Solve the Master Data Management Equation
Customers want personalized service and value, but all too often, efforts to give them this are hampered by inaccurate data. The problem is that data, if left unchecked, will rapidly erode at a rate of 20 percent annually, according to published reports. Without access to accurate and up-to-date customer information that is shared across the enterprise, costly mistakes can occur. That's why companies must ensure that the lifeblood of their business—their data—is clean and accessible across the enterprise.
If they don't, they can wind up offering too much value to customers who don't deserve it or, even worse, little or no value to customers who genuinely do deserve it. Take for example the casual gambler, who only shows up when he receives comped rooms at a hotel and casino. When he arrives, he takes advantage of the free entertainment, uses the hotel's facilities, and spends a little money at the tables or slots.
One might argue that inviting occasional gamblers back with perks is a smart business move, considering the hotel and casino won't make any money if the rooms are empty. However, it's not only about filling the hotel rooms. It's about who occupies those rooms. If the hotel fills rooms with low-value, occasional gamblers, it could be ignoring the all-important high rollers.
Targeting high-value customers has been tricky for many hotels and casinos. However, it is possible with a master data management (MDM) system that connects front- and back-office solutions for a complete, up-to-date, and accurate view of the customer. With this type of system in place, a hotel and casino can identify high- and low-value customers calling into a contact center; get a comprehensive view of the customer file; use guided selling tools to make appropriate recommendations; and capture and manage special requests.
The Mohegan Sun, an Uncasville, Conn.–based hotel and casino, wants to take this approach beyond the contact center. "We're looking at a real-time recommendation engine that we can put in our contact center, on our Web site," and even within some slot machines, said Christopher Friday, senior vice president and chief information officer at the Mohegan Sun, during a panel discussion at the Gartner Customer 360 Summit in March.
Friday outlined three core objectives in data management that are on the drawing board at the casino: finding ways to personalize the customer experience when 70 percent of customer reach occurs through the inbound contact center; unifying digital channels, which range from disparate Web sites to customer portals; and creating a foundational layer of master data management to ultimately feed quality data into all customer touch points.
"The point of MDM is to share common definitions and reference data across multiple applications," explains Philip Russom, research director for data management at The Data Warehousing Institute (TDWI). "You may start with CRM or the customer domain, and move on from there, but it's [limited], and you should expect over time to support a wider variety of applications."
Master data management, as defined by TDWI, is the practice of defining and maintaining consistent definitions of business identities, such as customer or product, and subsequent data across multiple IT systems, and potentially beyond the enterprise to partnering businesses.
The Data Dichotomy
The promise of master data management is that it enables organizations to go beyond customer data. Companies might also want a single view of a product or a supplier—and even their employees and workflow—to increase sales, improve efficiencies, and ultimately strengthen market penetration. Ray Wang, principal analyst and CEO of Constellation Research, says that a master data management solution fits into other enterprise point solutions, such as CRM, ERP, or guided selling products, because "to have effective guided selling, you need to count on good master data management…you need to know what products the customer bought, what kind of customers bought those products, and you need to know when they bought those products."
In the case of Boston-based Beth Israel Deaconess Medical Center, a teaching hospital of Harvard Medical School billed as the official hospital of the Boston Red Sox, disparate data sets had taken a toll on patients and physicians alike. "When we look at our healthcare system, it's generally unidirectional—from provider to patient," explains Steven Freedman, M.D., a Beth Israel gastroenterologist. Freedman leads the development of the digitized Passport to TRUST program, which powers bidirectional data flows between patient and doctor through software provider NexJ's Connected Wellness platform. "If your doctor tells you something, we know that eighty percent of the time, you won't remember what [he] said. Why can't we help that? Look at Amazon.com. When I go on the Web site, it's easy. I order something. I can check where it is in the tracking system. A week later, it arrives at my doorstep and Amazon sends me an email asking, 'Are you happy?' And, by the way, 'Here are some other things we thought you'd like.'"
It was that logic that inspired the program, which will be implemented over the next six to nine months and then undergo a year of clinical trials.
The hospital had a number of data warehouses, servers, and medical records with Web portals designed for patient care, but "none of those systems were really talking to each other," according to Camilia Martin, M.D., a member of the Passport to TRUST development team. (Martin and Freedman acknowledge that hospitals and medical systems have spent years and many dollars deploying electronic medical records systems, which will bring data management to center stage when healthcare reform materializes.)
William Tatham, CEO of NexJ Systems, points out that many patients visit multiple doctors, which results in disparity in health records with no single view of the patient. "The Connected Wellness platform and NexJ health exchange technology [enable you] to pull all of your health records from participating providers and aggregate them so [your doctors] have a holistic view of your condition."
