Now that master data management is on the short-list for many CIOs, it is worthwhile to consider how MDM projects are spawning in organizations and how an organization can evaluate their potential for success.
Recent surveys by some industry analysts recommend what the software mega-vendors such as IBM, SAP, and Oracle have been hyping — that CIOs must look at the MDM effort holistically and embark upon an enterprisewide MDM initiative. Today, MDM is a seductive vision that is sold primarily to the CIO office. However, the mainstream success of MDM depends on enrolling business as the sponsor — or the master — of such initiatives, because master data is inherently tied to solving business problems. Rather than falling victim to mega-vendor promises, CIOs are now opting for a more prudent approach that enables them to start small with a business-sponsored project to demonstrate the high return on investment that can be realized using MDM technology, and then evolve that technology into an enterprisewide MDM platform over time.
Data governance in infancy
The MDM vision being sold to the CIO paints a picture where all information silos within the organization are dissolved and the data is set free to flow among systems in real-time; data that is accurately unified with other data and is transmitted securely and viewed discretely by each business user at their desired frequency and latency. At a loftier level, the IT vision being presented is one that supports a set of universal definitions of all core business data entities — or master data — that are shared across all business processes and systems.
This vision is certainly alluring but also appropriate in order to tear down decades of legacy data silos. However, the first task CIOs face in realizing this vision is addressing data governance issues. Specifically, organizations must determine who defines the customer and standard product description; who knows of the correct relationship between customer and organization; who resolves the conflicts among these data sources, and more importantly, who owns the data? With all these considerations, it is not surprising that settling data governance policies and practices is an enormous, corporatewide undertaking that has the potential for political strife.
Ironically, the critical assumption underlying the MDM debate today is that IT can manage master data. This implies that IT can anticipate, define and standardize on a complete MDM technology stack in advance of the negotiated outcome of data governance issues between business and IT. The assumption is flawed and may prove to be fatal for the entire master data management category. Realistically, it could take three to five years at most organizations for the critical data governance issues and organizational priorities to be fully resolved, and for data governance policies and processes to be implemented.
Enter the business master
Consequently, it is mandatory for IT to work with business units to identify who the customer is, what the product is, and how products and customers are related – since business owners are the subject matter experts of business entity data. Moreover, if poor data has a negative impact on the business process, it is the business that needs to solve the problem and subsequently, the business that benefits from improvements in master data. This brings to light the new reality – business has to be the master of master data management. After all, who is more suited to answer these and other related questions such as: who is the customer that placed the order; is this employee authorized to approve the order; what product did we promise to ship; and what is the correct shipping location?
Without business enrollment in the MDM initiative, the project is often doomed from the start. Unlike other IT issues related to data management, master data and its management is not merely infrastructure. The business impact of master data is direct and its monetary benefits are measurable with ROI metrics. Given that the language of business is not the language of master data — the challenge lies in translating business issues and benefits into master data issues and MDM solutions.
For the business executive, improvements in master data are all about improving business performance, enhancing customer experience, reducing operational costs, and ensuring regulatory compliance. Consider for example, a vice president of sales operations challenged by lead assignments, commission payments, and order management processes. Using an MDM solution, customer data can be accurately identified with different accounts and products, and based on assignment rules can be synchronized across CRM and ERP systems to reduce operational costs and improve sales productivity. Another example is a senior executive in the financial services wealth management sector tasked with freeing up financial analyst’s time spent on data administration and new account opening processes to focus on advising clients. An MDM solution can address the management of customer profile and account information to allow financial analysts to better manage their customer relationships while saving millions of dollars from streamlined account administration processes. Finally, consider a chief complianceofficer at a pharmaceutical company who needs to ensure all physician information is accurately tracked in order to comply with pharmaceutical marketing regulations — as the business executive is accountable for compliance, not the CIO’s office.
Start small and build on proven success
Recognizing and engaging with business units and encouraging them to serve as the sponsor of the MDM initiative has several implications for how the MDM vision may be achieved and the extent of its success. To start with, predicting the entire set of requirements across all critical business processes is no longer necessary. It is more important to select one functional area with high business impact and demonstrable ROI — by allowing the organization to start small with a MDM project that can be realistically deployed within three to nine months. After all, business units will not have the patience or appetite for long term deployments. Secondly, it is necessary to select a MDM technology platform that easily integrates with existing heterogeneous IT infrastructure in order to reduce the required investments. Finally, an MDM platform should be fully extensible and able to evolve into an enterprisewide MDM platform that is capable of spanning across multiple MDM projects as they are deployed and integrated across business divisions and geographies.
In summary, while the seductive vision of MDM is currently being sold to the CIO office -it is presented under the flawed assumption that IT can manage master data. For MDM initiatives to succeed, it is critical to enroll business owners as the sponsor — or the true masters of master data. Remember, business units require an immediate ROI on such projects rather than a future vision of an enterprisewide MDM platform — even when promised by a mega-vendor. A more prudent approach is to start small with a MDM technology that delivers rapid ROI for defined business sponsored projects. More importantly, the MDM platform should be able to evolve along with the emerging consensus on corporate data governance policies without constraining the business. After all, your business success does not reside solely with the efforts of IT professionals, so neither should your master data management efforts.