I'm seeing a lot of discussion about the value and money saved by various tech initiatives lately, no doubt because of the economy. There's a lot of great pieces out there about explaining why you should spend your money on this or that. Maybe I'm projecting, but I often wonder if CIOs are reading these pieces and thinking, "OK, great-so it's worth the money. But where is this money supposed to come from?"
On the plus side, it's a great time to do research, because there's no pressure to invest right away. Hopefully you can use this information to sort out now what will be worth pursuing once your budget rebounds.
One topic that seems to be attracting a lot of coverage is the value of master data management, a relatively new tech initiative that companies seem to be curious about right now.
After reading several of these pieces, I thought I'd offer a summary of the top ways MDM can reduce costs. I found six:
- Reduce the costs of data cleansing. Ravi Shankar, the senior director of product marketing at Siperian, recently wrote a list of seven ways MDM can cut IT costs. I guess I'm stealing his concept a bit, but two on his list basically boiled down to you'll reduce your costs of cleansing data currently in silos, either because you were doing it yourself on several different systems or because you outsourced it. I'm assuming you don't do both, so I'm counting it as one.
- Reduce the costs of subscribing to, storing or just having redundant data. Again, several of Shankar's points speak to how MDM can save you money by eliminating redundant data, whether it's through fewer systems, fewer servers or even realizing that several business units are subscribing to the same third-party data providers, such as Dunn & Bradstreet or Acxiom.
- Cut the costs of other projects by improving data quality. Alex Fiteni, a professional accountant, software architect and project manager, recently questioned whether MDM has a clear value proposition. He decided the value is in the data quality, because it increases the value of other projects, including business intelligence and data mining. He also argues that "Investing in these latter projects without high-quality master data can increase the costs of such projects, render them obsolete as original master data is cleaned up, or even provide misleading or erroneous results due to incorrect assumptions."
- Eliminating the need for point-to-point integration. Because MDM provides a centralized location for master data, it will eliminate some of the need for developing and maintaining point-to-point integration between systems, according to Shankar. It may take a while to see those savings, but it's something you'd want to include in your ROI calculations.
- Reduce the time, costs and complexities of a merger and acquisition. As I noted last week, Baseline Consulting's Evan Levy makes a compelling case for why MDM shines during M&As. In a comment to my post, Levy elaborated further, sharing his theory that one reason why M&As are the most visible driver for MDM:
"...the short-term need to integrate data has challenged the traditional long-term approach of rehosting applications. The business executives have a sense of urgency around reconciling the data from newly-acquired companies or restructured organizations. MDM decreases the time of data integration significantly and allows companies to gauge common customers, and the impact of the restructuring on existing customers, in record time."
Whether these costs will actually cover MDM's high price tag-well, I can't answer that. However, I can point you to this free MDM assessment tool I found recently. It's a 30-minute analysis, created by TDWI, that promises to help you determine if MDM could help your company and whether you're ready for success with a MDM adoption-assuming the money starts flowing again.