Maximizing MDM's Benefits
Master Data Management and Business Performance Management
Inaccurate reporting isn't the only potential problem if you don't have your master data under control. Centralization, synchronization, and data integration can also pose challenges. Building an MDM system for end users is key.
- By José Villacís
- May 1, 2007
A recent TDWI survey revealed that 51 percent of respondent organizations use a master data management (MDM) solution to support business intelligence (BI) and transactional applications, and 32 percent use it for BI alone.
Moreover, 83 percent of respondents reported that their organization had suffered problems due to poor master data; specifically, 81 percent cited inaccurate reporting as a problem.
But bad reports aren’t the only potential issue if you don’t have your master data under control. When it comes to business performance management (BPM), you’re not working just with operational reports, but also with financial information, analytics, KPIs, etc. This information is usually contained in several data stores, such as a data warehouse or multiple data marts, and in applications for financial consolidation, planning and budgeting, strategic scorecards, analytic applications, BI tools, and, of course, transactional and other systems that feed the BPM layer.
Under this scenario, the master data problem evolves from simply trying to centralize and synchronize master data from a system of record, into a problem of how to effectively manage changes in master data. This is because the frequency of change, the nature of the change, the type of downstream system, the number of attributes, and the applicable business rules can vary widely. Most important, these changes involve different departments and stakeholders, depending on the type of master data (employee, vendor, customer, product, financial, etc.).
Transactional or operational MDM tools typically ensure that the right product, supply chain, or customer master data exists in ERP, SCM, CRM, or other transactional system modules. This information needs to be readily available, usually in real time, to ensure the successful operation of these systems. The key requirement is consistency and timeliness.
But transactional MDM systems are not built to support the master data management needs of BI and BPM—the challenge is managing the changes that are required in master data structures over time. There are companies today that process thousands of changes per month in their master data structures!
MDM solutions that can effectively support BPM (sometimes called Analytic MDM), while complementary to transactional MDM solutions, must rely heavily on highly flexible but robust business rules engines that can handle the varied nature of changes in BPM-related master data. A key requirement is business user empowerment; otherwise, IT remains a bottleneck. Today most IT organizations still use spreadsheets, messages, and calls to confirm and agree on changes with business users before applying them. So the overhead cost and risk of errors from this manual, iterative process are high.
Business users know why and how changes in master data and reporting structures should be applied. Whether set off by typical business decisions, or by disruptive events like mergers, acquisitions, or reorganizations, it is business organizations, not IT, who initiate change. For years we’ve predicated in the BI industry that IT should empower business users to do their own analyses and reporting, allowing IT to focus on more productive tasks such as user-enablement and systems administration and controls. MDM responsibility for performance management is analogous; business users should be responsible for making changes and maintaining master data, while IT enforces business rules and manages the environment.
So an MDM application must be built for end users—not only IT—with an intuitive user interface that includes all the functionality required for managing master data changes and the organization’s master data lifecycle. For example, it must have real-time validations, immediate user feedback, and approval levels to control changes. In addition, it must provide robust auditing, versioning, rollback, and integrity check capabilities for managing the environment. Robust import and blending, as well as export features, are necessary, as the type, frequency, and format of updates will vary widely.
Managing master data is essential for ensuring the quality and integrity of the information in our organizations. Ensuring that transactional systems share the correct master data in a timely manner is critical. But making sure that the BPM layer or “management system” layer provides the right information for decision makers is a priority, too.
What’s important is to identify the biggest pains first, then determine the right MDM solution(s). Start small, but outline a path to evolve your MDM solution to the enterprise level.
José Villacís is the Senior Product Marketing Manager at Hyperion Solutions Corporation.