What's Driving Companies to Adopt Master Data Management

Loraine Lawson

You know what's a bad use of time and money? Having engineers spend 50-80 percent of their time tinkering with data integration and quality, that's what.

 

Yet, that's basically what Nexen, an oil and gas exploration and development company, did for who-knows-how-long.

 

As you would expect, learning that engineers were spending the majority of their time tinkering with data-and even creating their own personal data resources-was enough to win executives suport for an enterprise-wide master data management and data analytics program, according to consultant Steve Dolha.

 

Dolha shared Nexen's story at the MDM Summit recently held in Toronto. Nexen is starting small, with the focus on departmental-level analytics and data clean up, but its goal is an enterprise-wide information management strategy that includes a two-year data cleansing and quality project, Dolha said. (For a related discussion on whether it's oxymoronic to have departmental MDM projects, see "Isn't MDM about the enterprise?")

 

Even though they're far from an enterprise-wide approach to data, their initial steps are already paying off. Engineers can now analyze 2,500 wells in minutes, as opposed to the weeks it previously took.


 

Though companies like Nexen are still in the early stages of MDM strategies, Aaron Zornes, the MDM Institute's chief research officer, told Summit attendees that the MDM market itself is now a mainstream approach. It's projected to reach $2 billion by 2012, with the usual big vendor players dominating the market-IBM, Oracle and SAP AG.

 

It seems Nexen's story of fixing inefficiencies caused by data problems is a bit of an unusual business case for MDM, though. According to Zornes, the top MDM adoption drivers are:

 

  1. Compliance and regulatory requirements
  2. Economies of scale for mergers and acquisitions
  3. Synergies for cross-selling and up-selling
  4. Integrating or augmenting legacy systems
  5. Better end-to-end customer data updates

 

Meanwhile, across the ocean in London, Gartner recently hosted its SOA & Application Development and Integration Summit, which inevitably included several discussions on MDM. Andrew White said he fielded a lot of questions on MDM strategy. He addressed several of them, including how MDM relates to orders and agreements and MDM best practices, in a recent blog post.


But I was most interested in what he had to say about MDM-aware applications, because this area touches on integrating legacy systems with MDM systems. He notes-and I think this is an important point that isn't made often enough-that MDM shifts data integration from point-to-point to a more hub-and-spoke approach. Not surprisingly, this can make integration with legacy applications tricky, and some legacy apps are more willing to "open up" to MDM than others.


Apparently, there are a few business application vendors who are reworking their master data model to play better ball with MDM. It's a start, but not a cure-all, according to White, who adds:

 

"Bottom line: if MDM as a discipline is to take hold and grow, many, many more business application oriented data stores have to be made 'MDM aware' in order to simplify the information infrastructure. If the master data models remain, as they are now, firmly hidden behind the application 'firewall,' then integration between MDM and the rest of the application stack will be traditional' and as such, an opportunity for lower costs will be lost, and more importantly, a degree of agility for the IT stack will be lost also."


The cynic in me can't help but suspect that in a couple of years we'll be talking about how many MDM initiatives failed because that didn't happen. That said, the optimist in me encourages everyone to prove the cynic wrong.



Add Comment      Leave a comment on this blog post
Jul 7, 2009 2:54 AM M Ellard M Ellard  says:

There are tons of efficiencies to be gained through MDM, and agreed, it can't work without connecting all the dots data-wise throughout the enterprise. It's the suppliers who take a consultative role and recognize that need for end-to-end connectivity who are going to, I think, in the long run be the best resources. In-house expertise can disappear in an instant to a new position or employer; and specialty applications often tend to get trapped in their own narrow spaces. 

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Aug 3, 2009 1:11 AM m ellard m ellard  says:

Just following up to my earlier comment here...glad to see that Nexen is starting with data quality. Good info on the various steps of good data management to be found here:

http://www.beyeblogs.com/businessinsight/archive/2009/07/learning_the_data_fourstep.php

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