DMP vs CDP vs DATA LAKE

During Customer Data Platform (CDP) and Data Lake discussions, I often come across wild assumptions on Data Lake’s ability to solve every problem while CDPs end up being heavily underestimated. In my opinion, neither CDP and nor Data Lake is replacement for each other but a perfect complement to each other. Data Lakes are a key source of data for CDPs while CDPs can help improve the quality and completeness of data in Data Lake. Another key platform in this mix especially for marketers is the Data Management Platform (DMP). I will like to spend some time to answer the DMP vs CDP vs Data Lake question.

Don’t think DMP vs CDP vs Data Lake but DMP+CDP+Data Lake.

If you don’t have the patience to read through all of this article on the difference of DMP vs CDP vs Data Lake, please skip directly to the summary section in the end.

DATA MANAGEMENT   PLATFORM (DMP)CUSTOMER DATA   PLATFORM (CDP)DATA LAKE
DEFINITIONData Management Platform (DMP) collects anonymous web and digital data. It comprehends information about prospects psychographics and demographics.  

Manage segments of customers with anonymous profiles.

For broadening marketing reach by building segments, audience mining etc.

Capture targeted audience at the right time in the buying funnel through relevant messaging.

Better optimization programs and smarter media buying decisions can be taken based on audience analysis and latest campaigns.
Customer Data Platform (CDP) is a type of packaged software which creates a persistent, unified identifiable customer profile that is accessible to other systems. Data is pulled from multiple sources, anonymized, cleaned and combined with third party data, intent data etc. to create a single profile of a customer.  

CDP enables real time activation of omni-channel experience across. CDP data can be leveraged in real time to provide more personalized content and delivery over web, mobile, Email, ABM, Ads etc. CDP data is accessible by external systems and structured to support digital and marketing team needs for experience management, campaign management, marketing analysis and business intelligence  

CDP is always a hot storage meaning easily retrievable and live connected to like customer master. CDP doesn’t need technical skills to manage and operate.
A Data Lake is a centralized repository that allows you to store all your structured and unstructured data at any scale. You can store your data as-is, without having to first structure the data, and run different types of analytics—from dashboards and visualizations to big data processing, real-time analytics, and machine learning to guide better decisions.

The key focus of Data Lake is to ensure that highly connected data is available to all enterprise systems and functions.

Data lake can have a combination of cold and hot storage. Cold storage for more older data like over 3 years.  Data Lake need very technical resources to build and operate it. Data Lakes don’t offer integration with last mile solutions like MarTech solutions.

Data Lake provides ability to understand what data is in the lake through crawling, cataloging, and indexing of data. It always ensures data assets are protected.

Data Lake allows to run analytics without the need to move data to a separate analytics system. Generate different types of insights including reporting on historical data and doing machine learning where models are built to forecast likely outcomes and suggest a range.

Different types of analytics on your data like SQL queries, big data analytics, full text search, real-time analytics, and machine learning are needed to uncover insights. You can create new business models based on historical data and new financial models based on customer behavior, product categories, market data, risks and opportunities
 USERSAdvertising Professionals Ad agencies Marketing (limited)Digital Marketing Customer Experience Sales (limited)Data scientists, Data developers, and Business analysts (using curated data)
IT
Sales
Finance
HR
Marketing
Digital
DATA SOURCES & MANAGEMENTData is ingested   from various client and media sources like marketing analytics, CRM, ad-servers, publisher partners and point of sale (POS).
Data is also collected from mobile apps, client’s website, as well as other channels that use native apps.
It is then augmented and enriched with   3rd party vendor data; private data exchanges are established.
First Party Data:
Web Analytics
CRM
Advertising Data
Marketing Automation Data
Second Party Data
Third Party DataIntent Data
Marketing Lists
Device data
Etc.
Data Lake can connect structured and unstructured data available in:
MDM (Master Data Management) systems
ERP CRM
Commercial Data
Product Data
Multiple other critical backend IT and Data systems in an enterprise
Line of Business Applications
DMP vs CDP vs DATA LAKE

Summary and Recommendation on DMP vs CDP vs Data Lake

DMP-vs-CDP-vs-Data-Lake

So how should we use this information on DMP vs CDP vs Data Lake and apply it to your business? DMP can take care of most of your needs if you are only focused on marketing segmentation and advertising. There are many mature products in the market that you can buy and start using immediately. If you have use cases broader than that (I hope so), then you must look into CDP and Data Lake. If you are a CDO, CMO or CIO reading this, you must look into CDP and Data Lake. CDP and Data Lake are both required by every organization as both provide solutions to different problems. While Data Lake brings the data from enterprise together and makes is useable immediately, CDP focused on doing the same for the use cases limited to teams focused on the customer side. These are primarily digital and marketing teams.

