CASE 3 (to be pass on your blog): Henry Schein Inc.: The Business Value of a Data Warehouse
Most companies store reams of data about their
customers. The IT challenge has been how to
integrate and massage that information so the
business units can respond immediately to changes in sales
and customer preferences.
Henry Schein Inc. (www.henryschein.com) has it figured
out. The $2.8 billion distributor of health care products designed
and built a data warehouse with an in-house team of
six IS professionals. CIO Jim Harding says he knew that having
the right skills was critical to the data warehouse project,
yet at the time, Schein had zero warehousing experience in its
IT shop. So he and Grace Monahan, vice president of business
systems, hired people for what they call “Team Schein.”
Because Harding had chosen two key tools for the data
warehouse—data extraction software from Informatica Corp.
and user query and reporting software from MicroStrategy
Inc.—the focus was on finding people who had experience
with those tools. So Monahan hired three people from outside:
project director Daryll Kelly, data modeler Christine
Bates, and front-end specialist Rena Levy, who’s responsible
for the user interface and data analysis, as well as user support
and training. Dawen Sun, who handles extract, transform,
and load issues, and database administrator Jamil
Uddin hold two other key positions. Another team member
is rotated in from Schein’s application development group.
Besides having the right skills, the other top priority was
ensuring data quality. “It seems kind of obvious,” says Harding,
“but sometimes these projects forget about quality, and then
the data warehouse ends up being worthless because nobody
trusts it.” So at the outset of the project, the team interviewed
about 175 potential business users to determine the information
they needed to access and the reports they wanted to see.
Plus, the team analyzed the old paper reports and the condition
of the data housed in the company’s core transaction system.
Monahan says those steps brought to light the importance of
cleansing data in a system that’s designed for transactional purposes
but not suitable for a data warehouse. That led to a long
period of standardizing transactional codes in order to produce
the sales reporting that business analysts needed.
“It’s the in-house people who have this gold coin of
knowledge of how their systems really work, which data is really
good and not so good, and how the end users really want
to use the data,” Kimball says. “Data quality is the hardest
part of the project, because it’s very time-consuming and detailed,
and not everyone appreciates it unless they’ve been
through a couple of projects, like Daryll has,” Harding says.
And there was yet another tedious obstacle. The data
warehouse was designed to provide a very granular level of
detail about customers, “so we can slice and dice at will,”
Harding says. But the result was sluggish system performance.
So the team created summary tables to make the
queries work faster, and those tables needed to be tested. It
was a lengthy process, Harding says, but in the end, it
worked very well. The journey has taken well over two years.
The system went live 18 months ago but “really came into its
own” in February, Harding says.
Of course, building a data warehouse is a never-ending
job. New companies are acquired, products are added, customers
come and go, and new features and enhancements
are ongoing. But from an IT standpoint, the data warehouse
is complete and has 85 percent of the data from the
core transactional system. The next major goal is to provide
the European operation with its own data warehouse system
and tie it into the one in the United States.
Harding says his project will surely justify the costs, but
he lacks hard numbers. “We didn’t have a formal ROI that
you could track later. I don’t even know how you would do
it,” he says. “The reason we’re doing the project is because of
the value it brings to the business.”
Lou Ferraro, vice president and general manager of
Schein’s medical group, says the business benefits are outstanding.
He can now figure out who his most profitable customers
are, target customers for certain types of promotions,
and look at the business by product categories or sales territories.
Ferraro says the data warehouse also helps select
customers for direct-mail marketing campaigns that range
“upward of 25 million pieces annually.”
One of the most valuable features of the data warehouse
has been the ability it gives users to add more fields to reports
as they are using the system. “Once you create a basic
report, draw a conclusion, and drill further based on those
assumptions, it allows you to use that data and go even further,
as opposed to creating a new report, and another and
another,” Ferraro says. The IT department used to create,
edit, revise, run, download, reprogram, and print piles of paper
reports—daily, weekly, monthly and quarterly—for the
analysis of sales and market trends. But today, business users
search, sort, and drill down for that information themselves
in a fraction of the time. The data warehouse has become “a
part of our culture,” says Harding. “It’s got that kind of aura
about it within the company.”
Case Study Questions
1. What are some of the key requirements for building a
good data warehouse? Use Henry Schein Inc. as an
example.
2. What are the key software tools needed to construct
and use a data warehouse?
3. What is the business value of a data warehouse to
Henry Schein? To any company?
