Master data management ‘crosses the chasm’ as corporates sharpen focus

Master data management programmes are gathering pace in corporate organisations as they try to get more business value from data.

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Interest in master data management (MDM) is “going through the roof,” in the words of one analyst, as organisations struggle to exploit a recovering global economy and comply with ever-growing regulatory burdens while hampered by poor-quality business data.

In fact, many enterprises have been attempting for a good 15 years or more to create so-called golden records or 360-degree views from siloed data held in transactional databases and applications such as ERP and CRM systems – often via data warehousing projects.

But it’s only over the last five or six years that efforts have started being made to create a single, trusted, reconciled and consistent master file for different types of data – financial, customer or product information, for example – to serve as a common point of reference across the enterprise.

Following that path and adopting an MDM strategy can enable an organisation to “create common, global views of data to ensure that everything is consistent,” said the master data lead at a large international engineering company that started its MDM programme in 2000. The ultimate aim is improving corporate reporting as well as the effectiveness of business decision making, added the MDM official, who asked not to be identified.

According to Andrew White, a research vice president within Gartner’s information management team, the appeal of that vision is such that, despite their complexity, 

MDM programmes have now “crossed the chasm” and are starting to move into a mass-market adoption phase, with interest levels going through the roof.

Andrew White, research vice president, information management, Gartner

An online poll undertaken by Forrester Research in November 2010 confirms this view. Of the 188 IT professionals questioned, 55% said they had already implemented or were in the process of implementing an MDM strategy, or they were expanding their existing MDM initiatives, often out of an initial pilot phase.

Uptake is particularly high among companies operating in deeply regulated industries such as financial services and pharmaceuticals, which were early MDM adopters. But MDM activity is also starting to spread to other sectors, including manufacturing, transportation and distribution, with many organisations being keen simply to get a better handle on their business performance.

During the global economic recession, the focus of most MDM initiatives was on trying to cut costs and boost internal process efficiency. But White said that has changed: “There’s been a shift back to where we were a few years ago, and the drivers are now revenue enhancement, improving customer service, business growth and regulatory compliance. So there’s a much broader mix.”

The need for a robust business case for an MDM strategy
Because few chief executives or even business functional directors, such sales, marketing or operations leaders, recognise that having a single coherent view of key corporate information is strategic for the ongoing competitiveness of their business, the likelihood is that IT or data management executives will need to make a solid business case to win them over.

Indeed, according to Forrester, 59% of MDM programmes that took place last year were driven by IT executives, while business managers took the initiative in a mere 30% of them. But for once, the finance director could prove to be a key ally.

“Buy-in at very high levels is required, but we’ve seen a lot of success in the office of the CFO,” White said. “They’re held legally accountable for the financial data that they’re holding, and so they’re usually very keen to ensure that it’s valid.”

Such buy-in, wherever it comes from, is crucial, not least because enterprise MDM programmes tend to be expensive multiyear initiatives that require large amounts of change management activity.

And that’s something IT can’t enforce on its own, said Andy Hayler, chief executive of research firm The Information Difference

IT typically hasn’t got the authority to get the business to change what it’s doing, so if you have an MDM programme driven by IT, it’ll be an uphill struggle

Andy Hayler, chief executive, The Information Difference

Hayler explained. “MDM is not primarily a technical problem. At the heart of this is trying to get people to change the way they do things when they don’t want to change or give up power.”

But, as ever, when trying to build an effective business case, a key consideration is to link any arguments to the organisation’s strategic high-level goals and objectives in order to define potential business benefits and demonstrate what success will look like.

For example, Chris Farnworth, lead information architect at Lloyds Banking Group, told attendees a IRM UK’s annual MDM summit in London this spring that the organisation had been working towards a single view of its customers for the last 15 years.

After a history of merger and acquisition activity, which included the purchase of Bank of Scotland owner HBOS, Farnworth said Lloyds found that by 2008, it had a total of about 2,000 applications, which was making any attempts at introducing business or underlying system changes “excessively complicated.

“Banks have evolved from being very account-centric to being customer-centric,” he said. “The critical thing is how to do that, and MDM helps.”

Another argument in favour of an MDM strategy is that many large companies have trouble obtaining straight answers to ostensibly straightforward questions, such as what are their most profitable customers, products or channels. They also often have no idea how much such failures to segment and analyse data effectively is costing them.

In the case of multinational organisations, this situation often comes about because each subsidiary has implemented a different instance of the corporate ERP system, all employing different definitions of apparently standard terminology such as profit or margins. As a result, there may be “no consistent way of allocating costs and calculating profit margins across multinationals, as there are always little differences,” Hayler said. “But the aim of MDM is to try and fix all that.”

Maintaining engagement among key MDM stakeholders
Another thing to think about, said the master data lead at the engineering company, is that MDM initiatives are inevitably long-term endeavours.

“MDM is not a project but a journey, and it never stops, so it has to be sustainable from the outset,” he said. “And because it’s a building block for other things, it’s important to keep stakeholders engaged.

 “At stakeholder meetings, you have to show that doing this would enable that and continually reinforce that we can now do this but we couldn’t do it a year ago,” the master data lead said. “Regular communication is important because the risk is that stakeholders could lose focus over time.”

The bottom line, he added, is that MDM success is measured over the long term. “There are no quick wins with MDM,” he said. “If you just do a six-month splash and then leave it, it’ll give you nothing.”

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