Data Warehousing Pays Off

Two new studies indicate big returns in properly implemented data warehousing. But the reports clash on other key points, including how many businesses actually are tracking data warehousing ROI and other financial metrics.

A Data Warehousing Institute study of 1,600 companies released this month showed only 13% of respondents track data warehousing ROI across the value chain; 37% said they plan to begin tracking ROI; and 27% said they are not tracking returns and have no plans to do so. The report was sponsored by Acxiom, Compaq, EMC, IBM, Microsoft, NCR, Oracle, Sagent Technology and Sybase.

Another new survey, conducted by marketing research firm Globalinkage for data warehousing vendor Informatica, includes data from 134 unnamed Informatica customers. The Globalinkage/Informatica study had a completely different result: 87 percent of companies surveyed track data warehousing's total cost of ownership, return on investment, or other financial measures of performance.

The two studies agree that properly implemented data warehousing can boost returns. But they clash on the question of how successful such implementations are.

Referring to the impact of data warehousing on customer relationship management, the institute found 16 percent of respondents say their data warehousing implementation is better than expected; 42 percent said it met their expectations; and 41 percent said they are experiencing difficulties.

"For certain companies struggling to build these warehouses, the next step is how to drive the warehouse into the fabric of the company, so that it's part of its business culture, as opposed to a technological addendum," said Wayne Eckerson, director of education and research for the Data Warehousing Institute.

Neither study provides specific return on investment figures, and companies in both surveys used a huge variety of financial measures, making comparisons impractical.

The Globalinkage analysis found little evidence of adoption difficulties. While confined to Informatica clients, it "probably is pretty representative of anybody in data warehousing," said Globalinkage principal Gaye Clemson.

The institute study said benefits of data warehousing include increased productivity. Issues facing companies seeking to integrate data warehousing into a larger corporate strategy include the need to change business processes, incentives, skills and the need for close attention to privacy concerns. Technical issues include the need to develop a scalable architecture and avoid over-collecting data.

Both studies found major benefits to successful use of data warehousing.

"There are tons of cost savings, especially if you go to the Web to provide Web access to the scope of the project," Eckerson said. "The more data you can integrate, the more complete your view of customers, suppliers and the more your business benefits."

Eckerson and Clemson agreed that businesses need to apply a range of financial metrics to their IT investments such as data warehousing. "The number by itself may matter less than we think," Clemson said. "Having metrics across a broad range of corporate activities may be better."