For many companies, having inconsistent data is not just
inconvenient, it is a major impediment tobusiness agilityand
competitiveness.
Yet many businesses suffer from this affliction, in which
information about the same customer or product, for example,
appears in multiple systems and in multiple formats across the
company and simply does not tally from system to system. This
undermines reporting initiatives and can seriously impede managers'
efforts to make sound strategic decisions.
This situation certainly cannot be blamed on a lack of effort or
technology investment, however. On the contrary, organisations
spent millions of pounds throughout the 1990s on
enterprise resource planning (ERP) suites that promised to
provide a central, consistent set of enterprise data.
The problem with this was that the vast majority of businesses
needed to implement additional software products after the ERP
system was introduced, and each new system would have its own
database, data format and, frequently, its own version of data that
appeared elsewhere.
"To put the problem in context, a change of address in a
company's customer relationship management system, for example, may
not find its way into other databases that also use that
information, such as the logistics system - with obvious
repercussions when it comes to the delivery of ordered goods," says
Nick Millman, a senior manager at consulting firm Accenture.
Enter
master data management (MDM). This is a practice and technology
that aims to help businesses improve data consistency and accuracy
across all systems and divisions, and also identifies and manages
the complex web of relationships that often exists between
disparate data elements.
BT, for example, uses MDM to ensure that customer names and
addresses are consistent right across the company using its name
and address database.
This acts as a central repository, which is used to populate all
other applications, says Dave Evans, senior data management
consultant at BT.
"In that way, we eliminate easy mistakes that cost us money -
such as an engineer turning up at the wrong address. Mistakes like
that really demonstrate the importance of data quality," he
says.
Xerox Europe, meanwhile, is using MDM to standardise data held
by each of its 16 in-country operations before loading the data
into a single instance of SAP.
"On average, we have found that in the best countries about 10%
of the data is duplicated. In the worst countries it is about 30%,"
says Andy Bloomfield, SAP deployment manager at Xerox Europe.
"We need to consolidate that all into a single, reliable source
of information - but that is quite a big operation, so we need all
the automation that technology can provide," he says.
But MDM goes way beyond a one-time clean-up operation for
enterprise data. In essence, it is about centrally controlling
definitions and formats for a wide range of data entities in order
to achieve harmony across multiple systems on an ongoing basis.
As a result, true MDM products offer a technical integration
architecture for centrally controlling and distributing definitions
of customers, brands, suppliers, financial indicators and so on in
near real-time.
The MDM database checks and revises data constantly, says Rob
Toguri, director of business information management at systems
integration specialist Capgemini.
"By defining changes to data in one place and then rippling that
through to relevant databases, MDM ensures that key data relating
to customers, suppliers, products, employees and so on is current,
consistent and accurate across all systems in the enterprise,"
Toguri says.
For many companies, that is an appealing prospect, and MDM is a
high priority for many clients, says John Radcliffe, an analyst at
Gartner. "But there is a lot of confusion," he says - not least
because of the range and diversity of suppliers eager to grab a
slice of the market.
That confusion does not seem to be stifling sales, however.
According to Rob Karel, an analyst at Forrester Research, MDM
licence and services revenue reached £550m in 2006, with 68% spent
on services and the remainder spent on software licences.
Karel expects the MDM market to reach £3.4bn by 2010, with
year-over-year growth averaging between 55% and 59%, and the
services-to-software ratio slightly decreasing but holding steady
at about 2:1.
Already, big industry names have staked out a substantial claim
in this market. For example, Radcliffe estimates that IBM, SAP and
Oracle already account for more than 50% of licence revenue in this
sector. Microsoft is hard on the heels of these firms, he says,
following its July 2007 acquisition of MDM specialist
Stratature.
Broadly speaking, the MDM software market can be divided into
three camps: customer data integration, product information
management and other MDM-focused niche products.
Customer data integration is the most mature segment of the MDM
product, according to Karel, consisting of transactional customer
hubs that collect customer data from disparate systems. These hubs
then standardise and consolidate data to produce a single customer
view that can be synchronised, delivered and consumed throughout an
enterprise.
