1994 Jul 01
Systems from Service Bureaus
David M. Raab
DM News
July, 1994

These are stressful times for direct marketing service bureaus.  The core of their business has been processing and maintaining client databases on mainframe computers.  But today’s PC and mid-range technologies give clients the power to maintain their own databases internally.  At the same time, clients want the lower cost and more immediate access that in-house systems can provide.  How can a service bureau meet its clients’ needs and still remain in business?

Many bureaus have adopted a compromise.  They keep the data on the service bureau mainframe but develop software that lets clients access the data with a modem-equipped PC.  This meets some client needs while retaining the fundamental mainframe infrastructure.  But it also retains the fundamental mainframe cost structure–good news for the service bureau, but no savings for the client.

Other service bureaus have decided this is not enough.  Reasoning that clients will eventually find the software to store their database in-house, these bureaus have chosen to provide that software themselves.  This gives them a continued relationship with current (and, hopefully, new) clients, who still need the service bureau for more complicated processing.  And it positions them as software providers should the demand diminish for their traditional services.

This column has previously reviewed systems from service bureaus including Harte-Hanks, Customer Development Corporation and Unibase Direct.  All create a file, complete with names and addresses, that can be loaded on a client’s own PC and used for both analysis and mailing label selection.  Two more service bureaus have recently added their systems to the market.

MarketGenius (Anchor Computer, Inc., 800-452-2357; 516-293-6100) is primarily intended for file analysis, but also includes capabilities for basic list segmentation and selection.  The system interface, written in FoxPro to run on Microsoft Windows or a MacIntosh, has been carefully crafted for simplicity and ease of use.

Although MarketGenius uses FoxPro for the interface, it generates standard SQL queries that can access files stored in any ODBC-complaint relational database.  Initial installations have used the FoxPro and Sybase database engines running on PC hardware.  The largest currently planned installation will be an eight million record system on a MacIntosh.

Performance is determined largely by the database engine and hardware used at a particular installation.  As with any relational database, performance is highly dependent on indexed fields and the number of data levels included in a query.  Anchor uses proprietary techniques to create compound index fields that improve performance and reduce the space occupied by the indexes.  Responses to queries against an indexed field are typically returned in a few seconds on a million record file; queries that summarize multiple levels of data can take several minutes.

Each MarketGenius database is designed independently, and can have as many relational tables as required.  The system automatically reads the table structure from the underlying database engine, so no adjustments are required if the data structure is changed.  File preparation such as household consolidation, reformatting, summarization, and data enhancement is all done outside of the system, typically using Anchor’s mainframe programs although it could also be done elsewhere.  The actual file load involves transferring the data into the appropriate database and generating indexes.  The system uses proprietary technology to reduce the number of fields to be indexed, while keeping indexes available for most queries.

Once loaded, the data is available for manipulation through a remarkably simple interface that keeps all activities within two levels of the main screen.  Segmentation uses a point-and-shoot expression builder (easier than FoxPro’s own) that constructs multi-expression statements and then applies them as either selection or suppression rules.  Expressions include basic logical relationships, but not more sophisticated functions such as sums or counts.  The system also hides the need to define “join” relationships among different files, which adds simplicity but means the relationships between files cannot be changed without a reload.

Once a set of criteria is established, the system will give a net count of the qualifying records.  It also lets the user browse the contents of the selected records.  The selected records will be used for other system functions until the segmentation is changed.  The system can also store a particular segmentation set-up for later reuse or modification.

The main analytical functions of the system are simple cross tabulations and frequency distributions.  The cross tab is limited to two variables (row and column) and provides one value per cell: a count of the selected records, or the sum or average of any other field.  The frequency distribution allows the user to select a single field to analyze, and will give sums and averages on any number of additional fields.  The system automatically limits sums and averages to numeric fields, but will accept any type of field as a row or cross tab column.  There is no way to group results into a manageable number of categories when variables have a large number of different values.  Calculations to do this (or anything else) must now be done outside of the system, although Anchor is planning to add “logical” calculated fields in a July release.

