The MDM Effect: Who Stands to Gain?
The need for timely and accurate information is driving businesses to adopt master data management (MDM) solutions in support of business intelligence (BI) and performance management initiatives, according to a new report by Ventana Research. The study, entitled "Master Data Management: Business and Technology Trends," finds that MDM is gaining momentum, as nearly half (49 percent) of the 230 business and technology professionals surveyed said they have an MDM project planned or under investigation, while more than a quarter (27 percent) have an MDM initiative already under way.
Companies have finally realized the need to consolidate data via a unified hub, according to the report, thanks to enterprise data distributed across an average of 20 to 40 systems. Citing the need to improve the management of multiple data entities--with customer, product, and financial data identified as top priorities--more than two-thirds of companies surveyed stated that a centralized hub is the most critical technical component to their overall MDM strategy.
That's an indication that companies have learned from the mistake of allowing data quality initiatives to come into play at the application level, says Mark Smith, executive vice president of research at Ventana Research. Smith adds that the application-level approach results in a heterogeneous collection of customer and product definitions across enterprise applications. "Each application or system has specific functionality and handles data differently, stores it in a separate data store, and may be unable to exchange and synchronize data with other systems," Smith writes in the report. "The result is inconsistency in how data is created and used across the enterprise."
The acknowledgement of that inconsistency--and the desire to clean it up--has led to some major spending: Despite the technology's relative immaturity, the MDM market (which includes such wide-ranging firms as MDM specialists Siperian and Purisma, data cleanser DataFlux Corp., systems integrator and business-process outsourcer Extraprise, and even IBM) is growing at a dramatic pace. By 2008 the market for customer data integration (CDI) solutions, the subset of MDM that focuses on customer data, will exceed $1 billion, up from $680 million in 2006, according to Gartner, while IDC projects the MDM market to exceed $10 billion by 2009. "Corporate leaders are demanding efficiency in business processes and commonality in data among information systems," Smith says in the report.
The study shows that the companies that are ahead of the curve in deploying MDM are using it to resolve both analytical and operational functions. At the analytical level, 34 percent of respondents said their top priority was to improve the accuracy and consistency of reporting from BI and analytic solutions by cleansing, organizing, and gaining control over the customer data needed to effectively market and sell products. At the operational level, the top priority for 70 percent of respondents was to create a centralized hub that can be used to synchronize data across multiple systems and data warehouses, such as CRM, ERP, and supply-chain management applications.
Despite the widely held belief in the importance of MDM deployments, however, the report finds that there's not yet consensus on which
part of the enterprise stands to reap the benefits of MDM: When asked to identify the functional areas that would benefit the most from MDM, no single category dominated the results. The top response, sales and marketing, was cited by less than a third of respondents (31 percent), followed by finance (22 percent), and customer service and I.T. (tied at 10 percent).
Though the technology is maturing rapidly, Ventana's research also recognized that a solid data-governance strategy is needed to ensure business success. Respondents claimed that data governance and the processes needed to govern master data are almost as important as the technology itself.
"Most companies have set up a data-governance board to oversee these initiatives," Smith writes in the report. "It's a best practice to have senior representatives of both business and I.T. on the board, as there must exist established governance processes and technology safeguards for those with access to the data."
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