CASE 2(to be passed on examination day): Harrah’s Entertainment and Others: Protecting the Data Jewels
In the casino industry, one of the most valuable assets is the
dossier that casinos keep on their affluent customers, the
high rollers. But in 2003, casino operator Harrah’s Entertainment
Inc. filed a lawsuit in Placer County, California,
Superior Court charging that a former employee had copied
the records of up to 450 wealthy customers before leaving
the company to work at competitor Thunder Valley Casino
in Lincoln, California.
The complaint said the employee was seen printing the
list—which included names, contact information, and credit
and account histories—from a Harrah’s database. It also
alleged that he tried to lure those players to Thunder Valley.
The employee denies the charge of stealing Harrah’s trade
secrets, and the case is still pending, but many similar cases
have been filed in the past 20 years, legal experts say.
While savvy companies are using business intelligence
and CRM systems to identify their most profitable customers,
there’s a genuine danger of that information falling into the
wrong hands. Broader access to those applications and the
trend toward employees switching jobs more frequently have
made protecting customer lists an even greater priority.
Fortunately, there are managerial, legal, and technological
steps that can be taken to help prevent, or at least discourage,
departing employees from walking out the door
with this vital information.
Organizations should make sure that certain employees,
particularly those with frequent access to customer information,
sign nondisclosure, noncompete, and nonsolicitation
agreements that specifically mention customer lists, says
Suzanne Labrit, a partner at the law firm of Shutts & Bowen
LLP in West Palm Beach, Florida.
Although most states have enacted trade-secrets laws,
Labrit says they have different attitudes about enforcing
these laws with regard to customer lists. “If you don’t treat it
as confidential information internally,” she says, “the court
will not treat it as confidential information either.”
From a management and process standpoint, organizations
should try to limit access to customer lists only to
employees, such as sales representatives, who need the information
to do their jobs. “If you make it broadly available to
employees, then it’s not considered confidential,” says Labrit.
Physical security should also be considered, Labrit says.
Visitors such as vendors shouldn’t be permitted to roam
freely in the hallways or into conference rooms. And security
policies, such as a requirement that all computer systems
have strong password protection, should be strictly enforced.
Some organizations rely on technology to help prevent
the loss of customer lists and other critical data. Inflow Inc.,
a Denver-based provider of managed Web hosting services,
uses a product from Opsware Inc. in Sunnyvale, California,
that lets managers control access to specific systems, such as
databases, from a central location.
The company also uses an e-mail scanning service that allows
it to analyze messages that it suspects might contain
proprietary files, says Lenny Monsour, general manager of application
hosting and management. Inflow combines the use
of this technology with practices such as monitoring employees
who have access to data considered vital to the company.
A major financial services provider is using a firewall
from San Francisco-based Vontu Inc. that monitors outbound
e-mail, Webmail, Web posts, and instant messages to
ensure that no confidential data leaves the company. The
software includes search algorithms and can be customized
to automatically detect specific types of data such as lists on
a spreadsheet or even something as granular as a customer’s
Social Security number. The firm began using the product
after it went through layoffs in 2000 and 2001.
“Losing customer information was a primary concern of
ours,” says the firm’s chief information security officer, who
asked not to be identified. “We were concerned about people
leaving and sending e-mail to their home accounts.” In fact,
he says, before using the firewall, the company had trouble
with departing employees taking intellectual property and
using it in their new jobs at rival firms, which sometimes led
to lawsuits.
Vijay Sonty, chief technology officer at advertising firm
Foote Cone & Belding Worldwide in New York, says losing
customer information to competitors is a growing concern,
particularly in industries where companies go after many of
the same clients.
He says the firm, which mandates that some employees
sign noncompete agreements, is looking into policies and
guidelines regarding the proper use of customer information,
as well as audit trails to see who’s accessing customer
lists. “I think it makes good business sense to take precautions
and steps to prevent this from happening,” Sonty says.
“We could lose a lot of money if key people leave.”
Case Study Questions
1. Why have developments in IT helped to increase the
value of the data resources of many companies?
2. How have these capabilities increased the security
challenges associated with protecting a company’s
data resources?
3. How can companies use IT to meet the challenges of
data resource security?
Source: Adapted from Bob Violino, “Protecting the Data Jewels:
Valuable Customer Lists,” Computerworld, July 19, 2004. Copyright
© 2004 by Computerworld, Inc., Framingham, MA 01701. All
rights reserved.
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