategic and tactical, makes different demands on how the data is organised. While strategic queries sift through large amounts of historic data, tactical queries typically require a rapid response with data that is current and preferably updated instantly. Building a warehouse capable of accommodating both sets of analysis has been practically impossible - at least until now.
But with technology advancing rapidly and business demands rising, data warehousing appears to be gathering pace within the airline industry. British Airways is a case in point. It had stored its customer and commercial data in multiple and separate disparate databases supplied by IBM, Oracle and NCR Teradata. BA's head of customer information, Rob Thorne, says the carrier decided to consolidate all its customer and commercial data into a single, enterprise-wide data warehouse that will run a Teradata platform.
Speaking at a recent Teradata users conference in Las Vegas, Thorne said the ultimate goal was to gain access to a "single, consistent view of each customer and each product they buy". Hence the decision to move to a single, cross-enterprise data warehouse. "With data in a single universe, the airline can use the same knowledge to market to the right customers and the same data to track the customers' behaviour," he said, noting the ability to avoid duplicating the same offers or mailings.
But there are clearly barriers to implementing such programmes. It is ironic that data warehousing is growing in capacity just as airlines are becoming wary of big-ticket IT investments. BA reports, for example, that its data volume has been growing at 50% a year.
Thorne also notes some more human barriers to exploiting data warehousing for CRM. Even when there is a better data source in the new warehouse, its "natural exploitation" is compromised by the fact that data analysts tend to go back to the legacy databases they know and trust. This was overcome only gradually. BA, which began its migration to Teradata at the start of 2002, also found some staff analysts were oriented by functional silos in the old model and not ready for enterprise-wide deployment.
BA's experience is not unique. Michael Burkett, a research director at AMR Research in Boston, says: "The not-built-here syndrome is a major barrier. With airlines, this is all the more so since they were such early and prodigious adapters to information technology."
Mark Cooper, who manages the FedEx "information superhub", agrees there are cultural barriers to the wider use of data warehouses. He says analysts tend to continue designing queries as they always have, in effect returning to their old databases instead of new ones.
Larry Greenfield of LGI Systems, a Chicago-based data-warehousing specialist, identifies some cultural issues for management too. "In some firms there are profound cultural barriers in the business organisation to the acceptance of a tool that allows a person to ask questions on his own," he says.
But such cultural barriers are being overcome. When Continental Airlines began building up its data warehouse, it created not only a centralised project team but also "ambassador" groups of staff. Dubbed COStars (Continental State of the Art Relationships), the teams brought several hundred employees together. After internal focus groups, they began an internal marketing campaign.
Kelly Cook, Continental's senior manager of customer information systems, says that by identifying "quick hits they could champion, we enlisted their goodwill". An important reason why this worked is that "we had no big-bang approach", says Cook, but brought in IT units and then engaged in data transformation and cleansing processes.
Cook says the next steps will give employees a focus to their efforts by presenting a single view of the customer instead of looking at each customer through the prism of whatever database the employee is working in.
Future technology
Brendan Hickman, Teradata's vice-president of travel and transportation, predicts the ability to bring CRM and revenue management closer together to allow for more dynamic "customer-centric" pricing. "When you know the customer's habits, his buying and paying habits, you can develop a concept of what he or she is willing to pay," he says. "From that, you can develop offers that are tailored to the individual."
It should also be possible to sharpen revenue management by tracking the habits of individual customers. For example, data on the propensity of an individual to cancel or show late at certain times or on certain days could be invaluable when calculating how many premium seats to reserve.
"It is a mistake to stop just at those customers you've identified as most profitable," says Hickman. "You also need to be able to detect when an occasional traveller is flying more frequently or purchasing full-fare, and immediately act not only to extend personal attention to them, but also supply them with appropriate loyalty rewards in a timely manner. Determining when a first-time or occasional flier is becoming more profitable due to changed behaviour helps cement that relationship and increase profitability."
But a wider focus is ahead. The next logical step is to adopt CRM across the enterprise, integrating with systems from the likes of SAP and Siebel. At Last Vegas, Teradata unveiled Version 7.0, the first real embodiment of what the firm calls "active data warehousing".
That comes with the enticing promise of processing data in real time and making analysis available to front-line employees such as ticket agents or call-centre workers.
REPORT BY DAVID FIELD IN LAS VEGAS
Source: Airline Business
