The Orbitz Effect — How Will it Impact Your Next Analytics Purchase?

Spend Matters welcomes another guest post from NPI, a spend management consultancy, focused on delivering savings in the areas of IT, telecom and transportation.

Of all the industries that benefit from the advancement of business intelligence and analytics technologies, retail tops the list. And, I'm always interested to learn exactly how retailers are using these technologies. Like most consumers, I have pretty much accepted that my favorite retailers know me better than I know myself.

So, it's no surprise that I found the following revelation from Orbitz to be riveting. From Dana Mattioli at The Wall Street Journal:

Orbitz Worldwide Inc. has found that people who use Apple Inc.'s Mac computers spend as much as 30% more a night on hotels, so the online travel agency is starting to show them different, and sometimes costlier, travel options than Windows visitors see...The Orbitz effort, which is in its early stages, demonstrates how tracking people's online activities can use even seemingly innocuous information--in this case, the fact that customers are visiting Orbitz.com from a Mac--to start predicting their tastes and spending habits.

This is just one example of how retailers are using predictive customer analytics to boost revenue, and it's only a taste of what's to come. It also demonstrates why retailers will continue to spend aggressively in this area, and why vendors will be aggressively pursuing higher margins from new and existing client investments. In short, the interest in BI/analytics is off the charts, and vendors know it.

Here are a few tips to consider as you plan for your next BI, customer, predictive or mobile/social analytics purchase:

  • Position the purchase properly. Proper positioning will yield 15-20% savings right off the bat. Be clear on the business problem you're trying to solve and the metrics for success. Also, don't go with an incumbent vendor without an objective price evaluation and selection process with multiple vendors.
  • Decouple pricing from ROI. Don't let vendors tie price to ROI. Aside from the fact that it has nothing to do with pricing, vendor ROI claims tend to be inflated.
  • Beware of the bundle. Vendors will tease you with high discounts for bundled packages. Break down the services/products in the proposed bundle, see which offerings you actually need and compare costs.
  • Identify implementation risks up front and decide how you're going to mitigate scope creep. Understand potential issues ahead of time and discuss with your vendor how you will get rid of or lessen these risks.
  • Beware of fixed-fee implementation. Fixed fees are rarely "fixed." Ask your vendor to bid implementation costs on a time and materials basis to understand true cost-to-serve.
  • Consider third-party implementation providers. These providers are often a better deal, especially those that have experience in retail.

- Jeff Muscarella, EVP of IT, NPI

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