1. Data Warehousing Supports Corporate Strategy at First American Corporation Rich Egan Pirun Srimandakul Stanley Lambert

2.  Summary  Motivation  Value / Contribution  Critque / Analysis  Conclusion  Reference Agenda

3.  1990-1998, First American Corporation (FAC) changed its corporate strategy from a traditional banking approach (product/service oriented) to a customer relationship-oriented strategy  Data warehouse called VISION helped make it happen Summary

4. FAC in 1990  lost $60 million  operating under letters of agreement with regulators FAC in 1998  profit over $211 million  innovative leader in the financial services industry Summary...

6. Tailored Client Solutions (TCS)  FAC’s customer relationship-oriented strategy  customer at the center of all aspects of the company’s operations  redesigned every aspect of its operation to meet its client’s needs as well as its own profitability  shift in sales culture  change business process and the incentives related to them  pursued by five separate groups concurrently Summary...

8. VISION  Data warehouse that stored information about client behaviors  1980s - early 1990s, FAC had not made significant investment in IT. So, it was an enormous catch-up effort.  First attempt fail because Internal IT seriously underestimate the size and complexity of the project Summary...

9. VISION...  Second attempt, FAC contract with NCR (leader in the data warehousing field)  to provide hardware, software, and consulting services.  transfer knowledge to FAC employees  VISION project use increment approach Summary...

11. VISION...  VISION architecture  data warehouse platform using NCR 5150M configured with five SMP nodes running the Teradata Relational Database Systems (1.5 TB)  37 rolling months of history of analysis  utilized over 100 source files that were extracted from 26 legacy applications Summary...

13. VISION...  The process of populating the data warehouse took approximately 10 business days  All data could be analyzed at any level of aggregation, from bank-wide or line of business down to individual account of client relationship.  New system development processes to ensure that changes to legacy systems not disrupt the flow of data to the warehouse Summary...

15. Data warehouse Team  required data warehousing skills changed over time  Design phase  good data architecture background  good logical data modelling skill  strong understand of business  Build phase  strong project management  technical (programming) skills  Exploit phase  strong technical background  excellent analytical skill  ability to translate the analysis into marketing plan Summary...

16. Data warehouse Team...  faced problem with the key person leaving at critical times resulting in delay of project  attractive retention program  bonuses for completion of the project  commitments for additional training  contract to hire Summary...

18. Using VISON  20 marketing and 30 finance analysts were given direct access to data warehouse  marketing area  use Cognos Corporation’s tools to create multidimensional cubes of data  finance area  use Cognos cubes  use Data mart created in an Oracle RDBMS  Data were organized around the customer  slicing and dicing  required different and more advanced skill set analyst  existing analyst either move to other position or left the company Summary...

20. Application of VISION  Client Information  customer preferences and profiles  share profile probably share preferences  better understand the preferences of high value customers  Flexible Product Line  product profitability analysis for seniors accounts  redesign product to create value both FAC and customer Summary...

21. Application of VISION...  Consistent Service  contact management system  one-to-one relationship with customer  consistent and seamless service  representative can access the same customer information at any branch  Distribution Management  Distribution Management System (DMS)  DMS calculate the best way to distribute product to customer  replace 22 higher cost hubs with 30 lower cost spoke locations with the same customer need, but over 20% return on investment Summary...

22. Transformation at FAC  Major organizational transformation  shift in mindset, thinking and culture  VISION  who can’t adapt to change left the company  25-30%/3yrs turnover to 100%/1yrs turnover  OO + NT = COO  merely implementing a data warehouse would not solve FAC’s problems  stated a goal of joining the “Sweet 16” financial services organization that lead industry Summary...

24. Discussion  FAC is remarkable because  transform both technology infrastructure and organization itself to implement a strategic vision  Henderson and Venkatraman argue that  the effectiveness of the strategic management of IT depends on alignment of four domains Summary...

26. Discussion...  FAC’s path in strategic alignment model  Business Strategy --> Organizational Infrastructure  Business Strategy --> IT infrastructure  IT infrastructure --> IT Strategy  Kotter suggest that to succeed in an organizational transformation we need to follow eight critical steps.  FAC’s success because it’s transformation followed Kotter’s prescription almost exactly Summary...

28. Discussion...  Ross et al argue that organization must invest in three IT assets  IT infrastructure  the relationship between business management and IT  IT human resources  FAC successful implement in spite of its weak IT assets because  exceptional clear business vision  critical technical infrastructure : VISION and etc.  IT knowledge : understand existing business application and generic data warehouse knowledge Summary...

29. Discussion...  New IT strategy  Data warehouse was different technology that would have to be managed in a different fashion  New system development processes to ensure that changes to legacy systems not disrupt the flow of data to the warehouse  Installing a data warehouse may be easily imitable but transforming an organization clearly is not.  Others path in Strategic alignment model can be achieve but only Business Strategy seem likely to generate strong effect for organizational transformation Summary...

30.  This paper tried to show that  Decision Supports Systems could help a company and make it viable  BUT merely applying new technology can’t help solving our problems  Strategic alignment is significant for implement IT to improve organization performance.  Key person is important to enforce successful organizational change  -$60 million can become +$211 million with excellent organizational transformation supported by appropriate Information Technology Motivation

31.  While this paper put forth the idea that DSS helped turn around FAC, it in fact did not show this conclusively. In fact, given the time frame of implementation it is doubtful that the DSS had much impact and the turn around could have be due to improved economic climate and the re- engineering of the firm. The major value of the paper is to point out that things do not happen in isolation and in drawing conclusions one needs to look at the environment that exists at the time  Provide critical steps of Kotter for us to follow when we need organizational change  Good example of effectively use Data warehousing to benefit organization Value / Contribution

32.  I have to say that the paper was well written and provided a wealth of very interesting information about an organizational re-engineering, but I do not think there is much that can be pointed to, to support the title contention that data warehousing supports corporate strategy at FAC.  In addition, it appears that AmSouth acquired FAC probably in the late 1999 or early 2000 period. It leads one to wonder just why AmSouth acquired FAC and how much was management involved in that decision. Critique / Analysis

33. FAC change their future by making radically change in their organization to follow new strategic vision. They successfully achieve their strategic vision because they transform both technology infrastructure and organization with well alignment in four domains. They follow organizational transformation steps of Kotter and choose appropriate method to implement new technology. Using NCR’s service is also critical key to success of FAC’s transformation. However, this strategy would have been impossible without a data warehouse called VISION. Conclusion

34.  Cooper, B., Watson, H., Wixom, B., and Goodhue, D., “Data Warehousing Supports Corporate Strategy at First American Corporation”, MIS Quarterly Vol. 24 No. 4, pp 547-567  Kotter, J.P., “Leading Change: Why Transformation Efforts Fail,” Harvard Business Review Vol. 57 #2, 1995, pp 59-67  Sprague, R., “A Framework for the Development of Decision Support Systems”, MIS Quarterly, December 1980,pp 1-26 Reference