Going into the 2014 holiday season, North Pole Inc. (ticker: XMAS), the leading global distributor of presents to good girls and boys, called upon Gartner to assess and advise on its information related needs and opportunities.
STAMFORD, Conn., December 16, 2014—
Over the past quarter, Gartner was again given exclusive access to the operations and information systems of North Pole Inc. (NPI), to help it set a strategic path for improved information management and analytic capabilities. For nearly two centuries NPI has struggled to support its growing operation and respond proactively to competitive pressures through the use of emerging technologies and best practices.
“We do a jolly good job year after year,” claims NPI’s Founder and CEO, Santa Claus, “but I have really put the pressure on my IT management team to achieve better efficiencies and creatively use information to innovate.”
As a long-time Gartner client, NPI has read about how other enterprises have selectively adopted information technologies, embraced new architectures and approaches, and acquired the necessary skills. “Now it’s our turn,” exclaimed NPI’s CIO Frederick Ellefsen. “We’ve now fully embraced ‘big data’ and the significant opportunities indicated by the confluence of mobile, cloud, social and information—Gartner’s Nexus of Forces— along with digital business best practices, so we didn’t want to be left out in the cold, so to speak.”
“This is a unique opportunity for Gartner to be exposed to the inner workings of one of the world’s most secretive yet successful enterprises,” said Peter Sondergaard, Gartner SVP Research. “We were pleased to be able to offer our services and insights to NPI.”
Gartner’s review of NPI’s systems revealed an operation not too dissimilar to other distributors and some major retailers, but on a much larger scale. However due to NPI’s unique legal status it has no finance department, nor does it have sales or marketing functions.
Santa’s Systems Portfolio
Key systems in NPI’s portfolio manage orders, inventory, quality testing, elfin performance and activities, along with tracking human behavior, correspondence, wish lists and contact information, and also environmental impact data. To achieve NPI’s objective of embracing the concept of “infonomics” (i.e. managing and leveraging information as an actual enterprise asset), Gartner first completed an inventory of the NPI’s extensive wealth of information assets:
- Toy Order Management System (“Tommy”) – Toy orders and order tracking of 5.5 billion orders; supplier and 2nd level supply chain and parts level visibility of 4.6 million suppliers; toy orders and order tracking of 5.5 billion orders
- Toy Inventory Management System (“Timmy”) – Receiving and inventory data on 6.9 billion toys
- Toy Assurance Management System (“Tammy”) – Test results and repairs/returns data on all toys received (average of three safety and quality tests per toy) totaling 21 billion tests annually
- Content system for Relations, Inbound Gift Request and Letters (CRINGLE) – Processing, scanning, content extraction and analysis of 6.5 million letters, emails and calls, and recording 19.5 million gifts requested
- Naughty or Nice Information Tracking System (NITS) – Processing and tagging of 16.8 trillion person-to-person interactions throughout the year
- Scheduling, Logistics and Expedited Distribution System (SLEDS) — Handling of 500,000 appearance requests and 280,000 actual mall and other appearances; the operation of 7700 gift express hubs and the logistics and maintenance of the half-million sleighs servicing them; and night-of-delivery (NOD) routing
- Kontact Information & Directory System (KIDS) – Basic contact, rooftop and chimney configuration information on 2.3 billion gift recipients and their 880 million households
- Helper Organization, Operations and Orchestration (HO-HO-HO) – Scheduling and coordination of elf workforce job responsibilities and activities; also coordinates elf housing and food service
- Job Information, Guidance, Learning & Elf Management System (JINGLES) – General elf resource (ER) system for tracking the performance, benefits and training activities of 230 million elves, along with ongoing recruiting activities
- Study for Negating the Outcome of Warming (SNOW) – A longitudinal study as part of NPI’s sustainability efforts. Millions of climate, atmospheric, emissions, deforestation, and animal and human population data points are collected annually to help NPI achieve its target of carbon neutrality by 2020
[See bottom of article for North Pole Inc. Core Data Requirements and Database Sizing]
Data Quality as Pure as the Driven Snow
Due to impeccable information governance and quality processes, a world-class master data management (MDM) program, an impressive team of data elves, robust data quality technology, and unwavering executive-level commitment and involvement, NPI’s information assets show no signs of significant completeness, accuracy, integrity or other quality issues according to sample data profiling using Gartner’s data quality assessment toolkit.
Analytic Opportunities Beyond Just “Naughty or Nice”
From a business intelligence perspective, Gartner found that NPI is lagging others in the shipping and distribution industry. Its enterprise data warehouse , called “Chimneys”, is really a collection of stovepipe query and reporting systems, some still relying on first-generation BI tools like Red Brick. Gartner recommended evolving to a logical data warehouse architecture for most low-frequency queries to enable more insightful cross-functional, federated analytics.
