A consulting firm has organized a consortium of technology companies, Hewlett-Packard Co. most prominent among them, to try to ease bankers' frustrations with customer information systems. Action Systems Inc., a firm that has thrived by improving major financial institutions' retail sales capabilities, said it could only go so far because most banks have been ineffective at using their huge stores of data when dealing with customers on the front lines. Through the coalition, being announced today, Action Systems hopes to bring order to the unintended chaos that has resulted from bankers' rush to build data warehouses. The members agree on the need to eliminate the "disconnects" between those data bases and the sales and service functions, said Robert E. Hall, founder and chief executive officer of the Dallas- based firm. The formation of such an unusual multivendor alliance points up the reality that bankers have not made the most of data warehousing. The participants-including providers of profitability measurement and data mining systems-say they have the combination of technical skills that financial institutions need to close the gap. "So much of the focus has been on the core technology," said Linda Wagner, director of retail financial services in Hewlett-Packard's financial services business unit, Cupertino, Calif. "The challenge is to do something quickly at the business management level," Ms. Wagner added, while avoiding "the disconnects that happen when managers are forced into ad hoc solutions." "A lot of money is being spent (on customer data bases), yet the very piece that is most needed to make them usable and get a return on investment is not there," said Mr. Hall. "We have to connect the dots." That is what the technology alliance, which Action Systems calls the Relationship Optimization Solution Set, is designed to accomplish. The consulting firm is combining its largely low-tech, "market competence" approach with contributions from five charter vendor-members. Hewlett-Packard, the designated "anchor partner," brings system integration and data warehousing expertise-and contacts with numerous financial customers and other companies that it considers strategic allies. Thinking Machines Corp., a Boston-area company renowned for parallel processing systems, can offer the data mining capabilities that bankers need to derive knowledge from their vast volumes of data. Exchange Applications of Boston supplies management systems for marketing campaigns. Information Advantage of Eden Prairie, Minn., specializes in data access and analysis using OLAP-on-line analytical processing. Profit Management Group, a Malvern, Pa., company that evolved out of KPMG Peat Marwick's profit-measurement practice, offers pioneering profitability- and cost-analysis systems. They have agreed to adhere to "open system" rules, and Action Systems expects the nonexclusive club to get bigger. The "solution set" had its genesis about a year ago when Stephen M. Carpenter joined Action Systems from Affiliated Computer Systems, a Dallas- based data processing company, as chief operating officer. Mr. Carpenter, who worked at Action Systems earlier in his career and recently added the title of president, said his experience in computer services opened his eyes to the lack of measurable returns from the highly touted customer information technologies. Serving a global client roster that includes Barnett Banks Inc., Chase Manhattan Corp., Norwest Corp., Bancomer of Mexico, and Royal Bank of Canada, Action Systems has helped deliver significant sales and profit increases through management and training systems that revolve around "continuous learning" and "feedback loops." These techniques involve getting marketing intelligence in usable form to points of customer contact, whether in branches or on the telephone, and using information gleaned from those contacts to develop and refine strategies. Action Systems said its formula typically brings first-year increases in customer profitability of 15% to 20%. Summit Bank of New Jersey said the firm's Managing Local Markets program was a factor in an 18% improvement in second-quarter earnings. But Action Systems hit a low-tech wall, and Mr. Carpenter said he wanted to seize an opportunity for "thought leadership." "The question became, 'How do we assure competency at the front line in the use of information?'" Mr. Carpenter said. "Continuous learning organizations had a need for technology that we could not satisfy. So we put together relationships with partners." "Financial institutions are telling us that most approaches address only part of the problem," said Ms. Wagner. Her company, Hewlett-Packard, enters into alliances as a matter of course and sees the Action Systems initiative as "holistically" well-suited to the complex task of customer relationship management. "There is no box in an organization that does everything we do," Mr. Carpenter said of the group. "We obviously believe that data mining is useful and valuable to our customers in and of itself," said William Guild, financial services business director of Thinking Machines Corp. "But coupled with the technologies that other partners are bringing, the whole is greater than the sum of its parts." As an example, he said Profit Management Group's profitability system is "also useful in and of itself" but packs more punch when coupled with data mining. "One can actually predict profitability based on future customer behavior," Mr. Guild said. "That is much more useful than just current product usage and current profitability." "Banks have identified the opportunity and need" that the Relationship Optimization Solution Set addresses, said Profit Management Group president and CEO Gregory J. Nolan. "What's lacking is thoughtful plans. "A lot of banks rush into data warehousing and put in OLAP tools but then wonder who is going to calculate customer profitability. Banks think about the data in their warehouses but they don't have plans on how to use it." Action Systems said there are "disconnects" between pieces of technology as well as between technologies and front-line actions. The alliance wants not only to bring together well-integrated systems but also to deliver products that will work for an institution regardless of its stage of technical advancement or sales culture. "Data warehouses tend to be in silos according to product or business- the information is usable but not tied together," said Bob Rickert, the company's vice president of strategic business development. "The alignment of strategy and organization is key. Learning and behavior should tie in with the technology integration." William Bradway, research director and senior analyst of Meridien Research in Needham, Mass., said Action Systems is taking its selling and service orientation to a "more sophisticated level" through the technology collaborations. Mr. Bradway said retail banks' high employee-turnover rates make it difficult to sustain the benefits from training programs. "The technology piece they are putting together makes it much easier for financial institutions to sustain that investment." Like many technology analysts, Mr. Bradway agreed that data warehouses have challenged bankers. "This is not to say financial institutions don't have effective initiatives in place or are not doing sophisticated data mining." But the biggest and most complex organizations have had a hard time integrating their business lines' fragmented approaches. "The enterprisewide model is so complex ... I haven't seen an excellent system that does everything it is supposed to do," said Thomas Thamara, head of FSIC Associates, a North Andover, Mass., bank consulting firm. Mr. Thamara said he was intrigued by the comprehensiveness of the "solution set." "It could be very good," he said. "Banks need to get to something like what Wal-Mart has. Data is available on the spot in the store, and management knows exactly what is selling today."

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