MDM: Companies Investing, Many Struggle to Show Business Value

Loraine Lawson

Gartner recently released a set of predictions for master data management (MDM), which, to my mind, raise a few questions about the financial issues with MDM.


Consider this: MDM is a really healthy market for an expensive undertaking in such a tough economic climate. Gartner says it's a fast-growing software market that has "continued to exhibit double-digit growth, even through the worst of the global recession." It's expected to keep growing at a compound annual growth rate of 18 percent, which would bring it to a $2.9 billion software market by 2014.


Further, right now, it's kinda a niche thing. Separate master data domains-HR, asset, supplier-and niche players are very much a part of what's driving this train-even though big vendors such as IBM are already offering multi-domain MDM solutions, which promise to deal with more than one area of master data.


Gartner predicts that there will be a unified MDM approach in the near future; although, it's unclear whether they mean multi-domain MDM or consolidation through mergers and acquisition, or both. But, in Gartner's opinion, we're there not yet. In fact, Gartner refuses to dignify multi-domain MDM with its own magic quadrant. In a Destination CRM article about the most recent MDM report-the Magic Quadrant for Master Data Management of Customer Data-John Radcliffe, research vice president at Gartner and author of the report, said the Massachusetts-based research firm believes "the aggregate MDM" market is still "premature."


"Although many MDM solutions are marketed as multi-domain MDM, we find that they don't provide similar depth of capability in every data domain," Radcliffe told Destination CRM last week.


Still, it's interesting that companies are moving ahead with MDM and risking the possibility of reinvesting later.


But even more befuddling to my mind is to take all of that into consideration and then ponder this additional Gartner prediction: "Through 2015, 66 percent of organizations that initiate an MDM program will struggle to demonstrate the business value of MDM."


Needless to say, this is particularly a concern when IT initiates MDM, leading Radcliffe to warn in the recent MDM predictions press release:

It's not just an IT project. The business needs to take responsibility and be accountable for master data governance and stewardship. Unless organizations take a holistic, business-driven approach to MDM, addressing governance and metrics requirements in particular, they risk having their MDM programs fail.

I know 66 percent isn't a horrible rate, but when you consider what's at stake and the cost-well, it does make you wonder how this is going to play out, doesn't it?


Bank Systems and Technology has a full report on Gartner's most recent MDM predictions. The Destination CRM article also includes a nice summary of the most recent MDM Magic Quadrant, which was actually released in October. If you'd like to read the unabridged report, Informatica has made it available for free viewing online-and no wonder: Despite the fact Informatica just bought its way into the MDM market by purchasing Siperian earlier this year, it's already placed in the leader's quadrant.

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Dec 15, 2010 3:18 AM Ravi Shankar Ravi Shankar  says:

Business buy-in is critical for MDM success. IT may implement MDM projects, but the consumer of the master data is clearly business users. Just today we announced acquisition of another MDM customer - Interstate Batteries (you can read the press release here - In it, you'll find that IB is using MDM to gain a 360-degree view of dealer information to power sales and marketing efforts. It's to be noted that a 360-degree view is incomplete without the depiction of relationships between customer (or dealer in this case) and other master data such as products. For e.g., you want to know which customer has what products, so that you can effectively launch a marketing campaing to cross-sell other products that they don't have. Hence multi-domain. Increasingly we see customers asking for multi-domain MDM solutions, since they want to solve the complete business problem, not just the part addressed by a single domain. And they're unwilling to implement separate MDM hubs for customer and product. They want a single MDM product to manage all types of master data.


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