Why MDM is a Strategic Discipline

Loraine Lawson

I've been writing about master data management, aka MDM, for some time now. When you cover something for long enough, it's hard to get back to basics, but I think it's important to do so occasionally, particularly here at IT Business Edge, where one of our goals is to make technology more accessible to business leaders,

 

Recently, I found an excellent IT World Canada article that promised to "demystifying MDM." I was pleasantly surprised, because not only does author Pedro Cardoso manage to explain the basics, he also manages to provide context and advanced insight into MDM, without resorting to too much jargon. That's pretty impressive for a veteran IT guy whose background includes technical jobs such programmer and project manager, with experience in business process improvement, business intelligence and ERP.

 

What I really appreciate about this piece is that Cardoso isn't just defining MDM or giving a simple explanation. Key to his message, and well worth repeating because it's easily missed, is that MDM is a strategic discipline.

 

I know, that's too often said in tech publications, but I think there's a good case for this being true with MDM. Cardoso names several reasons why, and Oracle's David Butler recently outlined the full case for MDM as a strategic discipline, but I'll mention a few of the key points here:

 

  • It'll save you money by decreasing money on things like data integration-a not insignificant issue, considering Butler's claim that maintenance and integration costs leave less than 5 cents on the IT dollar for systems that could address the problem.
  • It'll keep you out of lawsuits and compliance violations.
  • It addresses data issues that will benefit business intelligence projects and business process management, plus it can help with service-oriented architecture.
  • It'll support things your company needs to do but has postponed, like data governance.

 


But like any strategic discipline, it's hard and it takes dedication.

 

I like the way Cardoso explains it:

A key characteristic of an MDM solution is to enable sustainability - this isn't a one time activity but rather a process and service that remains as a key strategic and enabling core competency going forward. The benefits to getting MDM right are significant - in highly regulated industries for example, MDM can mean decreasing risk and financial impact associated with regulatory compliance, fines, recalls and lawsuits. Common across all domains, MDM excellence enables driving out of costs and inefficiencies imbedded within processes, decreasing cycle times, improving agility, time to market and increased ability to drive growth and add customer value.

And like any strategic discipline, you can't just buy a solution. As Cardoso warns, you've got to approach it as people first, process second, and, finally, technology.

 

Another point in his piece I'd like to pull out is his contention that MDM is not new, particularly for those with information management and ERP backgrounds for whom, he writes, "performing MDM activities has been a significant part of our roles over the years."

 

I point this out because there does seem to be some confusion about to what extent MDM can be handled by ERP. It's an issue that's likely to get more confusing, since ERP vendors are offering MDM solutions, as he points out.

 

Why might this be confusing? As Gartner analyst and MDM expert Andrew White recently cautioned, ERP was not designed for managing master data:

The fact is that such systems (once we agree what we mean by "ERP") were designed to deliver single version of the truth for financial records, but ERP systems were not and never were designed to deliver single version of master data. The notion of "master data" was not around when ERP was designed. The very notion of "master data" only makes sense when certain data describing important things about a business are copied, over and over again.

Mind you, Cardoso seems to agree with White, but given the title of his article, I just wanted to echo that point. ERP is not a master data-management solution. Witness what Cardoso says happens when ERP practioners tried to manage master data with ERP:

For the last decade in particular, after the popularity and ubiquitous deployment of ERP systems took place, efforts to improve and control master data quality have been almost as disjointed and scattered as the master data itself. Typically triggered when the enablement of new capability or new systems required it, corporations have spent billions of dollars trying to fix poor quality issues downstream in data warehouses and operational systems when the solution needed was to focus on the source of the issue - the master data entities themselves. The challenge up to now has always been that the very ERP systems we implemented often made this task difficult if not impossible.

Cardoso's piece is a great read for those new to MDM. Read along with Butler's piece; it's also a great resource for IT leaders building a business case for MDM as a strategic practice.



Add Comment      Leave a comment on this blog post
Sep 3, 2010 5:05 AM Ravi Shankar Ravi Shankar  says:

Great article and topic! MDM is very strategic in that many organizations take their so called "MDM Journey" by starting small in one division to solve a pressing business problem, reaping the ROI, and then expanding the solution to other regions/ geographies, or start on addressing the next business problem. I captured these thoughts in my blog - http://bit.ly/aMHZdg. For e.g., one of my Medical Devices manufacturing customer started last year solving the Physician Spend Management problem with MDM (customer/ party), and then this year they expanded to add product data (heart stents, etc.) to solve product recall issues.

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Sep 6, 2010 6:50 AM Dylan Jones Dylan Jones  says:

Great article as ever Loraine.

The more I speak to our readers and hear their tales of data quality woe, the more you realise that MDM should not be seen as just another IT project but a fundamental strategic building block that will never cease to add value to the organisation (if implemented in the right spirit!)J

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Sep 16, 2010 11:37 AM Ed Gillespie Ed Gillespie  says:

Thank you Lorraine.  Love the idea of MDM as a strategic discipline (with an emphasis on both strategy and discipline).  

I registered for a free webinar later this month hosted by David Loshin (Knowledge Integrity) where he surveys the 'conventional wisdom' about the business drivers for launching a master data management program.  If interested, see https://pbinsightevents.webex.com/mw0306l/mywebex/default.do?nomenu=true&siteurl=pbinsightevents&service=6&main_url=https%3A%2F%2Fpbinsightevents.webex.com%2Fec0605l%2Feventcenter%2Fevent%2FeventAction.do%3FtheAction%3Ddetail%26confViewID%3D279041394%26siteurl%3Dpbinsightevents%26%26%26

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