Across virtually every industry, the volume of data that is maintained about products, customers and suppliers is growing exponentially. Proactively managing this data is critical to achieving improved business performance in today’s highly competitive environment. However, in most organizations, master data is duplicated and scattered across multiple systems and applications. As the data evolves independently, it becomes error-prone and keeps decision makers from having a unified view of the data. It also prevents internal customers from obtaining accurate and timely information they need to make purchasing decisions. The result is higher costs, missed sales opportunities, eroding margins and increased risk.
Often data is stored by an organization in independent silos. For example, marketing might be using a CRM system to generate leads for sales. Finance has another database with customer sales history and accounts receivable. Sales and manufacturing have additional databases to manage order history, product inventory, and shipments.
An example of the problems that lead to erroneous conclusions because of these siloed databases follows. A successful marketing campaign is usually considered successful when product’s sales are up. However, the financial reality is that those sales may have come at the expense of another product, so it wasn’t really a success when examining the whole. To make things worse, manufacturing might not have known about the campaign, so inventory levels were not adjusted. The company must now deal with an inventory surplus, customer dissatisfaction because orders aren’t being shipped and a financial hit to the bottom line. All because data was not being shared between the departments.
The goal of Master Data Management (MDM) is to solve problems such as the ones described above. Master Data Management is an emerging technology used to synchronize enterprise-wide business data. It provides a system of record for all customer, product, and supplier data. When properly done, MDM streamlines data sharing among personnel and departments. In addition, MDM can facilitate computing in multiple system architectures, platforms and applications. The benefits of the MDM paradigm increase as the number and diversity of organizational departments, worker roles and computing applications expand. For this reason, MDM is more likely to be of value to large or complex enterprises than to small, medium-sized organizations. The implementation of MDM can minimize confusion and optimize the efficiency when companies merge.
Gartner, in its report “Forecast: Master Data Management, Worldwide, 2010-2015,” predicts a 21 percent increase in MDM revenue from 2011. By 2015, MDM revenue is anticipated to swell another 40 percent to $3.2 billion. Regionally, the U.S. and Europe will lead the MDM market, though the fastest rate of MDM software revenue growth will be in Asia by 2013. Gartner states that “Pressures to optimize costs and efficiencies in a heterogeneous IT environment are driving organizations to turn to MDM as a more efficient way to manage and maintain data across multiple sources,”
Many companies see master data management (MDM) as only a technology issue that will cure data integration and management mistakes made in the past. However, naively thinking that MDM is just a technology issue is a mistake; there are many process and governance issues that must be addressed to implement MDM. MDM cannot be successful without participation from individuals and departments across the business. MDM is about using key data to improve the business, and if the program is not approached in that way, it increases the risk of failure.
A successful MDM initiative involves cleaning up and sorting through the data that has traditionally been maintained in separate silos. While cleaning up databases and correcting the problems of the past is part of effective MDM, it shouldn’t be the main driver of the program. The main goal of MDM should be improving your business processes and decision making using better data. In today’s tough environment, it is essential to run your business as efficiently as possible. The key to better business is better data, managing and funding your data infrastructure like you would your other corporate assets. This is only achievable if you build data management and data governance processes based on business requirements.
The Enfocus Requirement Suite™ from Enfocus Solutions Inc. can provide significant help as you embark on an MDM strategy. The Enfocus product allows stakeholders and technical teams to work together to define their business requirements. The example MDM requirements provided in RequirementCoach™ will get you off to a quick start and help prevent you from overlooking key requirements.