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Experian is moving into a new headquarters and new markets

Headquarters tell a lot about a company.

Broadcom Corp.’s campus at the gateway to the Irvine Spectrum depicts the chipmaker’s brash, rule-the-world attitude. First American Corp.’s neocolonial digs in Santa Ana reflect a company that’s as old as Orange County itself.

Orange-based Experian Information Solutions Inc.’s new home going up near South Coast Plaza in Costa Mesa is all about a company wrestling with a move from an old-line business to a new growth plot.

“A year ago, we decided that we had to protect our core business and have a new growth engine,” said Joanna Kuo, executive vice president of Experian’s integrated solutions business unit.

Last week, Experian laid off 150 workers companywide, including an undisclosed number at its Orange headquarters. The cuts came at the company’s credit reporting unit, which is feeling the squeeze of competition and shrinking profits.

Experian, formerly the TRW Information Systems & Services unit of Cleveland-based TRW Inc., has been synonymous with credit reports. Now Kuo is heading Experian’s customer relationship management unit, which the company expects to drive its growth in the next few years.

“In three to five years, CRM for us will be as big as our credit business,” Kuo predicted.

Customer relationship management, or CRM, is software, hardware and services used to plan, schedule, track and control sales and customer contacts.

Experian, which plans to move to its new headquarters in a couple of months, formed its CRM unit in September. Since then, the company said it has signed on some 14 customers, including a large telecommunications it says it can’t name.

Experian is a unit of Britain’s The Great Universal Stores PLC and is the fifth-largest foreign owned company in OC with about 1,500 employees here. In all, Experian has 12,000 workers worldwide and 6,500 in North America.

For the 12 months ended March 30, Experian’s revenue was up 7.3% to $1.5 billion. Profit before tax touched $326 million, vs. $301 million in the year-ago period.

While Experian doesn’t give a complete breakdown of its business, the company’s credit information unit accounts for the bulk of its revenue and profit.

Trouble is, Experian’s main business is getting tougher. For the year ended March, Experian’s operating profit margin slipped to 22% vs. 22.3% a year earlier.

As more players have moved into credit reporting, including title insurer First American, the product has become a commodity with declining profits. Rivals include Atlanta-based Equifax Inc. and Chicago-based The Marmon Group Inc.’s Trans Union LLC unit.

CRM, on the other hand, is growing, according to analysts. Market researcher International Data Corp. predicts CRM revenue to outpace the overall information technology market, going from $61 billion in 2001 to $148 billion in 2005.

But Experian faces challenges making itself known in CRM. Oracle Corp., PeopleSoft Inc. and SAP AG dominate on the software side, while Acxiom Corp. is big in CRM services, which Experian is going after.

And while analysts see a bright future for CRM, for now the sector is dealing with the same woes impacting other technology segments. Late last month, Little Rock, Ark.-based Acxiom said it expects to post a loss for the June quarter instead of the profit analysts were expecting. The company said it plans to cut 400 jobs, or about 7% of its workforce, in response to the weakened economy.

Experian is “in a similar category as Acxiom,” said Gareth Herschel, an analyst at market researcher Gartner Group Inc. “They build insight into customer data. But primarily they are there as a data provider to fill in the gaps for a company in knowledge of their customer.”

Part of the challenge for both Experian and Acxiom, according to Herschel, is convincing companies that they need help in better knowing their own customers.

“Most of the companies that I work with are busy building their own understanding of customers,” he said. “So, to an extent, they have less need for someone like an Experian. They won’t go away from the market. There is always going to be a need for them. But I think companies dependence on them as a source of customer data will continue to decline.”

Experian sounds pretty confident about its CRM bid. After years of managing credit reports, the company boasts that it has gotten pretty adept at dealing with customer data.

Besides the CRM unit, there are other areas Experian says it is interested in. The company is branching out into other areas where it can best use its experience,data warehousing, decision support and computer management.

“We are traditionally known as a credit reporting agency, but more of our resources are being deployed to non-traditional parts,” said Margaret Smith, president of Experian’s strategic business development group.

Experian points to its experience with a telecommunications customer as an early CRM success. The company came to Experian with a database of 350 million U.S. customers, according to Kuo.

“Everyone knows that there are only 280 million people in this country,” Kuo said. “There had to be duplication.”

Experian purged duplicate and bad entries from the database and filtered it down to information on 205 million customers, Kuo said.

The company’s CRM unit assists in analyzing and filtering data for clients so they can make decisions on financial matters and on marketing their products. Experian says it can help clients decide what type of prospects to target, which customers are more profitable and what their spending habits are.

“We have 25 years of experience in data management,” Kuo said. “The company has 200 modelers, scorers and experts who do the decision support.”

In other areas, Experian started a business information unit a couple of years ago that provides corporate and credit information to small businesses. So far, it has a database of 15 million businesses in the U.S., according to Smith.

“We are the second biggest player in this field, but second by a quite distant margin to Dun & Bradstreet,” Smith said. “It is one of the faster growing businesses in Experian.”

Experian provides credit data on companies as opposed to full content given by Dun & Bradstreet. It has about 6% of the market for business information services, company officials say.

Experian also offers software that helps customers make decisions based on the company’s credit data.

“I have a team of 200 people who derive business intelligence from raw data that we have,” Smith said. “We develop credit-risk scores that help lenders understand the probable risk associated with your credit report to marketing model or response model.”

Meanwhile, Experian is looking to hold its own in traditional credit reporting. The company, which has personal credit data on more than 200 million people in the U.S., was getting trashed by startups that provide personal credit data on the Internet.

In June, Experian launched Credit-Expert.com, a subscription service that gives individuals full access to their credit history and information. Individuals also can do simulations on the site to figure out how to improve their credit scores.

Steve Krenzer, chief operating officer of Experian’s e-commerce business unit, said response to the site in the first month has been strong.

“Consumers want information about their own credit information,” he said.

And despite the company’s recent layoffs, Experian says its credit information division is meeting internal targets.

“The automotive car sales have been soft, and the refinance market may have peaked,” said Donald Robert president of the information solutions business unit for Experian North America, who recently joined Experian from First American.

But, “the business so far this year is on track,” he said. n

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