Studies and service offerings point to the need for better information herding.
Posted Oct 6, 2005
Two recent analyst studies and a new service offering cap a week of news about master data management (MDM) and its value in CRM. Systems integrator and BPO provider Extraprise announced the latest version of the data management component of its Insight-to-Interaction (i2i) platform and services today, and IDC published "Master Data Management: Worldwide Software and Services Forecast, 2005-2009," which predicts the software and services market for MDM will reach $10.4 billion by 2009. These follow last week's AMR Research study, "Master Data Management Framework: Begin With an End in Mind," which provides guidelines to developing successful MDM strategies and practices. Taken together, these three events indicate a growing concern over data management.
MDM is rapidly approaching buzzword status, defined by AMR Research as "a system of business processes and technology components that ensures information about business objects, such as materials, products, employees, customers, suppliers, and assets, is current, consistent, and accurate wherever they are used inside or exchanged outside the enterprise." Master data problems carry hidden costs, including poor customer service, production losses and delays, patchy partner information, and failure to identify and execute synergies.
The concept of MDM, and the problem it illustrates, has been around for several years, according to IDC group vice president and general manager Henry Morris. "MDM reaches across a number of areas, where functional units within an organization need to share data on products, customers, locations, etc., across multiple systems," Morris says. "As companies gather more data, and have to make it usable for CRM and compliance purposes, they encounter increasing difficulties and questions. What data is correct? Who is responsible for it? Who maintains the information?"
Morris says these issues mirror those that have faced ERP and CRM implementations for more than a decade. "These problems were identified back in the 1980s and 1990s, when customer information files (CIF) and ERP were being put into place, but they didn't solve the problem they were implemented to solve," Morris says. "At the high end of the spectrum, with SAP and similar solutions, a company like Unilever or Phillips might have dozens of separate SAP implementations within its organizational structure." He notes that businesses are not investing in new ERP and CRM systems as much as they are trying to rationalize their existing purchases.
Chad Gottesman, Extraprise vice president of marketing, notes the reason that MDM has appeared as a new term for an old problem: "Companies have often had customer information in multiple systems. It's important now because they want to do more with the information they have," Gottesman says. "Ten years ago, companies started gathering info via their SFA systems, then began automating SFA. Once that was done, they started automating data collection through the contact center, then field service. They wanted a 360-degree view of the customer, but this wasn't that--it was stovepipes of separate solutions, with data sources that all say something different about the customer."
The AMR study recommends a longterm, organized approach to MDM. "Most companies know they have a problem with master data for their various transaction systems, but few have an overall plan for dealing with it. Cost and scope make a top-down solution impractical, especially for manufacturing and retail companies that rely on packaged software," the report states. "Best practice is to make MDM improvement projects part of each significant business initiative with an explicit plan for piecing together a full solution over several years."
The report outlines the rules and responsibilities for a master data management framework: Identify the objects and data elements to be managed; specify the policies and business rules for how master data is created and maintained; describe any hierarchies, taxonomies, or other relationships important to organizing or classifying objects; and explicitly assign data stewardship responsibility to individuals and organizations. "Stewardship is a key word," the report concludes. "Organizations can't 'own' the data; they have to maintain it for the benefit of the whole company and its partners."
Gottesman believes that MDM, and services built around it such as Extraprise's i2i, will deliver on the promise of CRM, and the practice will grow throughout successful businesses. "Take e-business as an example for comparison: as it developed, organizations built separate units dedicated to just doing that, and becoming experts on that set of functions," Gottesman says. "It became so important that it was absorbed into the behavior of the organization as a whole. The same possibility is there with MDM. We can expect to see more companies with a chief data officer, and MDM principles will become part of how business is done."
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