Data warehousing: An IT idea whose time has come?

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March 10, 2004 (Computerworld) -- PALM DESERT, Calif. -- Some IT projects, like security and system optimization, are so ingrained in corporate computing that hardly anyone questions their budgets or importance.
But other IT projects, such as data warehousing, are still seen as discretionary programs that haven't yet been pegged as critical business practices.
That view could be changing, however.
At Computerworld's Premier 100 IT Leaders Conference here yesterday, Vickie Farrell, marketing vice president at data warehousing vendor Teradata, a division of NCR Corp., said IT leaders are beginning to realize that better organization of their critical data can lead to better productivity, sales and revenue.
By putting corporate data in a common data warehouse where it can be easily mined, companies can better analyze their performance and processes for improvements and business ideas they never considered before, Farrell said. "Having the data is good at first, but then you can ask where you are going to go from there," she said. "Where will you use the data later to make more improvements?"
For users, the benefits of data warehousing can go far beyond the cost savings or revenue generation an effective IT project can bring, she said. Usually, customers do ROI analyses before undertaking such projects. But that's only half of the equation. Companies should also monitor the return on investment of a data warehousing system after it's installed so IT leaders can use it to wring out additional savings.
That's the approach used by companies like Oak Brook, Ill.-based Ace Hardware Corp., where post-implementation ROI tracking showed that data warehousing efforts boosted the size of retail purchases by Helpful Hardware Club customers by $1.03 per transaction -- and increased the customer response to marketing campaigns through data reuse, Farrell said.
Consumer goods maker 3M Corp. in St. Paul, Minn., also moved to data warehousing, using it to learn more about its business after compiling the data it had previously stored in a variety of places across the company. 3M found, for instance, that it had been paying taxes it didn't owe because of inaccurate data that was cleaned up as part of the project, Farrell said.
In Iowa, state tax officials found that state and federal tax data was so widely scattered in data depositories that, even in the simplest cases, revenue agents would have to be sent to interview taxpayers on routine matters. Such visits were labor-intensive and costly, but the state legislature wouldn't provide money to update the systems.
An analysis of the problems found that by bringing in a data warehousing system, the tax agency could bring in an extra $28 million in uncollected revenue in the first three years, which paid the costs of the new system, Farrell said. The system now generates $10 million more in annual tax revenue, paying its own way, she said.
"If you do it right, you can get instant ROI with very little expense," Farrell said.
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