Going into the 2017 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 17, 2017—
Over the past quarter, Gartner was 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 data and analytics leadership team to help us innovate and transform to become a fully digital enterprise.” He also added with a wink that there is an imperative to do so because, “the limited physical space of our workshop is starting to krampus.”
As a long-time Gartner client, NPI has learned how other enterprises have selectively adopted data and analytics 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 infonomics concepts to drive more value from our information assets because 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 it advises, 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 vision to become a more data-driven digital business, 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 below for North Pole Inc. Core Data Requirements and Database Sizing]
Data Quality as Pure as the Driven Snow
NPI has developed 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.
Valuing its Avalanche of Information Assets
Each year, NPI collects piles and piles of more data, “but we have become uncertain what the relative cost and benefits of that data is.” said NPIs new chief data officer (CDO), Iselin Berg. “Therefore we have begun applying Gartner’s infonomics methods for valuing our information assets to establish information management priorities and policies, manage them as an actual asset, and to identify opportunities for monetizing them with partners and suppliers in ways that conform to digital ethics.”
Analytic Opportunities Beyond Just “Naughty or Nice”
After taking the Gartner IT Score for Data and Analytics and the Enterprise Information Management self-assessment it was clear 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, incorporating a data lake 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. And this year, based on Gartner advice, NPI has mobile-enabling Santa in the field during mall appearances so he can advise on toy availability and alternatives in real-time while a child is on his lap. Gartner analysts pointed out that this new capability should 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 analyzing social media streams and other alternative data sources. 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 from data brokers 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, admitted Ms. Berg. “Advanced analytics just isn’t a core elfin competency. We’re definitely going to have to fly-up or crowdsource outside talent for a bit.”
Operational Efficiency at Times Glacial
Gartner also advised NPI on how to consolidate its ordering process and information. Since the late 1970s, NPI has been 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,” Ms. Berg 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 including new GDPR compliance requirements, and spotty connectivity at its arctic headquarters, Gartner recommended that at this time NPI only consider hosted data solutions for its 7900 gift express hubs.
Gartner recommended that NPI consider operating in a bimodal manner. That is, two separate, coherent modes of IT delivery, one focused on stability and the other on agility coexist. This has become the cornerstone of NPI’s new “bi-polar” strategy in which ongoing operations are relocating to the new Antarctic data center, while its arctic operations refocus on innovation and the becoming more limber. “Given the magnitude of our operation,” commented Mr. Ellefsen, “moving to a bi-polar execution model helps us ensure smooth sledding with both our evergreen solutions and new ideas generated by our enterprise architecture group headed by Trip Wiseman.”
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 and monetize its information assets, including:
- Selecting toys that would encourage naughtier kids to be nicer
- APIs for suppliers to access NPI demand data in real-time
- Elf-service data prep and elf-service analytics to enable valuable insights to be produced by anyone throughout NPI
- An artificial intelligence (AI) realtime NOD (night of delivery) routing and navigation system incorporating 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” (IoT) capability to enable better collaboration among kids and self-reporting toy diagnostics
- Implementing digital twin capability for expedited sleigh maintenance
- “Quantified elf” capabilities for enhanced worker performance
- A diversity program to help better recruit and integrate dwarves, hobbits and Inuit workers along with those of all genders and orientations into the male-dominated elfin workforce
- Launching northpoleinc.com to place holiday wishes, maintain wish-lists, check real time naughty-or-nice indices, receive gift notifications, etc.
- White-labeling its platform for providers of other festivals such as Hanukkah and Kwanzaa
- 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 households)
However the entire NPI management team was quick to throw cold water on 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 North Pole Inc. and other organizations are innovating and transforming with data and analytics, be sure to attend one of Gartner’s 2018 Data and Analytics Summits. It is rumored that NPI representatives will be there for networking with attendees.
Gartner, Inc. (NYSE: IT) is the world’s leading research and advisory company. We help business leaders across all major functions in every industry and enterprise size with the objective insights they need to make the right decisions. Our comprehensive suite of services delivers strategic advice and proven best practices to help clients succeed in their mission-critical priorities. Gartner is headquartered in Stamford, Connecticut, USA, and has more than 15,000 associates serving clients in 11,000 enterprises in 100 countries. For more information, please visit gartner.com.
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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