"The majority of customer data integration applications provide
single-supplier support to enable a majority of the capabilities
required with the MDM ecosystem, but they only have out-of-the-box
business rules and data models to support customer master data.
Support for other data domains, like product, asset or contract, is
not usually an option," Karel says.
IT suppliers offering customer data integration products include
IBM, Initiate Systems, Oracle, Purisma, SAP, Siperian and
VisionWare.
Financial services company Irish Life & Permanent is
currently implementing IBM's Websphere Customer Center product in
order to establish a single record of its customer base, formed
from the 1999 merger of insurance company Irish Life and bank Irish
Permanent.
Product information management products, meanwhile, provide many
of the workflows, business rules, data models and integration
capabilities required to support either an organisation's internal
product master set or its external supply chain data.
"Product information management systems specialise in
cataloguing, standardising and synchronising product data from
disparate sources, but they are also limited to product data, and
rarely support other critical data domains," Karel says.
Companies offering product information management products
include GXS, i2 Technologies, Oracle, SAP and Tibco.
US restaurant chain Brinker uses Tibco's MDM product to
standardise the data it holds about menu items so that it can
calculate the cost of food supplies across a network of 1,600 food
outlets.
The third category of MDM products includes niche products that
"offer a solution to one of more components of the MDM core, but do
not have the same breadth as a typical customer data integration or
product information management supplier," Karel says.
Since a core component of creating master data is the ability to
first perform data-quality profiling and then apply
standardisation, matching, merging and enrichment logic, Forrester
includes data quality tools from suppliers such as
Business Objects,
DataFlux, Informatica and Trillium Software.
Likewise, other suppliers such as Kalido and Hyperion Solutions
- best known for producing datawarehousing and business
intelligence - also offer data workflow, model management and
hierarchy management tools that complement customer data
integration, product information management and data quality
products.
Whatever product is chosen, however, attempts to impose common
business definitions require substantial collaboration between IT
and the business people who use and rely on the data.
That is a tall order, says Radcliffe. "It requires a great deal
of understanding, effort and discipline to achieve. The good news
is that for companies that succeed at MDM, there are substantial
rewards to be gained."
Study: Irish Life & Permanent
Financial services company
Irish Life & Permanent is currently implementing IBM's
Websphere Customer Center product in order to establish a single
record of its customer base.
"While the two businesses - life and bank - continue to operate
separately and have their own brands and offices, we nevertheless
want to cross-sell to our combined customer base, and there is a
lot of crossover between businesses and products," says Noel Garry,
executive manager of IT strategy and planning at Irish Life &
Permanent.
"If we have a 'Noel Garry' on our life database and a 'Noel
Garry' on our bank database, it is vital we know that we are
dealing with the same person.
"At first, we thought we might simply load data from the bank
file into the life file, but after a bit of exploration, we got
talking to Gartner about MDM and we realised that it would provide
us with a more long-term answer to the challenge of keeping our
data consistent," Garry says.
A massive data clean-up is now under way, using automated
technology that brings together and consolidates matching records.
When agreed thresholds for matches are not reached, the system
marks the records up as "suspect" and flags them for human
intervention.
Using that approach, the group has already identified 117,000
exact duplicates within the Irish Life database alone.
Now that those duplicates have been eliminated and the rest of
the data has been cleaned up, the group can start to load that
database on to the Websphere Customer Center, Garry says.
The data held in the bank database, meanwhile, will also be
cleaned and loaded into the MDM product towards the end of
2007.
"Once that is complete, every time a new customer is entered
into any of our systems, that system will reference Websphere
Customer Center and use the hub to standardise the data
captured.
"And if a customer calls into the bank and tells us their mobile
phone number has changed, the new number is automatically
distributed by the hub to all systems that hold information on that
customer," Garry says.
MDM, he says, is just a starting point for Irish Life &
Permanent. "It will be a springboard for all types of new
initiatives, which is why we see this very much as an enablement
project for all types of improvements to the services we can offer
our customers," he says.