As part of an ambitious six-year strategic plan to dramatically expand its core business, Caixa Galicia recognized that developing sales and customer centricity would be essential to building lasting and profitable relationships by offering each customer the most appropriate mix of products and services.

• Caixa Galicia has implemented Teradata's Enterprise Data Warehouse and Value Analyzer (a calculation engine for customer valuation) to provide customer profiling and segmentation, as well as profitability analysis by customer, with a front end developed in-house using Microsoft .NET. This enables the company to make better-informed sales offerings and to focus attention on its most-valued customers.
• Caixa Galicia used business intelligence (BI) to help transform the business as part of a six-year strategic plan. With executive sponsorship and a long-term vision, the company has been able to effect a transformational change to its customer relationships.
• The team responsible for the project was set up by people from business and the IT organization.

• Organizations should invest in customer profitability analysis as a way of driving consistent customer experiences and improved business performance.
• Alignment with strategic plans is a key requirement for transformational BI projects. The BI strategy should use a phased approach to deliver manageable-sized projects in support of the execution of the business strategy.
• Executive sponsorship and long-term commitment is vital. BI projects require a significant initial investment and sizeable ongoing outlays during several years to achieve transformational results.

In 2003, Caixa Galicia announced its 2004 through 2010 strategic plan. To meet this objective, the company recognized that it must become a customer-centric sales organization able to attract and retain customers with targeted offerings. To support this, it transformed its technological infrastructure by implementing a new management information system, along with Teradata's Enterprise Data Warehouse and Value Analyzer.

Partially due to the successful adoption of a customer-centric approach, during the past four years, Caixa Galicia has opened more than 170 new operational branches, more than doubled its business volume (from 2004 revenue of €34.816 million to more than €76.3 million in 2007) and has improved its efficiency rate (expenses as a percentage of revenue) from 52.47% to 40%. In February 2008, Caixa Galicia was a semifinalist in Gartner's BI Excellence Award competition.

Caixa Galicia is one of the 10 largest Spanish savings banks — focused on credits and deposits for families and companies — with more than 2 million customers in Spain and Portugal. It owns more than 800 branches in the region and has further consolidated its expansion strategy globally through its presence in Switzerland, Portugal and the U.S. This network of branches is supplemented by a multichannel platform with electronic banking and financial services through cellular phones.

In support of its strategic plan to drive customer satisfaction, Caixa Galicia selected Teradata as a key technology provider to support the development of a customer-centric data warehouse and CRM application to help anticipate customer needs and to incorporate added value into customer relationships.

Caixa Galicia crafted an ambitious six-year plan to become more customer-centric, but it didn't have enough information about its customers' attitudes and behaviors to execute on this strategy. Moreover, it lacked information about customer profitability that was required to accomplish two fundamental business drivers for the overall project: changing its way of dealing with clients and rationalizing the resources of the commercial side of the business. Once Caixa Galicia had detailed information about customer profitability, it could improve service and provide new offerings when the business model allowed. Caixa Galicia had detailed profit and loss (P&L) data but no way to calculate profitability in a bottom-up fashion with generally accepted accuracy of the calculation by all the major business units across the bank. In addition, it did not have any tools for product management that would permit it to look at the profitability of every commercial action.

This initiative started in 2003 when Caixa Galicia laid the technology foundations for its new strategy by implementing a corporate data warehouse and developing "Sigma" — a marketing information and management system to optimize sales planning tasks and perform customer segmentation. In 2004, Caixa Galicia initiated a strategic CRM project with the aim of driving forward a sales action focused on the specific needs of each customer, increasing shares of its financial portfolio and strengthening customer loyalty. This project was aimed at the small and midsize business (SMB) and personal customer sectors — segmenting customers and prospects into a series of clusters that were allocated to CRM advisors to better-target and align products and services to existing and potential customer needs. Caixa Galicia also developed specific programs for monitoring quantitative and qualitative customer information using reporting and scoreboard tools for tracking targets developed primarily in-house.

The latest phase of this initiative started in 2006 when Caixa Galicia decided to extend its solution with the acquisition of Teradata's Value Analyzer to accurately calculate the profitability of each customer. The first objective was to use an extraction, transformation and loading (ETL) tool to get operational-level information into the warehouse to support the ability to calculate detailed profitability.

The team responsible for this project was set up by people from the marketing and IT departments. Initially, the initiative was taken by the IT department. In the functional design, this team required the cooperation of other areas in the organization. Steering committees and operational committees were established for making key decisions in the system's design. After finishing the system's design, they decided (with input from the commercial operations department) to launch a pilot rollout for specific commercial managers (a sample of 120). The pilot had the following objectives:

• Include profitability information as normal input in the dashboards of the commercial managers.
• Determine whether any errors were missed in testing or whether omissions in the information were displayed through data checking.
• Analyze the utility of the reports — oriented toward their daily use.
• Check the application's ease of use and accessibility.

This project phase started in January 2006 with an implementation team comprising three IT full-time equivalents (FTEs), two FTEs from financial planning and three external FTEs — although throughout the project's development, there were up to 15 IT FTEs involved in the operational system modifications. The project's initial hardware and software costs were approximately €400,000. The system went live in April 2007, using Teradata as the data warehouse supporting the whole process, Teradata Value Analyzer as the software to make profitability calculations and in-house development (in .NET) for the management information system that would include the profitability analysis.

After going live with the pilot project, the steering committee held workshops with the stakeholders from the commercial operations department to define a progressive deployment to the whole commercial organization. This deployment was prioritized according to the complexity of the reports that would be required.

Ongoing efforts for the project use two and a half FTEs for maintenance in the IT organization, two FTEs in the financial planning department, two FTEs for call center agent support and one external consulting FTE. The annual budget for the project is approximately €200,000 (only external costs).

After successfully rolling out the customer profitability system, Caixa Galicia is planning (in 2008) to aggregate all branches' P&L statements to determine the profitability of their contracts. It also plans to deliver an additional detailed, risk-adjusted, return-on-capital analysis.

Caixa Galicia is changing its normal business operations to make better and more-consistent judgments about recommendations for additional products and services. With this new system that provides profitability assessments for every contract in the organization, Caixa Galicia can complement traditional insights, such as churn likelihood and product interest, with insights about individual customers' value. For the first time, Caixa Galicia's commercial managers are able to view detailed customer analysis and profitability down to the individual contract to support decisions that have a material impact on P&L.

The profitability information has been used in business negotiations with clients. Client profitability is becoming the main measure for awarding managers with bonuses. The system has enabled Caixa Galicia to fundamentally change the way it does business, because important contract decisions are no longer based on volume, client retention or interest rates, but on detailed profitability calculations.

• Caixa Galicia developed its customer-centric BI solution as a series of phases, and used pilot projects to iron out any issues prior to widescale adoption. This step-based approach enabled the company to gradually expand its use of BI and synchronize its more-sophisticated systems with organizational maturity.
• IT sponsorship was required to help drive the overall initiative and educate the organization on the possibilities that IT solutions could offer. An essential step was to set aside sufficiently skilled IT resources to support the design and implementation phases without losing momentum.
• Caixa Galicia found that using external resources was key to keeping the project in a good rhythm and to delivering implementation skills needed for some complex calculations.
• Tying the measures from the BI system to employee bonuses has been a successful tactic in driving BI adoption.

• A strong leadership team made up of IT and commercial staff was needed that was able to align the complex technical requirements with necessary business domain expertise.
• For customer profitability analysis to be trusted for operational use, a solid IT infrastructure was needed.