RESEARCH & RESOURCES

MDM Trends: The Good, the Bad, and the Inevitable

To provide your organization with the foundational components necessary to build competitive advantage and to be market responsive, take a look at the good, bad, and inevitable aspects of master data management.

By Brian Hill, Director, Hitachi Consulting

One of the hottest technology growth areas in the last few years has been master data management (MDM). Companies are realizing that integrating master data directly into enterprise data warehouses and cleansing data as they implement or replace ERP systems is only taking them so far with information management maturity. These approaches provide insight into their existing business operations and enhance decision-making capability, but many companies have realized the value they are looking for (and need now) will come from exploiting their information to create competitive advantage.

The economic environment we live in continues to challenge companies to differentiate themselves, add value, and reduce costs. What most midsize and large companies are learning is that creating value requires a foundation in enterprise data management that specifically addresses the management and use of enterprise master data.

The MDM marketplace is continuing to mature at a rapid pace. Vendors are trying to catch up with demand and needed skills continue to evolve, but they’re not keeping pace with growing demand. Why is MDM growing so rapidly? What trends are going to help you or hurt you in your MDM initiatives? Let’s take a look at the good, the bad, and the inevitable.

The Good

Whether you are building, enhancing, or upgrading your data warehouse or ERP system, you are likely grappling with lessons learned from early attempts to integrate your master data. You created conformed dimensions in your data warehouse for reporting and analytics, but the data slowly (or, as in many cases, quickly) began to lose quality, and you’ve been fighting to maintain it ever since. You may have realized that maintaining your master data in your ERP system has limitations when enhancing that data for enterprise use outside of the ERP.

Why is this good? Companies are getting smarter when it comes to managing data as an enterprise asset. They’ve learned from their generation one, two, and (gulp) three data warehouses. They’ve learned the limitations of data management within ERP systems. This experience is fueling the MDM market today. Companies are realizing the value and potential in their data, as well as how poorly managed data is limiting their competitive growth.

Companies I have worked with that have come to this realization are investing in MDM as a way to allow them to respond quickly to ever-changing market conditions, accelerate product introductions, improve cross-channel and cross-line-of-business sales as well as improve the quality of their business analysis. For these companies, MDM has been a foundational element in pushing their competitive advantages further.

The Bad

Although the growth curve for MDM continues to swiftly steam along, the unfortunate side effect is that skills in the marketplace are struggling to keep up. Hiring permanent internal resources to fulfill key MDM leadership/architect roles requires planning, patience, and compelling incentives to attract and retain talent. If you are looking to organically build an MDM team, it is more difficult than developing other skills because there are several disciplines involved, including data architecture, data integration, data governance, data profiling and data quality management. Although not required for good MDM practitioners to be “masters of all,” they need to master many of these skills and be well versed in the others.

As you embark on you MDM initiative, do you know what MDM tool(s), data profiling tools, or data quality tools you will use? Will SOA be involved or will you only require ETL? It’s hard to develop or hire an internal resource when you haven’t yet determined your technology platform. To complicate matters further, it typically requires stronger communication and negotiation skills than most other senior technical roles. It is challenging to find the technical know-how combined with strong soft skills that are typically required in management-level positions.

Most companies, lacking the internal capability required to attack an MDM initiative, turn to their consulting partners to find the talent. If your consulting partner has an MDM practice, or focus, it provides an opportunity to find the resources you will need for your implementation. Even though the vendor landscape for MDM software has rapidly matured over the last five years, the talent is still primarily platform-specific.

A wide variety of strengths and weaknesses still permeate vendor tools, so finding a resource with specific experience in your technology footprint, while challenging, still makes a big difference.

The Inevitable

Five years ago, picking an MDM tool was similar to picking a BI/reporting tool 10-15 years ago. The market was disjointed, numerous independent tools were leading the mega-vendors, and picking a software tool as part of your solution was a tenuous effort. Fast-forward to today where it is becoming much easier to find a vendor to meet your needs. Many tools have a lineage as either a customer domain (CDI) or product domain (PIM) MDM tool and have been trying to grow into other domains. This distinction is starting to fade with the maturity of many vendors. As with BI/reporting tools, MDM tool vendors have been acquired by the mega-vendors and integrated into their overall product suites. Furthermore, these tools are now maturing with key features beginning to standardize across the platforms.

Many companies are finding it possible to maintain technology footprint strategies with key vendors within the MDM space. All the mega-vendors offer tools of this type. Informatica’s acquisition of Siperian (a market-leading, best-of-breed data integration company buying what was considered by many to be the leading independent MDM tool suite) has created competitive options for companies while maintaining vendor leverage as many Oracle, SAP, Microsoft, and IBM shops likely have Informatica in their fold as well.

As with any maturing technology market, this pattern is inevitable. Your software vendor choices will shrink as mega-vendor offerings improve; smaller, quality independents consolidate; and the less competitive contenders fall by the wayside. Those fewer choices become more robust, and having competitive options while maintaining a vendor strategy is valuable for both pricing as well as skill development.

Conclusion

If you are considering an MDM approach to data management in your organization, this is a great time to do so. Tools are stabilizing and reaching the point on the maturity curve where their maturity becomes more evolutionary and less revolutionary. Suites of MDM-related tools offered by the mega-vendors are filling out. Your challenges are becoming less about the technology and more about the knowledge and skills brought to bear in defining, designing, developing, and deploying the solution.

Realize how The Good is driving market growth and maturity. Plan ahead for how you will bring knowledge and skills to bear on your MDM initiatives to avoid The Bad of the challenges of marketplace skills. Appreciate The Inevitable path the vendor market is heading down. With these three things in mind, you can confidently march forward in providing your organization with the foundational components necessary to build competitive advantage and to be market responsive.

Brian Hill is a director at Hitachi Consulting where he leads the master data management, data governance, and data quality practice. He has over 17 years of information technology experience. Brian can be reached at bhill@hitachiconsulting.com.

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