Choosing Your Database Technology: Inhouse or Service Bureau?

Many companies have invested large amounts—as much as several million dollars–in marketing database technology. Others have achieved results with relatively modest investments in list management tools. In fact, several recent studies have revealed that most corporations that have undertaken large-scale marketing database initiatives say the programs failed to achieve all the original objectives.

The technology for inhouse target marketing databases has evolved significantly in recent years. Traditional suppliers that relied on specialized inverted or bitmapped databases to enable quick queries of multimillion-record databases are being assailed by integrators who make use of open-architecture database and reporting platforms such as Oracle, Sybase, and Microsoft SQL Server. In addition, advances in PC and Unix server architecture and processing speed have enabled corporate or workgroup servers to achieve performance benchmarks that were previously only attainable in large-scale mainframe service bureaus.

At the same time, the Internet has ushered in the application service provider (ASP) model, where external suppliers host databases and enable access through a secure Web browser to a distributed user base. This model is especially useful when coordinating the delivery of services between the list manager, the marketing program manager, and outside advertising agencies and print production shops.

Before you decide whether to manage your marketing database inhouse or whether to outsource it, you should answer the following questions:

  • Is your company technically able to support the database architecture and maintenance?
  • Can your company effectively integrate geographic, demographic, and lifestyle data to select lists for marketing?
  • Is the cost and timing of implementing the solution sensible in terms of the program plans?
  • Are your customer data too confidential or sensitive to install in an external service bureau?

If the answer to all four questions is “yes,” then you should consider an inhouse solution. Conversely, if you answered “no” more often than “yes,” you’re likely to be better off working with a service bureau.

Larry Daniel is president/CEO of Austin, TX-based Conclusive Strategies ,

a provider of database marketing and geographic analytics.

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