If you have a functional Data Lake, you should build a CDP (light) as data lakes are not built to solve last-mile use cases. Your digital and marketing experiences will struggle as you will not be able to utilize Data Lake to full potential.  CDP implementation will be lightweight and primarily focus on

  • Append digital and marketing specific data that is not available in Data Lake.
  • Create customer 360 and build segments for activation
  • Connect with last-mile experience and marketing systems to activate the data

If you only have CDP, you should look into building a Data Lake to solve bigger use cases and enable digital transformation in other areas like Sales, Customer Service, finance etc. Data is the blood for a Digital Transformation. 

If you don’t have both, you should start at least with CDP as those can build quickly and you can start hacking growth while you build data lakes that can take years in a large enterprise. As I mentioned above, you will still need a Data Lake. Plan to have that in the long term.

The question of DMP vs CDP vs Data Lake is not right as all these systems come together and help you enable transformation in the digital age that we all call Digital Transformation.


More suggested content from some experts in this space

Some additional content from the post on LinkedIn where I got some good feedback from experts in this field:

Most organizations are looking to add CDP to their MarTech stack as they are getting a data lake stood up, leading to parallel efforts and often times the 3rd party CDP (with speed to market) beating the in-house data lake build initiative. Then it gets to be buyer-beware as all CDPs aren't true and good CDPs. It's all about having laser-focused CDP use cases ready to deliver business value and knowing which vendor to partner with to maximize ROI. - Fauzia Chaudhry (Senior Manager, MarTech, Robert Half)
Today’s customer is on at least 5 or more connected device at any given point in time and with this device hopping the expectation is to have the same intimate moments of delightful and seamless experience on all of the channel of engagement and that is where CDP makes an immense impact, especially with privacy and regulations. - Raphy Mathias (Domain Information Officer, Toyota Financial Services)
CDPs are designed from the ground-up to solve both of these problems using AI to make sense of the data, and automation to active data into individual channels. As channels proliferate and customers move to Digital consumption modes, this combination of activation + automation is a must-have to grow Revenue without adding complexity and cost. - Shashi Upadhyay (EVP, Dun & Bradstreet)

Digital Transformation, Digitization and Digitalization

I came across three words related to transformation in the digital age; Digital Transformation, Digitization and Digitalization. These words were quite confusing especially Digitalization hence decided to explore the definitions and real-life meaning. Here is what I learnt in the process and will love to hear your thoughts and feedback.

Digital Transformation

Digital transformation is the practice of leveraging emerging technologies to build new business systems, business models, consumer & employee experience, or to change current ones to address increasing industry and market needs.

Digital Transformation is focused on CX, EX, Business Systems and Models
Digital Transformation is focused on CX, EX, Business Systems and Models

Digital transformation goes beyond conventional systems such as distribution, marketing, and customer support. Instead, digital transformation starts and ends with the way you think about customers and the way you engage them.

Digital Transformation, Digitization and Digitalization

Since all of these words have “digital” in them, they must be the same. Wrong. These words define and describe three different things and are not interchangeable. Let’s take a brief look.

Digitization

Digitization is the transition from analog to digital. Not that long ago, businesses had paper accounts and ledgers to keep track of their activities and transactions. The business data was analogous, whether handwritten in ledgers or typed in documents. You dealt with physical documents, such as papers and binders, Xeroxes, and faxes, if you wanted to gather or share information. Digitization is the process of converting information into a digital format as per TechTarget

Another great example is our videos in VHS to CDs or DVDs and audio in cassettes to CDs and eventually MP3. Computers became popular, and several corporations began turning all those paper and physical documents into digital data archives. The method of transforming material from analog to digital is called digitization.

