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High Quality Master Data is Vital to Business Success

This is an excerpt from an August 17, 2007 VentanaView from Ventana Research.

Master data management (MDM) has become one of the hottest topics in information management as companies struggle to come to terms with collections of systems that have left them with master data dispersed in various silos and in multiple versions of the same system. In 2006 Ventana Research found that many companies are still learning what MDM actually is and that those that have adopted it are only at the beginning of MDM maturity. In many cases, these companies have chosen to adopt spreadsheets or data warehouses as their solution and few have yet to adopt a purpose-built MDM product.

Assessment

Master data should be the single trusted source of data that everyone in an enterprise relies on and uses. It can include data about such key aspects of business as customers, products, employees and finance as well as less obvious items such as hierarchies (for example, corporate structure and reporting lines), business rules (how to aggregate items) and definitions (such as the currency in which monetary figures are expressed). Master data goes beyond metadata, which is the commonly accepted way of describing data (for example, a customer name is 20 characters long, the format for amount fields or instructions that a certain amount field should not exceed a defined value). MDM is the data itself, and it does rely on the enterprise having a single metadata description of all master data items. Master data should be consistent, unique, clean and complete, and be available to everyone who needs it in forms suitable for their particular uses.

The issue for companies today is that their systems have grown haphazardly over time, and no one can rely on there being one consistently reliable source of data or only one description of an item readily available. The latest research from Ventana Research shows that 26 percent of companies have customer data in up to 20 types of systems, and only 11 percent have total confidence in the quality of their customer data. In addition, a variety of research studies show that many employees have resorted to extracting the data they need into personally managed spreadsheets so they can see the results they want when they want them, regardless of requirements for organization-wide consistency.

Many vendors claim to have systems that can solve some of these issues. They may focus on a particular type of master data, such as customer, product or finance; on tools that can extract data into a common repository; on data quality; on technology that allows the synchronization of data across multiple systems; or on reporting and analysis of data.

Once the definitions are complete, users can extract data from existing systems and load it into the hub using tools that support rules-based cleansing and transformation if needed. These tools can work with data cleansing products from other vendors. MDM Hub contains other tools that can enrich data from internal or external data sources as well as rules-based tools to identify potential duplicate records and flag them, merge duplicates and/or create relationships between records based on the hierarchy data. MDM Hub automates many of these processes and flags others so a data steward can make the necessary changes manually, where needed working with others through a workflow tool to decide on the required action. All of these functions are governed by data access and security rules that managers can set for individual users or user types.

The resulting master sources of data can be made available for use in different ways. MDM Hub supports a registry-style operation in which duplicates are flagged; it also can be used to synchronize data across defined systems, for reporting and analysis, or to support shared services such as Web-based services.

Market Impact

Several research benchmark programs undertaken by Ventana Research show that companies are considering various types of vendors to support their MDM initiates. One choice is to work with their existing database or application vendor, most often IBM, Oracle or SAP. Another popular choice is to build an in-house solution using tools from vendors of databases, such as Teradata, or of data integration tools, such as Informatica. Companies that focus primarily on reporting and analysis are likely to turn to vendors of enterprise-style business intelligence (BI) software such as Business Objects or Cognos. An as-yet small percentage of companies have recognized the limitations and high costs of these products and are turning to more specialized vendors such as Siperian and dedicated MDM vendors like Initiate Systems and Kalido. Such products are flexible and support multiple types of master data from within one product, allowing companies to start with managing one type of master data and then expand to manage multiple types. For these reasons, we expect to see adoption rates increase as dedicated MDM gains more market recognition.

Recommendation

As well as examining technology, Ventana Research's benchmarks show that companies recognize the importance of putting data governance processes in place. A common approach is to create a data governance board that includes both business and IT personnel to oversee initiatives. Empowering such a group promotes buy-in from both sides of the business and acceptance that MDM is a shared responsibility. MDM involves people from all sides of the organization and thus different levels of technical ability. This creates the need for technology that is highly flexible, highly configurable and supportive of all the required processes.


Richard Snow, VP & Research Director for Ventana Research the Contact Center Performance Management research practice, which is dedicated to helping organizations improve the efficiency and effectiveness of multichannel contact centers. He conducts research exploring the people and process issues behind customer operations management, the new customer interaction technologies now available to support customer interaction management, ways in which companies are reviewing their strategies for customer relationship management (CRM) and the emergence of its second generation. He also works with senior business operations and IT managers to ensure that companies get the best performance from today's highly complex application products. Richard has more than 25 years experience working in the IT services industry and specializes in delivering customer care and billing solutions for telecommunications operators, and delivering several multichannel customer contact centers for organizations in both the public and private sectors.

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