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MDM for Business Information Initiatives

Today's constant pressure on organizations to increase transparency, accountability and fiscal compliance with regulations has a strong effect on data management efforts. To meet the challenge, many organizations are turning to master data management (MDM).

Details about interest in and implementations of MDM are scarce. Uncertainty is rampant among end users and vendors alike. Against this background, Ventana Research conducted a research study in July 2006, with sponsorship from IBM and SAP, to attempt to add some clarity to this complex and rapidly growing area. We collected data for this study from a Web-based survey of 515 business and IT professionals. Approximately 70 percent of respondents were from businesses that had revenue last year of more than $100 million.

Figure 1: Levels of MDM Maturity

The purpose of the study is to understand the trends, needs and practices of organizations that are implementing or intend to implement MDM. The study addresses questions such as, what business drivers and organizational characteristics indicate a need for master data management software and services? What is the level of MDM awareness, maturity of understanding and progress of implementation?

Level of MDM Maturity

In processing the survey responses, we applied the Ventana Research Maturity Model to MDM. It ranks maturity in four levels: tactical, advanced, strategic and innovative. We determined maturity by analyzing the responses to specific questions from the survey. The overall maturity in the MDM area is shown in Figure 1, which indicates a finding between tactical (36 percent) and advanced (34 percent). Our analysis by line of business found that financial and manufacturing enterprises are closest to the advanced level, while the other industries matched the overall trend (see Figure 2).


Figure 2: MDM Maturity by Industry Sector

Although our approach cannot claim to assess individual maturity levels in detail, it does provide a useful guide for organizations wanting to understand and assess their position relative to others in this complex and diverse area of business technology usage.

Within the limits of our survey, we uncovered what Ventana Research believes to be significant trends in MDM. For example, there is a growing awareness of and interest in MDM. More than 80 percent of respondents reported that they were aware of the meaning of master data management, and 18 to 25 percent said they were actively investigating the benefits for their business unit or enterprise (see Figure 3). Some 15 to 22 percent of organizations have already initiated MDM projects at either the business unit or enterprise level.


Figure 3: Respondents' Involvement in MDM Projects

Of those who expressed a view as to the expected benefits from implementing MDM, 42 percent ranked improving timeliness and consistency of information as most important. "Customer" was rated as the most important master data object to be managed, with "product" and "financial reporting" joint second. Improving customer satisfaction was the key criterion used to measure performance improvement resulting from MDM. In terms of where in the organization the main benefits of implementing MDM will accrue, respondents rated sales and marketing and finance joint first and customer service second.

Of the organizations planning to implement MDM, less than half (39 percent) said they would seek to purchase a packaged MDM solution, and 20 percent expressed the intention to build it in house. A significant number of organizations (51 percent) have already implemented a product information management or customer data integration master data solution. On the negative side, almost half (47 percent) of organizations have made no attempt to estimate the costs of problems and errors directly attributable to errors in master data.

For the full report, please visit www.ventanaresearch.com.  


Dr. David Waddington, a global research director at Ventana Research, serves as head of information technology research in Europe, a practice that includes integration management, information management and business intelligence. As former chief IT systems architect for Unilever's two food groups in Europe, Waddington led a team to develop a master reference data repository, establishing common data standards and data warehousing. He also served as section head of the Linear Programming Group and was a founding member of the IT team that facilitated the move to open systems standards. He has provided advice and assistance to companies including Kalido, BP and Unilever, and has held academic posts at the universities of Oxford and Leicester.

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