Digitalization

This one is very confusing for me at least. For some, it means Digitization and for some digital transformation.

As per my understanding Digitalization enables and improves business processes by leveraging digital technologies e.g. APIs, big data, cloud etc. Digitalization is not about changing the way you do business or creating new business models. It is about making everything quicker and easier now that the data is readily available and not stuck anywhere in a rusty folder in a file cabinet or a homegrown database server.

In the example of customer support, Digitalization has fundamentally improved operation by allowing consumer information simple and fast to access via the device. The simple customer support approach did not shift, but as scanning paper ledgers became substituted by inserting a few keystrokes on a computer screen or mobile app, the procedure of answering a query, looking up the appropriate records, and providing a response was far more effective. It has not changed how you provide support by using new platforms like social media etc.

As per Gartner Digitalization is the use of digital technologies to change a business model and provide new revenue and value-producing opportunities; it is the process of moving to a digital business.

Closing thoughts

Digital Transformation, Digitization and Digitalization
Digital Maturity: Digital Transformation, Digitization and Digitalization

Digital Transformation, Digitization and Digitalization are all steps in the right direction at different times with different outcomes and value. While Digitization initiates the journey, Digitalization accelerates the business systems and makes it easier to access information. It is Digital Transformation that enables the end to end game that every organization needs to win it’s customers, employees and investors.

Recommendation

The companies who are just happy with Digitization or Digitalization are the ones that will not be able to compete and stay in business for the long term. Even if you are not competing with Amazon, Uber or Delta but your customers and partners are learning what good CX looks like and they expect the same from you!

Go Directly for Digital Transformation as Digitalization is partial and digitization is too basic. Digital transformation strategy and tactics will enable all you need for hacking growth via great digital experience and business models.

History Of Digital

History of Digital and Transformation it has enabled

If you look around, you will see that every single aspect of our modern world runs on electronic devices. The core of everything is ones and zeroes nowadays, and the world is on a path of aggressive modernization and digitization. This was not the case for the last century. We have come a long way, and today, we will decipher the history of digital and the revolution it has created.

Ones and zeroes have become the building blocks of modern technological advancements. Moreover, digitization has led humanity to new heights of prosperity, progress, and success. From landing on the moon to creating social media platforms for billions, digitization plays a vital role in every aspect of human lives.

From smartphones to personal computers, from tablets to gaming consoles, everything runs on ones and zeroes. However, this was not always the case. Let’s take an in-depth look into the history of the digital era.

History of Digital 1703 – 1847

Yes. The birth of the digital era took place in 1703 when mathematician Gottfried Wilhelm Leibniz developed the modern binary number system and published it under the name “Explication de l’Arithmétique Binaire.”

In the year 1847, Boolean algebra was born when George Boole published “The Mathematical Analysis of Logic.” The book would later become the foundation for a new field of mathematical logic using the modern binary number system. In his words, “The respective interpretation of the symbols 0 and 1 in the system of logic are Nothing and Universe.”

History of Digital 1937 – 1969

In 1937, Claude Shannon established the foundation for digital circuits in his Master’s thesis at MIT. He came up with a method of implementing Boolean algebra and logic to enhance the design of relays used for routing switches in telephones.

In 1947, John Bardeen, Walter Brattain, and William Shockley invented the first transistor at Bell laboratories, which changed the course of history forever and opened a new window to the digital future. This was among the most important inventions of the century. This semi-conductor device replaced the giant vacuum tubes and offered a simpler way of amplifying or switching electric signals.

In the year 1950, the very first series of pagers were introduced for physicians in New York City. Pagers showed a new mode of communication with the help of wireless telecommunications devices. These pagers could receive a message within 40 kilometers of the nearest transmitter tower.

In the following year, 1951, the first commercially available computer, Britain’s Ferranti Mark I, was delivered to Manchester University. This computer was created for simple arithmetic and data handling. Several other companies released their versions of general-purpose computers, such as UNIVAC, EDVAC, and LEO, etc.

