Database Mining in Enterprise Resource Planning

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Database Mining in Enterprise Resource Planning

• UCI Freshman Seminar
• May 10th, 2004
• Patrick Nguyen Huu

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Introduction To ERP

• Enterprise Resource Planning is a software
  architecture that facilitates the flow of
  information among the different functions or
  processes of an enterprise (manufacturing,
  logistics, HR, supply-chain management, etc)
• ERP provides the backbone for an enterprise-wide
  information system
• A database, in turn, is the backbone of an ERP
  system

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Client/Server Architecture
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The ERP Software Industry

• Until recently, JBOPS were market leaders (J.D.
  Edwards, Baan, Oracle, PeopleSoft, SAP)
• JBOPS -gt SOPMS (PeopleSoft acquired J.D.
  Edwards, Oracel has a hostile bid for PeopleSoft,
  Baan-gtInvensys-gtSSA Global Tech)
• There is a number of specialized providers
  (Siebel Systems for customer relationship
  management, i2 for supply-chain mgmt)
• D-Base companies provide the backbone (Oracle,
  MS(SQL), Sybase, IBM)

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The Business Intelligence Imperative

• Forces on the supply side
• The Internet reduces barriers of entry in many
  markets
• Interactive customer channels and increased
  bandwidth
• Explosion of power and data storage capabilities
• Forces on demand side
• Increasingly informed and empowered customers
• Lower search costs
• Higher customer acquisition costs
• gt As a result, the leverage of corporate data
  resources is becoming essential for business
  success

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Tools For Responsive Marketing

• Clustering Partitioning a d-base so that records
  within each group are sufficiently alike
• Profiling Obtaining a generalized classification
  model from a database sample
• Factor Seeking Finding interdependencies in the
  data based on associations between groups of
  attributes

• Database Marketing Translates customer purchase
  and demographic information into an individual
  purchase probability, by means of a response
  model based on purchase history, demographic
  variables, and product attributes

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Companies Built Around D-Base Marketing

• CalyxCorolla Marketer of floral arrangements
  Analyzes customer d-base to determine which
  customers to target with different flower
  catalogs to balance prospecting costs against the
  lifetime value of the customer
• Franklin Mint direct marketer of quality
  collectibles and products Sends catalogs to only
  those customers with the highest propensity to
  purchase the offered product this increases the
  response rate, lowers costs and increases profits
• Capital One leading credit card issuer Uses
  customer profitability analysis to deliver the
  right product to the right customer, at the
  right time and at the right price

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How Database Marketing Works?
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The Harrahs Case

• Harrahs Casino, Las Vegas
• Difference form other casinos focus on the
  middle-class, medium-scale gamblers rather than
  the high-rollers
• Had several attempts at customerinitiatives, such
  as the Gold Rewards gt Collected a bulk of
  customer data via these cards (purchases, points
  of visits, etc)
• Realized that the bulk of their income came from
  small to medium scale gamblers, utilized their
  database of customer data to customize service
  for each individual cardholder

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What Made Harrahs Success

• Harrahs is mainly a casino facility with
  slotmachines and the occassional gambling tables.
  It lacks the glamorous attractions and shopping
  centers of comparable casinos in Las Vegas
• Unlike other casinos who draw their main income
  through the attractions and shops Harrahs
  focuses on creating its loyal clientele and
  providing best service, giving them incentive to
  return
• Service for their clientele is personalized,
  based on the analysis of the data collected from
  the individual cardholder