Two recent reports throw a bit of cold water on master data management, despite significant benefits and business process gains.
Posted Jun 25, 2008
Companies trying to solve their data problems may be missing the benefits of master data management (MDM), according to a new report by Aberdeen Research (a division of Harte-Hanks). Of the 4,600 respondents in "Winning Master Data Management Strategies for 2008-2009," only 17 percent reported having an active MDM effort in place, with another 28 percent having some kind of future MDM plans. A whopping 54 percent of respondents claim to have no plans to employ MDM whatsoever. But even the apparent MDM nonbelievers still report specific business challenges and needs that, according to Aberdeen, MDM policies, processes, strategies, and tools can help to enable or support.
Despite the seemingly slow uptake, a May 2008 MDM report by Forrester Research insists that MDM is on its way out of the early-adoption phase -- and that organizations are now talking about how MDM can improve business activities by linking together disparate data. As Michael Dortch, an Aberdeen senior analyst, writes in his firm's report, "This ‘think globally, act locally’ approach is translating MDM-related initiatives into significant business benefits; including better customer care, cross-selling and upselling, and more effective business decisions and processes." Dortch goes on, "The promise of such benefits is sufficient to drive investments in MDM-related solutions even by companies that claim to have no MDM plans." Aberdeen finds that nearly all companies -- 98 percent -- continue to struggle with data communication, integration, and quality issues, despite the investments made by some in MDM tools.
"At organizations that are highly distributed or operating dispersed, with loosely coupled IT and business infrastructures, getting and keeping hold of ‘one version of the truth’ is particularly bedeviling," Dortch writes. The report provides case studies showing how MDM use in the customer data sector can tackle that challenge.
In fact, according to Aberdeen, the link between CRM and MDM is stronger than ever: Sixty-five percent of respondents are using MDM solutions for customer data needs -- about four times better than the overall rate of MDM penetration -- evidence that successful efforts can translate into opportunities for additional revenue through cross-sells, upsells, and referral business. Among the surveyed companies that Aberdeen considers "best-in-class" -- those using MDM and focusing on customer data quality -- the results were striking:
- 94 percent reported improved data integrity;
- 95 percent reported improved data usability; and
- 89 percent reduced the time required to make customer data ready for business use.
Dortch says that customer data is a logical starting point with MDM efforts. Once benefits are gained with CRM data, MDM efforts can be spread throughout the enterprise. He adds that deployment of an MDM solution can aid and alleviate time spent on the following business-related tasks:
- business intelligence and analytics;
- regulatory compliance;
- risk management;
- data classification, governance, migration, and transformation; and
- IT agility in response to evolving business needs.
He warns, however, that an effective roadmap must be created before an MDM deployment begins, and not left to ad-hoc management. Dortch suggests that organizations:
- focus each initial MDM-related initiative and project on a specific business goal, need, process, or task;
- evaluate MDM solutions based on the ability to interoperate with already in-place or planned infrastructures and solutions; and
- ensure that MDM initiatives and deployments are supported by well-documented policies and processes.
Dortch writes that the significance of having tools in place that collect, clean, and analyze data cannot be overstated. "Whether looking specifically at customer data quality and integration or MDM as a whole, ensuring the integrity of the data the organization is relying on is vital if that data is to be used to maximum efficiency."
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