Master Data Management: Myth of the Mega Vendor Platform
Industry analyst firm IDC is predicting that the master data management (MDM) market will grow to $10.4 billion by the year 2009, with a compound annual growth rate of 13.8 percent. Other analyst firms such as Gartner and Forrester claim that MDM provides significant business benefits and is a critical foundation for managing enterprise information assets.
- By Anurag Wadehra
- May 1, 2007
Industry analyst firm IDC is predicting that the master data management (MDM) market will grow to $10.4 billion by the year 2009, with a compound annual growth rate of 13.8 percent. Other analyst firms such as Gartner and Forrester claim that MDM provides significant business benefits and is a critical foundation for managing enterprise information assets. Not surprisingly, the market hype from the mega-vendor triad (IBM, SAP, and Oracle) has been deafening as each attempts to position its single enterprisewide platform as a complete solution to MDM strategy. Despite the flurry of activity, no one is talking about MDM in the same way, and there is no consensus on the crucial questions that CIOs and executive management teams want to address. While MDM has come to the fore as a critical area of data management practice with different data domains, MDM requirements have not yet coalesced into a coherent market.
Is a Single Vendor Platform Necessary?
At the organizational level, MDM is a cohesive strategy for managing all master data domains, whether product, customer, employee, asset, or financial. Each of these master data domains differs greatly. For instance, customer master data often originates from multiple sources, including several from outside the company. Customer master data is often structured and well understood, while typically following a “business party” model. On the other hand, product master data is usually generated internally and shared externally among suppliers. The characteristics of product master data—such as in a product catalog or an item master—are both structured and unstructured, while requiring a hierarchical data model.
It is being debated whether any mega-vendor today can handle these differing requirements in a single integrated MDM platform. But here is the more pertinent question to ask: is centralizing on a single MDM vendor even necessary? If the service-oriented architecture (SOA) promises of mega-vendors are indeed true, then why not select different best-of-breed solutions that work together to deliver the most suitable solution? Shouldn’t each MDM solution leverage your past investments in data integration infrastructure, legacy data hubs, and external data sources? Perhaps the most critical question to ask is: where is your organization most likely to derive business value from a MDM platform?
The Path Forward: Adaptive Master Data Management
Many companies are finding that the simplest route to move forward with MDM is to initially deploy one master data domain for a specific business need, and then extend to other data domains over time. Which data domain to start with will differ by industry. For example, it may be customer data in high-tech, doctor, or hospital data for a pharmaceutical company, counterparty reference data in institutional banking, or product data in retail.
By starting with one data domain, companies are able to achieve immediate ROI in an identified area, typically in less than six months’ time. However, the key to this approach is to select an adaptive MDM platform that can easily be extended to different data domains over time to meet future requirements. An adaptive MDM platform should not only support SOA and allow you to coexist with existing data hubs, data sources, and the larger application platforms, but also allow you to evolve the architectural style over time across the organization to implement a comprehensive master data management strategy.
Remember, MDM is a strategic process, and while mega-vendors are vying for dominance, each master data domain presents unique challenges. An adaptive approach is necessary to meet these challenges and enable you to start down the path to MDM without compromising your ability to evolve toward an enterprisewide master data management platform