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Relationships beyond customer relationships

As companies begin to invest heavily in customer data integration (CDI) technology, they need to consider the hierarchy of relationships.

The customer data integration (CDI) market continues to explode, and businesses investing in the software might want to consider managing hierarchies across multiple systems and data sources.

"It's a critical functionality," said Aaron Zornes, chief research officer of the CDI Institute, a San Francisco-based consultancy. "The data model is everything. You can't just model the relationship between you and your customers or suppliers. Your customers have a lot of relationships."

CDI systems need to integrate not just customer-level data, but the hierarchy, or higher-level relationships, data systems have with one another.

Householding, the process of determining the relationships and purchasing history of people within one residence, demands a sophisticated hierarchy, Zornes said. For example, householding in an insurance company would allow an account manager to view all relationships for multiple members of a household across different policies and claims. Householding has an equivalent in the business world: One company can have multiple subsidiaries and offices across multiple continents.

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"It's very hard to unravel the relationships," Zornes said. "This is the whole concept of hierarchy management. There's lots of discrete data, but what's interesting is customers' relationship with you and other customers or people who aren't your customers."

On Monday, Siperian Corp., of San Mateo, Calif., released its Hierarchy Manager, a complement to its Master Reference Manager (MRM), to help companies solve the customer relationship problem. The Hierarchy Manager leverages customer meta data into the MRM and provides consolidated relationship data for multiple applications.

The tool was built after Siperian discovered many of its customers were custom developing their own tool for managing the hierarchy of data, said CEO Darlene Mann.

Pharmaceuticals is one industry that has discovered a need for hierarchy management, with purchasing organizations such as hospitals and pharmacies banding together to purchase drugs at a discount.

"Keeping track of how they relate back to one another is one of the big challenges in pharmaceutical contract management," Mann said. "There are more regulatory pressures to explain the pricing of pharmaceuticals. It's important to track how those companies are interrelated and who is getting what pricing and why."

The high-tech and media industries are joining insurance and pharmaceuticals in investing in CDI, and it's beginning to show. According to the CDI Institute, the overall market for CDI software and integration services grew 36% from 2003 to 2004, and will reach the $1 billion mark by 2008.

Established business application vendors like Siebel Systems Inc., SAP AG and Oracle Corp. have already started chasing the market with their own offerings, as have best-of-breed vendors like DWL Inc., Initiate Systems Inc. and Siperian. Over 75% of the technology professionals who participated in a recent CDI Institute survey said they are considering purchases outside the family of the business application platforms like SAP, Oracle and Siebel.

Yet Siperian believes its competitive advantage lies in the data model.

"Almost all of our customers have Siebel or one of the other major CRM offerings," Mann said. "Even if you do have packaged applications, it's heterogeneous. Companies usually have some Oracle, some SAP and some Siebel. When you pull it all together, they don't conform to the same data model. [The business application vendors] represent their CDI solutions with the data model they use for their apps. That means you're trying to get Siebel to fit into Oracle's model."

Siperian's Hierarchy Manager is a component within the Siperian Hub and can be purchased in addition to its MRM tool.

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