Question and Answer: Master Data Management Coming Into its Own
MDM initiatives finding their place in the sun.
- By Linda L. Briggs
- March 24, 2010
Although data management has been around a long time, it's just now starting to find its place in the sun, says Rob Karel, a principal analyst at Forrester Research: "We're seeing a full shift. I think the economic downturn has a lot to do with it."
Companies are attracted to ways of beefing up business at low cost, he says, leading to growth in data quality and master data management initiatives -- especially in areas hardest hit by the financial downturn.
BI This Week: Since master data management is referred to in many different ways, can you give your basic definition of MDM?
Rob Karel: We [at Forrester] define MDM as a business capability enabling an organization to first identify trusted master data and then leverage master data to improve business processes and decisions. That's the formal definition; it means that, yes, you can create a single version of truth for any kind of data, but that single version of truth is completely useless if you can't deliver it to the right stakeholder at the right time and in the right context. Management of the data includes the responsibility not only of creating that single view but delivering it.
One of your recent papers for Forrester was a trends piece in which you talked about the continuing enthusiasm for MDM that you see in the marketplace. Are there particular industries where you're observing greater adoption of master data management, and if so, why that might be?
I think that MDM has hit a maturity level where we're seeing very good interest and increasing adoption across industries. Yes, there are certainly some of the more mature industries that have been at it a little longer -- financial services, manufacturing, [and] retail. From a product-data standpoint, they are probably much further along than some of the newer entries. We're expecting a lot [of interest] in the health-care and public sector verticals based on the [federal] stimulus [package].
You'll probably see much more growth in those areas than perhaps you have in years past, but MDM isn't new to those sectors. It's just that we're going to see broader adoption -- more enterprise-based as opposed to departmental, maybe.
Often, the entry point for MDM, on the customer data side for example, might be [in areas such as] direct marketing. Now, we're starting to see it supporting multiple functions across the enterprise.
Do we tend to see MDM adoption in the very largest enterprises because those are the ones that are really struggling for a global view of their data?
Yes. I'm somewhat amused at talk about MDM for the mid-market. To me, that's somewhat of an oxymoron. The whole concept of MDM is trying to reconcile redundant views across a complex ecosystem -- most small to mid-market companies I know about don't operate complex heterogeneous environments. They're fairly homogeneous, or their entire IT infrastructure might be a single application. It's not that there aren't data quality problems that need to be addressed in the mid-market, [but] master data management really means multiple masters that you're trying to reconcile.
If we talk about MDM as a multi-year, multi-phase approach -- and that seems to be where you and other experts are going with MDM -- then where does a company typically begin? What's a starting point for implementing a master data management initiative?
The answer to that is within your own organization. Where's the squeaky wheel? It goes back to this: where can companies find the most support and the quickest return. Not everyone should start in marketing, or in finance, or in a call center. Where are the business stakeholders that are best able to articulate the problem they're having in executing the business process and the decisions they're responsible for due to poor quality data?
Those are the opportunities, as opposed to someone from the IT group saying, "Wow, our order management system has a lot of failed orders. … That's a huge opportunity if we can get MDM plugged in there." If no one that owns the order management business process is complaining, it's not necessarily the right place to start. MDM is so invasive -- the real key is starting your MDM journey in the areas of the business that are best able to articulate their needs.
Does the value of MDM seem to be recognized on the business side in general? Is that still a battle that needs to be fought from the technical side -- explaining MDM's benefits?
It's shifting. It used to be that data [was considered] an IT problem; let IT take care of it. The exception has been around customer data. Marketers understand the value of their data to their processes. A half-percent increase in response rate due to better data management could be a huge win for a large organization. They understand the amount of money they're spending on wasted marketing and wasted collateral without a really good, qualified customer to market to.
There are some functional silos within the organization where business people do understand the value of the data, but I would say in general, the cross-enterprise, cross-functional value of trusted data is more rhetoric than reality. A top executive will definitely say the right thing when it comes to managing data as an asset, but they're not often putting their money where their mouth is. They still often prioritize [MDM] as a nice-to-have, not a must-have.
What it comes down to is, we're seeing a full shift. Honestly, I think the economic downturn has a lot to do with it. [Management is] looking for new ways to improve efficiencies and reduce risk and costs.
[It's also true that] data management, in general, is finding its place in the sun. It's been around all this time -- we can actually improve our business even during tough times. We've seen a lot of growth in data quality and MDM adoption, especially in the industries hardest hit by the downturn, such as financial services.
Regarding Informatica's acquisition of Siperian, which you mentioned in an interesting blog on the Forrester site recently. You predicted a big impact on the MDM market from that acquisition, especially for much larger vendors such as IBM, Oracle, and SAP. Can you expand on those comments?
I think both acquisitions -- Informatica's of Siperian and IBM's of Initiate Systems -- are going to have resonating impacts on the MDM market. Informatica's entry, as I noted in my blog, is huge. Although Informatica is certainly nowhere near the same size as "The Big Three" of IBM, Oracle, and SAP, it's a $500 million company that's been around for a while, with a proven track record in the data management space. It's going to add a very attractive fourth alternative to consider in many MDM vendor evaluations.