Ever had to deal with a bank, retailer or other organisation that doesn’t seem to have basic control of its records? When you're sitting at the dialing end of a premium-rate telephone line, having to go through all of your details because the customer service agent can’t see the information you want to discuss is a great way to lose the inner calm you’ve spent so long building up.
This problem is replicated in organisations large and small around the globe and is probably something your own customers are encountering – unless you have master data management tools in place.
An MDM system works by taking the ‘reference’ data from multiple databases, making it consistent and holding it in a single master database. The standardised reference data, which can apply to ‘domains’ such as customers, stock items, supplies and internal resources, becomes the only point of access to other types of data via links from the MDM hub to the databases underlying enterprise applications. The idea is to ensure that there is one master data record that is always referred to in transactions, thus creating a coherent set of information within an organisation.
As a good example of MDM’s potential value, consider a customer who has a cheque account, savings account, credit card and mortgage with the same bank, which holds the records for each account in splendid isolation and tries to pull everything together by semi-manual means as required.
But that can be a hit-or-miss process. In addition, it's dependent on each system storing the data in exactly the same way: the customer has to be down as 'Ms. A. Customer' of '1 High Street', and so on, in every database. If the data changes – for example, she moves house – each of the records has to be individually updated to keep everything in sync.
Now let’s take the same scenario but use MDM tools and procedures instead. Every transaction starts by going to the master database to ask, "Do we know Ms. A. Customer?" The MDM hub also contains pointers to all of the other ‘slave’ databases where data is held on the customer. If any reference data is changed, the master record is updated and the changes are propagated to the various transactional databases.
Master data management tools, MDM system can restore order to data
In addition, data on new customers is first entered in the master database, and the details are then replicated to the slaves. In this way, control is regained over the data and the customer experience can be improved.
For example, by using an MDM system as the main touch-point for corporate data, a single view of the customer becomes possible, and people can be offered special deals based on factors such as how loyal they’ve been across the whole of the organisation or their current perception of how they’re being served. It also becomes easier to look at previous transactions and check for cross- or up-selling opportunities.
Most organisations tend to view MDM as being only about customer data integration and management. But as mentioned above, it can be expanded to other domains as well. For example, using an MDM system across product databases can make it easier to tie together inventory and supply chain data – enabling an organisation to, say, create marketing campaigns with variable pricing dependent on customer, time of day, inventory levels and other factors.
The same company could also create a highly dynamic inventory system where multiple transaction channels, from electronic point of sale to online and telephone sales, are all working against the same back-end ERP, invoicing and CRM data. That could mean its customers no longer face the problem of ordering something, only to discover at a later date that the item is out of stock.
MDM can appear to be a silver bullet, but it does have its own problems that need to be dealt with early on – for example, existing data that by its very nature is ‘dirty’. Whereas a human being typically would find it easy to see that 'Ms. A. Customer' of '1 High St' with a postal code of 'AB1 2CD' is the same as 'Miss Andrea Customer' of '1, High Street' and 'AB12CD', a computer may view such database entries as being for different people.
All such dirty data must be cleansed before it is used in an MDM system. Measures will have to be taken to ensure that naming conventions, product catalogue numbers and other internal data references are rationalised. The data scrubbing effort may also require the use of external databases, such as the UK Post Office’s Postcode Address File.
Limited use of master data management tools is bad for business
At Quocirca, we believe that the current limited use of MDM tools and techniques is harming everyone, from the customer through to the business and its suppliers. MDM’s ability to create a far more effective and efficient data environment can provide a market differentiator for those companies that adopt it.
An MDM system also simplifies the task of ensuring proper data governance; rather than leaving an organisation scrabbling to control and pull together information across multiple applications and databases, MDM enables everything to be managed from one point. Auditing and data governance capabilities are built into the entire data structure.
MDM uptake is low partly because MDM software vendors have done a poor job of educating the market, leaving potential users worried that MDM is too complex and will require a massive new database to hold all of their existing data. Many businesses also have a false confidence that they can cope with the issues that multiple data stores create without investing in an MDM programme and MDM tools.
But MDM need not be all that onerous to implement, and maintaining data chaos isn’t a good way to carry out business. Now is the time to bite the MDM bullet, even if it isn’t a silver one.
Clive Longbottom is the founder of Quocirca, a UK-based research and analysis company. His primary coverage area is business process facilitation, through which he helps companies understand their core processes and the technologies that can be used to improve them. Longbottom has been an ITC industry analyst for more than 15 years and is also a frequent speaker at industry events and webinars. For more information on Quocirca, or to download any of its freely available research reports, go to www.quocirca.com.