Often, large enterprises maintain a bevy of systems that house disparate data sets. This can result in fragmentation or even duplication of information if that data is not managed and cleaned properly. "CRM is one view of the customer, but that information possibly needs to be linked to various other parts of the supply chain," maintains Sanjay Jindal, global process leader for master data at Capgemini. "One customer, for instance, may have different [terms and conditions], and will need to be looked at differently by the people who are responsible for advising and billing than by a marketing group."
For many organizations, the problems are compounded when they go through a merger or acquisition, as large volumes of data enter the picture. Two or more enterprises that add staff, processes, and technology will often face a challenge in obtaining a precise and single version of the truth when a number of parts merge. Considering that merger and acquisition activity increased by about 23 percent from 2009 to 2010, with a global dollar value set at $2.4 trillion—according to Thomson Reuters and Freeman Consulting Services—that's a lot of data that needs to be addressed.
"When you look at an organization like Bell Canada Enterprises, your first thought is, 'It's a phone company,'" says Aaron Zornes, chief research officer at The MDM Institute, noting that the Canadian phone market has seen its fair share of merger and acquisition activity. "But they have a wireless and wire-line business and two different customer call centers, Internet, satellite TV, and who knows what else? And each of these has separate billing, sales forces, and product manager systems." Beyond managing an influx of data as a result of merger and acquisition proceedings, the question then becomes "How can I ensure the data I have is of good quality?"
Age of Data
Customers move, change their names due to marriage or divorce, reach new life stages, and die. Add to that the mistakes that customers and employees make when entering customer information, and it's easy to see how customer data can erode so quickly.
Also, data quality relies on a healthy technical infrastructure, experts say. "You may be working with a restaurant client and all of a sudden there's a hiccup in one of their POS systems, so perhaps we didn't get data from certain portions of their file for a week," says Brad Rukstales, founder and president of Chicago-based CAC Group. "Or sometimes retailers change SKU-based categories and that data doesn't make it all the way through to the customer-centric repository, and all of a sudden you have some atrophy in the hierarchies you're using."
To put it simply, it's an imperfect world, and there will always be interruptions in data flow and information from Point A that doesn't quite make it to Point B, let alone Point D. But where this most affects companies is when a perceived view of the truth isn't actually the truth. "When I change the address of a company, I generally just change the address, and there's no reason applied to that data to say why it was changed," says Ed Shepherdson, senior vice president of enterprise solutions at Coveo.
A company may have downsized and relocated to a smaller office. Or, conversely, the company may have been acquired and moved to a larger office. "With some of this data, there is no time period applied to it and no additional context, so the data becomes very stagnant and in a lot of cases, its value erodes over time," Shepherdson adds.
When you add a growing layer of social and mobile data, defining time periods becomes an especially valuable attribute for enterprises. Shepherdson says that organizations need to figure out if they will nurture, archive, or eliminate data. Social, in particular, is very time-dependent and situational. If a company receives a customer complaint on a social channel like Facebook or YouTube and, in the worst case scenario, finds out it went viral, there is a limited window of opportunity to respond. Companies must define what they will and will not use as reference data going forward.
"Big data is useless unless you have some idea of who or what that data is about," Zornes says. "Master data uniquely identifies these online personalities…it makes sure we're transacting with the people that we think we are, that we're granting credit to the appropriate corporate structure…. It's a complicated world, and master data management helps us make some sense of it."
"The big thing people are starting to realize is that big data, social, and mobile are converging, and in order to deliver on a perfect customer experience, you need to have some context and you can't do that without MDM," Wang emphasizes. "People are starting to realize, 'I've got to have a good profile. I have to understand what they're engaging in.' [MDM is] like the heart of all of these social CRM initiatives. More importantly, it's the heart of basic customer experience."
When one hears about master data management, it can be natural to overlook the human element of the equation. But mastering the people and processes is precisely where organizations can begin to successfully implement an MDM solution and strategy. Outlining the benefits of building a business case for MDM during the Gartner Master Data Management Summit, Michael Smith, a Gartner vice president, put the success rate of IT initiatives at 50 percent. What it comes down to is that the primary stakeholders leading the initiative—from the IT team to the business executives—disagree on specific project objectives.
It's important to identify where the benefits of MDM could occur. "If you're working on customer data, customer service and sales will be affected," Smith noted. "If it's product quality you're looking at, you may want to involve people in inventory or product management. Also, engage the financial stewards early and ask them to participate." The whole point of MDM is to enable apples-to-apples sharing for a consistent and single view of the truth across various lines of business and processes.
