To download our Database management Insource VS Outsource Whitepaper, please click http://www2.digitalalchemy.com.au/l/4222/2012-02-02/82slm

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Should you outsource your marketing database or build and manage it in-house? It is the question
many marketers ask themselves. This white paper will clarify any uncertainty you have by helping
you to explore the untapped potential of your marketing database; examine the key factors that can
be game changers for you and review some of the tools that enable you to make the right choices
for your business.
Database building & management
Building a marketing database is not a one-time event. The database needs to be managed and
refined on an ongoing basis. You currently have the in-house resources for a dedicated team
to manage, maintain and support the database for the long term, be aware that good DBM
specialists are in demand; there is an ongoing risk that key members of your elite team could
leave at any time, taking their know-how with them.
Challenges of a successful marketing database
Figure 1 shows that around 50% of US respondents outsource all database management services and another
40%+ outsource at least some of their functions to external providers, whereby 80% of the respondents use
external providers to support segmentation efforts, and 78% outsource data mining and analytic modeling
driven by the difficulty in finding analytic talent. One prime reason for using an outsourced vendor for database
management is the benefit gained from a dedicated and experienced team assigned to specifically look after
your business.
“How do you perform the following database marketing functions today?”
Database management
Marketing technology and support
Segmentation and list managment
Data mining and modeling
Campaign execution/operations
Marketing software application management
Email marketing
Creative development
Campaign planning and design
Customer strategy
Outsource only
Base: 185 direct marketers who use at least one database marketing services provider
Mixed insource and outsource
0% 20% 40% 60% 80% 100%
Source: Forrester Research, Inc.
To Outsource Or Not To Outsource:
Make The Right Choice

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It is essential to identify potential customers by using up-to-date and accurate information.
Hence, ongoing data cleansing and National Change of Address (NCOA) updates are vital
processes that must be automated in order to cope with the velocity of change in the market.
Database building & management
In figure 2, the number one challenge for marketers is keeping data clean and useful. Poor quality data clearly has
an adverse impact on the overall marketing function. Metaphorically, if the data were the foundation of a house,
building the house on a vulnerable foundation will jeopardise the well-being of the residents.
Workloads invariably fluctuate, so over time the internal resource requirement is likely to
vary between either under or over the optimum level for your actual workload. Additionally,
reliance on internal IT resources can be an issue when your IT department is unavailable to
implement required tasks such as accommodating new data or enhancing the database. Any
delay carries an opportunity cost, especially during critical campaign periods or when unique
market opportunities arise.
Resource flexibility and agility
Top Marketing Challenges August 2008
Responses
Keeping Data Clean and Useful
Calculating Meaningful ROI
Generating Enough Quality Leads
Creating Quality Content
Determining the Best Campaigns
Collecting Management
Campaign Management
List Management
Growing our Email List
Improving Email Response Rates
Meaningful List Segmentation
0 50 100 150 200 250
Source: ResearchCorp

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Due to the dynamic characteristics of their data, marketers need to act fast in response to an
opportunity. It is often a one-time chance, which means if you lose it, you lose it forever.
Speed to market
Marketing database implementation calls for specific skills that create an inverse correlation
between capability and cost: the more experienced your resources, the less time it takes for the
implementation delivering better results at a lower cost.
Skills/experience
The difference between a marketing database
(MDB) and transactional database (TDB)
Purpose of usage:
MDB is used by the marketing department whereas TDB can be widely used throughout the
company.
Nature of the data:
MDB is very dynamic and has to be updated frequently while transactional data is historical,
likely to remain unchanged and is kept as a record.
Data composition:
Transactional data is a subset of MDB which comprises of transactional data, customer’s profile,
campaign history, data from third parties, etc. All these components are shaped into a Single
Customer View in the MDB.

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Pain points may include:
Unstructured stored data
Workload peaks and troughs
Non-alignment between IT and marketing
Unmet business demand for fast turn-around
Complexity of technology and risk of obsolescence
Bear in mind that opportunity costs will be incurred while the marketing database implementation
is in progress and subsequently if database performance is below the required benchmark. It is not
uncommon for a poor performing system to be canned, even after considerable time and financial
investment has been incurred.
Furthermore, there are core technical processes which require in-depth expertise to undertake:
Design and build a customised MDB to meet business objectives
Clean, de-duplicate and manage data and create a Single Customer View
Provide insights and identify opportunities based on customer analytics
Plan and execute communication programs based on the analysis and insights
Measure responses and results and generate reports
A Typical In-House Implementation
Building a database always takes longer and hits more unexpected ‘bumps’ along the way than at first
envisaged. The project undertaken by your IT and marketing teams will certainly be no exception to
therule.MostITdepartmentsaregoodatoperatingsystemdatabasesandmanycanbuildreasonable
transactional databases, but it is most unlikely that they will have the extensive experience required
to build a state of the art relational marketing database. For their part, marketing departments often
lack the time, resources and IT skills. The main upside to building the MDB in-house is the useful
insight that individual staff can acquire combined with their intimate knowledge of the database’s
various idiosyncrasies and nuances.