Some predictive analytics is done to select appropriate toys based on NITS behavior modeling, demographics and prior-year presents. Gartner recommended that this system be enhanced to account for factors such as sibling response, damage/loss propensity, and social content analysis. NPI however is working on mobile-enabling Santa in the field during mall appearances so he can advise on toy availability and alternatives (as necessary) in real-time while a child is on his lap. This system is expected to be in place for the 2015 holiday season. Gartner analysts pointed out that this new capability would also require enhancing its “Tommy” toy order management system to capture full catalog and supply chain information from its suppliers. Today NPI only maintains this tracking data on actual orders.
Although NPI does a great job of social media participation, including a multi-channel Twitter strategy (i.e. @santa, @officialsanta, @santaclaus, @santa_claus, etc.), Gartner recommended that NPI begin tapping and analyzing social media streams. Social sentiment analysis will help NPI identify emerging “hot toys” for pre-ordering, and identify early warning signals of quality-related issues. NPI also took into consideration the idea of integrating global economic data to better focus its gift giving on those in the greatest need. However, NPI like many organizations is struggling to hire or train a team of data scientists. “Advanced analytics just isn’t a core elfin competency,” lamented Mr. Ellefsen. “We’re definitely going to have to fly-up outside talent for a period of time.”
Operational Efficiency at Times Glacial
Gartner also advised NPI on how to consolidate its ordering process and information. Since the late 1970s, NPI has being consolidating inbound shipments using its gift express hubs scattered secretly in forests around the world. However it still orders and inventories gifts from suppliers one-by-one. “Our ‘Tommy’ system is definitely outmoded,” admitted Mr. Ellefsen. With sophisticated demand analysis, order pattern matching and smart RFID-enabled inventory management, Gartner believes NPI could save 70-80% of its current TOM processing expense.
No More Cookie Cutter Approaches to Data Management
Regarding the human behavior tracking system (NITS), Gartner suggested that in today’s world perhaps both online interactions (text, email, social media) and human-to-animal interactions should also be captured and tagged as “naughty” or “nice”, and that a broader 5-point Likert scale or automated video/audio analysis might improve measurement precision. NPI is obviously concerned by the size and performance of this already 168 terabyte system, but will be looking into HDFS or other NoSQL alternatives to support expanded tracking ideas. “For obvious reasons, we got away from inverted tree data management structures years ago,” Mr. Ellefsen chuckled.
Gartner and NPI also discussed a long-term cloud strategy. But with over 200 terabytes of online operational data, austere personally identifiable information (PII) privacy and security requirements, and spotty connectivity at its arctic headquarters, Gartner recommended that at this time NPI only consider hosted data solutions for its 7700 gift express hubs.
A Big Sack of New Ideas for Big Data
During the “Workshop at the Workshop” session as it was called, Gartner helped NPI conceive many innovative ways to use information, including:
- selecting toys that would encourage naughtier kids to be nicer
- putting de-identified data online for suppliers to analyze
- realtime NOD (night of delivery) routing and navigation via integrated weather, GPS and air traffic data to optimize Santa’s 10,200 takeoffs, landings and deliveries per second
- 3D printers for custom toy fabrication to reduce sourcing and inventory expenses
- autonomous drone-technology sleighs and robotic Santas to further optimize toy delivery and keep up with growing demand
- developing an “Internet of Toys” capability to enable better collaboration among kids and self-reporting toy diagnostics
- “quantified elf” capabilities for enhanced worker performance
- launching northpoleinc.com to place holiday wishes, maintain wish-lists, check realtime naughty-or-nice indices, receive gift notifications, etc.
- launching a mobile app packed with additional functions such as sleigh tracking, product scanning, and even realtime milk & cookie delivery so Santa receives the freshest snacks (with gluten-free, nut-free, sugar-free, and even kosher and halal options for mixed-religion families)
However the entire NPI management team was quick to squash the subject of transitioning to an outsourced, mobile-enabled parental workforce. “Elves have magical capabilities beyond those of most humans,” Mr. Claus interrupted, “Not to mention a tremendously strong union.”
For those interested in learning more about how NPI and other organizations are innovating with information, be sure to attend one of Gartner’s 2015 Analytics and Information Management Summits. It is rumored that NPI representatives will be there for networking with attendees.
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North Pole Inc. Core Data Requirements and Database Sizing*
* For non-believers, these data sizings were derived from various sources: Population data used to determine the number of worldwide Christians (2.3B) and Christian households (884M) is from the US Census, the Catholic Education Resource Center, the Christian Post, and the the Global Population Clock. The average number of presents from Santa (3, excluding stocking stuffers) is from Babycenter.com and CircleofMoms.com. The number of person-to-person interactions (20/day) for calculating the volume of “naught/nice” data comes from the Tilted Forum Project on Humanity, Sexuality and Philosophy. The amount of correspondence Santa receives is from a Wired Magazine article (500K letters annually) and extrapolated to include emails and worldwide correspondence. The number of toy makers (1547 in US) is from toydirectory.com and is extrapolated to include worldwide toy makers, suppliers and parts. The number of shopping malls (105,000 in US) is from the International Council of Shopping Centers. And package delivery, transportation and personnel numbers are extrapolated from public FedEx data.
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