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Next Generation MDM – Executive Summary

Blog by Philip Russom
Research Director for Data Management, TDWI

[NOTE -- I recently completed a TDWI Best Practices Report titled Next Generation Master Data Management. The goal is to help user organizations understand MDM lifecycle stages so they can better plan and manage them. TDWI will publish the 36-page report in a PDF file in early April 2012, and anyone will be able to download it from www.tdwi.org. In the meantime, I’ll provide some “sneak peeks” by blogging excerpts from the report. Here’s the fifth excerpt, which is the Executive Summary at the beginning of the report.]

EXECUTIVE SUMMARY

Master data management (MDM) is one of the most widely adopted data management disciplines of recent years. That’s because the consensus-driven definitions of business entities and the consistent application of them across an enterprise are critical success factors for important cross-functional business activities, such as business intelligence (BI), complete views of customers, operational excellence, supply chain optimization, regulatory reporting, compliance, mergers and acquisitions, and treating data as an enterprise asset. Due to these compelling business reasons, many organizations have deployed their first or second generation of MDM solutions. The current challenge is to move on to the next generation.

Basic versus advanced MDM functions and architectures draw generational lines that users must now cross.

For example, some MDM programs focus on the customer data domain, and they need to move on to other domains, like products, financials, partners, employees, and locations. MDM for a single application (such as enterprise resource planning [ERP] or BI) is a safe and effective start, but the point of MDM is to share common definitions and reference data across multiple, diverse applications. Most MDM hubs support basic functions for the offline aggregation and standardization of reference data, whereas they should also support advanced functions for identity resolution, two-way data sync, real-time operation, and approval workflows for newly created master data. In parallel to these generational shifts in users’ practices, vendor products are evolving to support advanced MDM functions, multi-domain MDM applications, and collaborative governance environments.

Users invest in MDM to create complete views of business entities and to share data enterprisewide.

According to survey respondents, the top reasons for implementing an MDM solution are to enable complete views of key business entities (customers, products, employees, etc.) and to share data broadly but consistently across an enterprise. Other reasons concern the enhancement of BI, operational excellence, and compliance. Respondents also report that MDM is unlikely to succeed without strong sponsorship and governance, and MDM solutions need to scale up and to cope with data quality (DQ) issues, if they are to succeed over time.

“Customer” is, by far, the entity most often defined via MDM. This prominence makes sense, because conventional wisdom says that any effort to better understand or serve customers has some kind of business return that makes the effort worthwhile. Other common MDM entities are (in survey priority order) products, partners, locations, employees, and financials.

Users continue to mature their MDM solutions by moving to the next generation.

MDM maturity is good, in that 60% of organizations surveyed have already deployed MDM solutions, and over one-third practice multi-data-domain MDM today. On the downside, most MDM solutions today are totally or partially homegrown and/or hand coded. But on the upside, homegrown approaches will drop from 45% today to 5% within three years, while dedicated MDM application or tool usage will jump from 12% today to 47%. To achieve generational change, half of organizations anticipate replacing their current MDM platform(s) within five years.

The usage of most MDM features and functions will grow in MDM’s next generation.

Over the next three years, we can expect the strongest growth among MDM features and functions for real-time, collaboration, data sync, tool use, and multistructured data. Good growth is also coming with MDM functions for workflow, analytics, federation, repositories, and event processing. Some MDM options will experience limited growth, because they are saturated (services, governance, quality) or outdated (batch processing and homegrown solutions).

This report helps user organizations understand all that MDM now offers, so they can successfully modernize and build up their best practices in master data management. To that end, it catalogs and discusses new user practices and technical functions for MDM, and it uses survey data to predict which MDM functions will grow most versus those that will decline—all to bring readers up to date so they can make informed decisions about the next generation of their MDM solutions.

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ANNOUNCEMENT
Please attend the TDWI Webinar where I present the findings of my TDWI report Next Generation MDM, on April 10, 2012 Noon ET. Register online for the Webinar.

Posted by Philip Russom, Ph.D. on March 30, 2012


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