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June 28, 2002

Eyes Wide Open

Building a privacy-aware information infrastructure is a conscious effort

by Justin Kestelyn

These days, acquiring and analyzing customer information is like defusing a bomb. And it's a lot easier to do that with your eyes open.

Advances in analytic techniques and technology have helped many information-focused organizations understand the needs and motivations of their customers, and respond accordingly. Indeed, the hallmark of any intelligent enterprise is the ability to improve the customer experience across all channels through constant analysis, evaluation, and personalization and to base performance metrics on customer satisfaction (Intelligent Enterprise Imperative #9; for articles pertaining to this goal, see www.intelligententerprise.com/info_centers/imperatives/9). Those meeting this goal tend to prosper; those that don't tend to fail.

Unfortunately, privacy is the wild card in this high-stakes game. All the information assets in the world are useless if customers don't trust your company's instincts in determining "acceptable" use of those assets. There's plenty of evidence to suggest that the lack of such trust is a competitive disadvantage: For example, the U.S. Federal Trade Commission estimates that online retailers have lost $18 billion in sales because consumers were concerned about how their personally identifying information would be used.

On the Level

The privacy issue is becoming more explosive as more invasive information acquisition technologies (customer surveillance and biometrics, for example) go online. If you think that your company's current ability to build personally identifying customer records is sensitive now, what do you think about the imminent ability to link facial images with names? It's safe to say that even the possibility of such a practice would stigmatize "relationship" marketing. But does it have to be that way?

Not necessarily. My proposition, which has echoed in Intelligent Enterprise since its inception, is that appropriately designed business intelligence solutions can, in fact, help enable privacy policy. That proposition is counterintuitive, but as Mark Madsen explains in this issue's cover story ("Making Your Privacy Policy Work"), a carefully designed enterprise analytics strategy can help map privacy policy to strategic business applications across the organization. How? Because the information infrastructure required by such a strategy is the ideal place to build firewalls between different types of information acquired in different ways.

For example, you could design your data warehouse to deny access to certain customer information based on the profile of the requesting application or employee. Similarly, certain information, such as healthcare records or biometric data, could be managed in such a way that they're never combined with other types of information in a dynamic fashion. In that sense, the "intelligence" of information infrastructure is partly based on the premise that data assets should never be mixed or managed blindly. In fact, customer privacy demands it.

True Blue

The SonicBlue case is an interesting prism through which to view the issue. The company, which sells personal digital video recorders, was ordered in May 2002 by a federal magistrate to collect detailed data about customer viewing habits (with no opt-out provision or notification) and then make it available to several television studios, which are suing SonicBlue for enabling copyright infringement. Incredibly, this order would countermand SonicBlue's own privacy policy, according to which no such data is collected.

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The fear is that once this data is created, at some point the studios could join it with personally identifying data from other sources to fashion valuable customer profiles. (As of this writing, SonicBlue had won a stay on the magistrate's order.)

This case illustrates that information is like a chemical that, while ordinarily harmless, can become quite explosive in specific conditions. Information infrastructure designed to avoid these conditions is a big factor in privacy awareness.