Before adopting a solution, an organization must identify what domain it wants to tackle first. "A single-application MDM is a safe start, but at some point, a single view of the customer needs added views with products and financial data," Russom says.
After identifying business goals and domain, there needs to be a collaborative process to integrate data governance and data stewardship into the equation. A proper data governance principle, according to The MDM Institute, will consider business drivers, project scope, roles, policies and procedures, data quality, and business operating model. Only then should the search for or the building of a technical solution begin.
The MDM Landscape
According to Gartner Research, global master data management software revenues will total $1.9 billion in 2012, a 21 percent increase from 2011. That number is expected to jump to roughly $3.2 billion by 2015. Much of this growth will likely come from three or four standout leaders.
In 2010, Informatica acquired Siperian for $130 million, which has continued to mold the company into "one of the leaders in the space," Wang says.
In May, Informatica MDM 9.5 was introduced to the market. The company says the solution will "open the door for organizations to engage in effective social e-commerce, take MDM to the cloud, enable the mobile workforce, and scale MDM for today's big data realities." The solution is available on-demand or on-premises, and offers an Informatica MDM iPad App, which allows users to grab customer transaction, social, or master data on the fly.
Naturally, Informatica is not alone. IBM has completed its fair share of MDM acquisitions (such as DWL in 2005 and Initiate Systems in 2010), positioning it as a strong competitor. DataFlux (a SAS company) is another master data contender. Plus, industry-specific solutions from companies such as Talend are sitting at the master data management table too. And, of course, one mustn't ignore industry newcomers, such as Pitney Bowes Software, which released MDM solutions in April.
Master data management solutions will have a pivotal year in 2012, according to The MDM Institute's "Master Data Management & Data Governance Strategic Planning Assumptions for 2012–2013." Vendors will need to increasingly support multidomain environments with reference management and better integrations with data governance and business process management (BPM) solutions. According to IT Business Edge, while BPM automates a company's business processes, by melding it with MDM for a complete view of its data, a company could, for instance, trigger an order or response when inventory falls below a set level.
"The BPM people link together workflow applications, but realize: 'What's the point of linking applications if you don't have a consistent view of the data?'" Zornes notes. "So you've seen BPM vendors like TIBCO and Progress Software add master data capabilities."
By the same token, Zornes says MDM solution providers such as IBM, Oracle, SAP, and Informatica are growing their BPM capabilities.
Although cloud-enabled MDM is in its early stages, there is room for growth in 2012 if the SMB market enters the picture; cloud-based MDM solutions offer a viable entry point with no long-term or expensive commitment.
In its "Next Generation Master Data Management" report, issued in April, TDWI says that next-generation MDM means nixing the so-called "Roach Motel" mentality—a scenario where data checks in, but never checks out. Single-domain MDM is inherently unidirectional. In other words, customer data flows from ERP or CRM systems into the database. If it comes out, it will usually just flow into a data warehouse or analytics mart. Unidirectional data works well for research and business intelligence purposes. However, it is not conducive to improving reference data, the report indicates.
By fostering a bidirectional, multidomain MDM system, the Roach Motel can be avoided. The goal of next-generation MDM is to create a real customer hub that allows data to flow freely and to be improved or fixed, and synchronized back to its original source, be it a BPM, CRM, or financial applications system. These efforts will undoubtedly further MDM's purpose—to create a single version of the truth.
Top 5 Business Drivers for Master Data Management
The MDM Institute outlines the following ways in which MDM helps unlock measurable ROI:
- Accelerates opportunities for cross-sell and upsell. Obtain a more accurate view of your customers' profile, accounts, and interactions to leverage bundling opportunities.
- Fosters regulatory compliance. Continuous customer data improvements can result in lesser regulatory fines for inaccurate or missing information.
- Improves customer satisfaction. By ensuring consistency and delivering uniform customer processes, such as account or name changes, MDM can help companies "drive dirty data" out of the information supply chain.
- Increases sales force and call center productivity. By leveraging existing enterprise infrastructure with newer channels of service, MDM increases the likelihood that you'll save substantial integration costs.
- Facilitates economies of scale for mergers and acquisitions. When a company undergoes a merger or acquisition, MDM can help shorten the timeframe for customer, desktop, and billing integrations when assimilating new customers into an organization.
Source: "Proven MDM Strategies for Business Success," Aaron Zornes, chief research officer, The MDM Institute
Associate Editor Kelly Liyakasa can be reached at email@example.com.