• October 20, 2008
  • By Jessica Tsai, Assistant Editor, CRM magazine

Are You Ready for MDM?

NEW YORK — Master data management (MDM) has historically been viewed as an expensive and resource-intensive software, but as a technology and a technique has finally broken into the mainstream. That's the verdict delivered at the MDM Summit here this morning by Aaron Zornes, chief research officer at the Master Data Management (MDM) Institute, in his morning keynote. Solutions not only have more functionality, but they are more affordable, extending from the Global 5000 down into the midmarket. Entering the mainstream, the concept of MDM has evolved, Zornes told the crowd: Instead of a business software, MDM has become a game-changing business strategy.

Zornes outlined what the MDM Institute found to be the top five drivers of MDM deployments:

  • compliance and regulatory reporting: to provide business transparency for customers and suppliers;
  • economies of scale for mergers and acquisitions (M&A): especially relevant given today's market, MDM projects must be factored into the M&A budget in order to rationalize database integrations;
  • synergies for cross-sell and upsell: a lack of communication between siloes hinders a company's ability to build a 360-degree view of a customer to create lifetime value;
  • legacy-system integration and augmentation: uniting old and new technology solutions to bring data into a single, central location; and
  • "once-and-done economies" and customer satisfaction: enable customer and supply-chain self-service capabilities, automatically updating information changes (e.g., name and address) to deliver a single version of the truth.

Zornes warned attendees, however, that, as MDM exists right now, there is still no single vendor that can fulfill its enterprisewide promise. For many companies, data continues to reside in siloed departments: product data lives in the supply chain, employee data is stuck in human resources, and customer data is stored behind firewalls, closed off from the wealth of unstructured data available outside. Therefore, vendors moving into subsequent generations of MDM are steering away from data-centric models to ones focused on application, process, and policy.

Zornes' description of MDM's development included the following four phases:

  • Phase 1: MDM solutions at the departmental level or in a subdivision of the enterprise.
  • Phase 2: an enterprisewide deployment that includes multiple entities of analytical, operational, and collaborative MDM.
  • Phase 3: an "ecosystem" where the multiple pieces bought to build an MDM solution are brought together as a single product on a services-oriented architecture that can be built once and made available to all application groups. Phase 3 enterprises should have hooks in place for data governance, even if those hooks are not ready to be used.
  • Phase 4: multiple-entity framework that supports both project- and party-level MDM (i.e., the customer or supplier), mashups that incorporate unstructured information from internal and external sources, integrated data governance, and enterprise search.

Reaching Phase 4, Zornes said, should be the plan for enterprises over the next two to five years.

Tony Fisher, chief executive officer of DataFlux, took the stage after Zornes presentation, and continued to underscore the importance of MDM. The ultimate goal, he said, is to be able to answer one overarching question: "How is what we're doing going to improve our business?" Fisher's appearance at the MDM Summit follows just weeks after DataFlux's own user conference, during which he delivered a similar presentation emphasizing that business and technology must come together if MDM is to have a fighting chance.

Fisher also shared with the audience the internal measurement of MDM sophistication that DataFlux has developed. As companies progress, he said, the rewards increase and risk is mitigated:

  • The Undiciplined companies include roughly one-third of companies today. Their business decisions are very technology-driven, resulting in a mess of duplicate data and an inability to efficiently adapt to market changes.
  • The Reactive companies are those that incorporate business goals as they try to align processes across technologies such as enterprise resource planning (ERP) and CRM. Fisher called this method "dysfunctional," adding that it "has a high cost to maintain."
  • The Proactive companies, ironically, only become proactive in the aftermath of a reaction: some circumstance that forced a reevaluation across the entire enterprise. This, Fisher said, is the most difficult transition to make, not because of the technology -- which Fisher said is available -- but because it requires different departments to actually work together. Only 10 percent to 15 percent of companies are at this level.
  • The Governed are companies that have established a business-driven technology that operates with repeatable, automated processes. Unfortunately, only 10 percent to 15 percent of companies have automated business processes, Fisher reported, let alone an integrated corporate environment. Only after reaching this rarefied stage, however, can companies truly attain personalized customer relationships and optimized, cost-effective operations.

Earlier, Zornes had reminded attendees that MDM is intended to provide an authoritative view of every unique entity and application in your business, regardless of its source. That premise came with a warning: "Focusing on single-data domain and usage style is detrimental to the long-term business strategy of integration."

So, for his part, Zornes offered a very different overarching question for attendees to ponder: "Are you going to be strategic, or myopic?"

News relevant to the customer relationship management industry is posted several times a day on destinationCRM.com, in addition to the news section Insight that appears every month in the pages of CRM magazine. You may leave a public comment regarding this article by clicking on "Comments" at the top; to contact the editors, please email editor@destinationCRM.com.

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