In 1969, the precursor to modern-day internet was born, and it was named ARPANET (Advanced Research Projects Agency Network). The first message that was transmitted via ARPANET was “LO.” A student, Charles Kline, tried to send the word “LOGIN” to the other computer, but after LO, the receiver crashed.

History of Digital 1971- 1984

The very first email was sent out by computer engineer Ray Tomlinson to himself in 1971, and it read “QWERTYUIOP.” This laid the foundation for the modern email and data exchange protocols observed by the majority of email providers.

1975 saw the invention of TELENET, the world’s first commercial packet-switched network. This was the first version of the internet, and it connected company computers to other systems all over the world.

In 1981, the laptop computer was born. The 8/16-bit Epson HX-20 was invented in 1981 and was commercially sold in 1982. The screen was a little bigger than a matchbox (120×32-pixel dot-matrix LCD). The screen only displayed four lines of text at a time. It came with 16 KB of RAM (expandable to 32 KB).

In 1984, the very first mobile phone was launched for 4,000 USD. It offered only 30 minutes of use after a 10 hours’ charge. However, it laid the foundation for modern cellular and smartphones.

History of Digital 1989 – Present Day

Thanks to Tim Berners-Lee, in 1989, the “world wide web” was invented and thus born the modern internet. He was working at CERN at the time, and he created the system to facilitate the automated information-sharing among different scientists.

In the following year, 1992, dial-up internet and modems became public, and everyone was introduced to the joy on the internet. We all remember the era of unplugging phone lines to use the internet on our personal computers.

In 1994, the very first smartphone was introduced to the public, and it allowed the ability to place calls, send a fax, retrieve emails, and send text messages to others. It was known as IBM Simon Personal Communicator, and the battery only lasted an hour.

In the year 2000, Broadband was introduced in the UK, and a new form of internet connection was introduced. People quickly started replacing their dial-up modems for Broadband modems.

In the year 2003, Skype was launched. This was the very first medium of video conferencing and communication between people. It quickly became popular, and there was now a new medium of communication.

Facebook was launched in 2004 and became the number one social media platform for years to come. It gave birth to a new age of social media communications and earned millions of users within a few years of inception.

Did you know that the first iPhone was launched in 2007? The first iPhone also resulted in a sudden and an immense surge in the usage of smartphones. It sold over 6.1 million units all over the world and established Apple as the best brand for smartphones for a while.

In 2011, Bitcoin made history by becoming the first widely accepted fully digital currency. When Bitcoin focused on modern encryption technologies to offer a form of wireless currency, it became all the rage, and people started investing in Bitcoins.

2016 was the year when Facebook released the virtual reality headset, Oculus Rift, to consumers and set a new age for virtual reality applications.

Closing Thoughts

We live in an age of 4G (soon to be 5G) networks where we can watch or access anything from all over the world within a matter of milliseconds. Everything is available on the internet nowadays, and you can communicate with your loved ones from thousands of miles away.

From a mere email conversation to significant business decisions, everything is done via digital mediums. It all began with a binary number system, and the modern digital advancements are not showing any signs of slowing down for decades.

What is meaning of Digital in Digital Transformation

This is the most common question I am asked during all my years in digital transformation. It may come in various formats, but the intent is to understand the digital transformation scope. Every digital transformation lead will have a different answer based on the state of the company’s evolution. Hence no answer can be right or wrong in my opinion.
As per me, Digital is the new way of doing business and engaging with customers in this digital age. That is why a digital transformation should focus on both customers and employees in transforming the following:
  • User Experience
  • Business Processes
  • Business Systems
Do you agree? Please share your thoughts.

Leading Digital Transformation (Step 8)- Institute Change

Articulate the connections between the new behaviors and organizational success, and develop the means to ensure leadership development and succession.

Don’t manage – lead change before you have to. -Jack Welch

Here are some of the things that I have seen implemented in order to solidify change that has been initiated or created due to Digital Transformation initiatives:

  • Start a Digital enablement program
  • Promote and adopt ROI mindset
  • Align Digital KPI’s to Performance KPI’s in long-term
  • Whatever else that you think can work based on the culture of your organization

This is the final step on the list of 8 steps that I recommend for digital transformation in your organization.