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Advantages and Disadvantages of In-housing
and Outsourcing
The most common strengths, weaknesses, threats and opportunities are identified by simple SWOT
analysis.
How Database Marketing Services Provider (DBMSP)
can assist you?
The solution and the tools
Subject matter expert
The DBMSP has the required software and hardware ready installed. Your implementation is an
incremental activity and therefore added to a technology platform that is tried and tested to provide
you with best practice.
A DBMSP has one role in life - to support its client’s marketing activities and drive incremental
value from marketing activity. They have a deep and broad understanding of the technology and
applications you are using and invest heavily in ensuring your system is available and working to full
capacity. As DBMSP are experts in their field, you can take full advantage of the skills and experiences
they have gained over considerable time and across the varied business needs of their multiple clients.
Strengths
Control of staff and resources
Responsible for own destiny
No risk of outsourcer bias
Strengths
High probability of success
Speed to market
Access to specialised talent
Established test and measure
processes
Opportunities
Work with best talent in the
market
Achieve rapid capabilities
enhancement
Find innovative, leapfrog solutions
Weaknesses
IT- Marketing friction
Talent/staff sourcing issues
Limited domain expertise
Weaknesses
Limited control over staff
Long-term contractual
obligation
Risk of static solution
Threats
Cost overruns
Slow time to market
Failed or flawed systems
Threats
Buy into yesterday’s platform
Outsourcer bias
Poor account team
Opportunities
Business flexibility
Technical flexibility
Organisational agility

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IT independency
Keep up to date with new applications using best of breed technology
A DBMSP can offer you extra IT resources with specific experience. This saves you from relying upon
your own IT department to take care of specialised marketing matters outside their skillset.
A DBMSP’s business is based upon marketing technology and up to date techniques, so they must
stay abreast of relevant technology and processes in order to maintain their competitive edge in the
marketplace. Continuous learning from successive new implementations also flows back to existing
clients.
Checklist before choosing a DBMSP
First, make sure that you find the right partner who is experienced and ideally has a background
in building marketing databases in your industry or similar.
Clarify your objectives and assess the vendor’s capability and accountability and whether they
can provide what you need to accomplish your goals.
Have a look at the vendor’s corporate philosophy and check that their culture will not come into
conflict with yours.
Arrange an initial test lab or mini project where possible. This will enable you to evaluate their
work first hand, it is particularly important if you expect workload requirements to increase or if
you are seeking to establish a long-term relationship with the DBMSP.
In conclusion, making the wrong choice between an in-house implementation and an
external service provider can significantly impact the effectiveness of your marketing campaign
executions. There may be good reasons why your company chooses not to outsource but more and
more companies are seeing the tangible benefits that are gained by leveraging an external partner’s
resources and expertise, outweighing the traditional internal barriers.
A DBMSP can assist you to apply the right level of resourcing by being flexible and allowing you to
access skilled, experienced resources as and when required on a pay-as-you-go basis. With a service
contract arrangement, the external provider undertakes to maintain suitably qualified campaign
specialists who can be called upon to meet your needs if departmental resources are not available
or when the work load exceeds your internal capacity.
Flexible resources

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About Digital Alchemy
Digital Alchemy Limited (DA) is Asia Pacific’s leading Database Marketing Services Provider. DA’s
team of professionals are dedicated to working with clients to improve their marketing efficiency
and to capture latent customer value. Established in 2003 and operating in Sydney, Melbourne,
Auckland,Bangkok,HongKong,Nanjing,andSingapore,DAhasbeencontributingtothesuccessofan
expanding breadth of clients including leading companies in financial services, telecommunications,
motoring services, media and other industry sectors.
“This document has been prepared for the purpose of providing general information and should not be relied on in substitution for individual
professional advice. Copyright in this document is owned by Digital Alchemy Consulting Pty Limited, and except as permitted under the Copyright
Act 1968, no part of it may be reproduced by any process, electronic or otherwise, in any material form or transmitted to any other person or stored
electronically in any form without the prior written permission of Digital Alchemy Consulting Pty Limited.”

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Reference Cited
“How firms use database marketing services”, Forrester Research
<http://i.i.com.com/cnwk.1d/i/bnet/DBMarketingServices.pdf>
“Marketing Automation Survey: crossing the chasm”, Researchcorp
<http://www.pinpointe.com/wp-content/assets/Pinpointe%20Report%20-%20Marketing%20
Automation%20Survey-08-08.pdf>