One particularly nice feature is a push button that can automatically transfer a cross tab or frequency distribution table into an active Excel, Lotus or Quattro Pro spreadsheet, without the need to export the file or cut-and-paste the data.

The system’s extract function will create files that contain user-specified fields from the currently-selected group of records.  The system can create the file in ASCII, FoxPro, Excel, Lotus, DIF and SDF formats.  Users can save and reuse different export formats.  The new release of the system is expected to allow the user to also specify a key code to be placed on the exported records, and do export Nth selects.

MarketGenius is priced at $18,000 for a single user or $50,000 for up to four network users.  Annual maintenance runs 15% to 17% of the license fee.  The system can be financed over a two or three year period, or used on a subscription basis where Anchor stores the data on its own computer and users access it remotely.  Initial set-up, initial data load and recurrent update processing are additional, running upwards of $1.00 per thousand depending on file size and complexity.  The company provides one day of training for a single user or two days of training for network users.  Toll-paid technical support is available from 9 a.m. to 5 p.m. on weekdays.

The system has four current clients, with several additional installations under way.  A demonstration version is available for a $20 shipping and handling fee.

MarketWise (Epsilon, 617-273-2630) is a set of tools for data access, analysis and promotion management, designed to work with multiple database engines.  The system was developed by Epsilon–a major database marketing agency–to help manage the files it creates for its clients.  The company needed a solution that could handle files of all sizes, provide sophisticated marketing functions, and offer a broad range of general analysis tools.

Epsilon’s solution was to use an “object oriented” standard called CORBA (Common Object Request Broker Architecture), which can integrate custom-built tools with externally-developed products for generic activities such as mapping and graphics.  To allow these products to work effectively with very large files and different database engines, the company created a piece of “middleware” that could extract manageably-sized data sets from external systems.  These sets are stored on a Unix server where they can be manipulated by the various tools embedded in the system.

MarketWise provides several query tools, including a natural language interface, multi-dimensional executive information system licensed from Pilot Software, point-and-shoot query generator, and native SQL typed directly by the user.  The company has also licensed complete sets of graphics and mapping tools, and is developing additional modules including statistical analysis and neural network model execution.  The system has a powerful custom report writer and a scripting language that allows users to execute a complex sequence of commands and can pause for user input.

Sophisticated campaign management features include the ability to select multiple segments in a single pass, allocate mail quantities by segment, and store campaign-related information.  In addition, Epsilon is developing a module for the user to define event- or date-driven promotion “tracks”, assign customers to different tracks, and then execute the appropriate programs.  This module will be able to create personalized letters as part of its output.

Although MarketWise runs on a Windows PC as its workstation, the results of queries and most processing remain on the Unix “middleware” server, rather than being sent back to the PC as in most client/server systems.  This allows the system to exploit the greater processing power of the server hardware and also makes it easier to share results among users.  The system also has some abilities to change data in the original source files.

The speed of a MarketWise installation depends on the implementation.  Epsilon aims to achieve sub-second response to 80% of a user’s queries, and does this through a combination of database engine, hardware, file structure, summarization and indexes.  Relational databases are generally limited to 10 gigabytes or less, while larger installations uses specialized database engines and parallel processing hardware.  File structures and record lengths are custom-designed for each client.

MarketWise databases may reside either at Epsilon or on the clients’ own hardware.  Although MarketWise does not include a built-in householding capability, Epsilon offers householding services to its clients.  For smaller databases, MarketWise users can dynamically experiment with different householding strategies by executing different types of SQL queries.

MarketWise was announced in January 1994, and is now being installed at three Epsilon clients.  Pricing for Epsilon clients was tentatively set at $1,000 per user when Epsilon stored the data, and upwards of $25,000 for client-based systems.  Updates were estimated at $10,000 to $100,000 per month.  The company plans to develop specially-priced versions for specific vertical markets, such as retail, financial services, health care and non-profits.

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David M. Raab is a Principal at Raab Associates Inc., a consultancy specializing in marketing technology and analytics. He can be reached at draab@raabassociates.com.

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