Going into the 2022 holiday season, North Pole Inc. (ticker: XMAS), the leading global distributor of presents to good girls and boys, called upon West Monroe to assess and advise on its data-related needs and opportunities.
Over the past quarter, the digital business consulting firm, West Monroe, 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 data and analytics leadership 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 West Monroe 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 West Monroe to be exposed to the inner workings of one of the world’s most secretive yet successful enterprises,” said Matt Rager, West Monroe Senior Partner and co-founder. “We were pleased to be able to offer our services and insights to NPI.”
West Monroe’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.
Figure 1 – North Pole Inc. Operations
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-- managing and leveraging information as an actual enterprise asset--West Monroe first completed an inventory of the NPI’s extensive avalanche of data 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 environmental, societal and governance (ESG) program. 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 2030
[See below for North Pole Inc. Core Data Requirements and Data Sizing]
NPI has developed impeccable data 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 data assets show no signs of significant completeness, accuracy, integrity or other quality issues according to West Monroe’s data quality assessment.
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 Ms. Berg. “Therefore we have begun applying West Monroe’s methods for valuing our data assets to establish data management priorities and policies, manage them as an actual asset, and to identify opportunities for monetizing them among our partners and suppliers in ways that are legal and ethical.”
After doing a benchmark comparison 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. West Monroe recommended evolving to a hybrid cloud 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. West Monroe 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 West Monroe's advice, NPI has mobile-enabled 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. West Monroe 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 participation, including a multi-channel Twitter strategy (i.e. @santa, @officialsanta, @santaclaus, @santa_claus, etc.), West Monroe recommended that NPI begin tapping and 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 to better focus its gift-giving on those with the greatest need. However, NPI like many organizations is struggling to hire or train a team of data scientists, admitted NPIs new chief data officer (CDO), Iselin Berg. “Advanced analytics just isn’t a core elfin competency,” lamented Ms. Berg. “We’re definitely going to have to fly-up or contract on-shore talent for a period of time.”
West Monroe also advised NPI on how to consolidate its ordering process and data. 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 having a meltdown,” admitted Mr. Ellefsen. With sophisticated demand analysis, order pattern matching and smart RFID-enabled inventory management, West Monroe believes NPI could save 70-80% of its current TOM processing expense.
Regarding the human behavior tracking system (NITS), West Monroe suggested that in today’s world perhaps online interactions (e.g., text, email, social media) 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 and efficiency. NPI is obviously concerned by the size and performance of this already 168 terabyte system, and will be looking into private cloud alternatives to support expanded multimedia tracking ideas. “For obvious reasons, we got away from inverted tree data management structures years ago,” Ms. Berg chuckled.
West Monroe 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, West Monroe recommended that at this time NPI only consider hosted data solutions for its 7900 gift express hubs.
West Monroe recommended that NPI operate in more of a hybrid 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 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.”
During the “Workshop at the Workshop” session as it was called, West Monroe helped NPI conceive many innovative ways to use and monetize its data assets, including:
Selecting toys that would encourage naughtier kids to be nicer
Putting pseudonymized data online for suppliers to analyze
Elf-service data prep and elf-service analytics to enable valuable insights to be produced by anyone throughout NPI
A realtime artificial intelligence NOD (night of delivery) routing and navigation system incorporating integrated weather, GPS and air traffic data to coordinate and 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 “RobotiClaus” 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 provide self-reporting toy diagnostics
“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 realtime naughty-or-nice indices, receive gift notifications, etc.
White-labeling its services for providers of other solstice festivals such as Hanukkah, Diwali, Kwanza, Soyal, Saturnalia, Dong Zhi and Festivus
Launching a mobile app packed with additional functions such as sleigh tracking, product scanning, and even real-time milk & cookie delivery so Santa receives the freshest snacks (with gluten-free, nut-free, sugar-free, and even kosher and halal options for mixed-faith 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 North Pole Inc. and other organizations are innovating and transforming with data and analytics, be sure to attend next year’s MIT CDOIQ Symposium which West Monroe is sponsoring. It is rumored that NPI representatives will be there during their off-season to network with attendees.
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 toymakers (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.
About West Monroe:
West Monroe is a digital consulting firm that was born in technology but built for business—partnering with companies in transformative industries to deliver quantifiable financial value. We believe that digital is a mindset—not a project, a team, or a destination—and it’s something companies become, not something they do. That’s why we work in diverse, multidisciplinary teams that blend industry expertise with deep operational and technology capabilities—moving clients from traditional to digital operating models and creating products and experiences that transcend the digital and physical worlds. Our 2,000 employees have the opportunity to own a stake in the company, so when you partner with us you know we are committed—because your success is our success. Our undeniably different approach breeds undeniable results. Visit www.westmonroe.com to learn more.