Five Key Strategies in Master Data Management

Here is a very interesting Profit Magazine article on MDM:

A recent customer survey reveals the deleterious effects of data fragmentation.

by Trevor Naidoo, December 2010
 

Across industries and geographies, IT organizations have grown in complexity, whether due to mergers and acquisitions, or decentralized systems supporting functional or departmental requirements. With systems architected over time to support unique, one-off process needs, they are becoming costly to maintain, and the Internet has only further added to the complexity. Data fragmentation has become a key inhibitor in delivering flexible, user-friendly systems.

The Oracle Insight team conducted a survey assessing customers' master data management (MDM) capabilities over the past two years to get a sense of where they are in terms of their capabilities. The responses, by 27 respondents from six different industries, reveal five key areas in which customers need to improve their data management in order to get better financial results.

1. Less than 15 percent of organizations surveyed understand the sources and quality of their master data, and have a roadmap to address missing data domains. Examples of the types of master data domains referred to are customer, supplier, product, financial and site. Many organizations have multiple sources of master data with varying degrees of data quality in each source -- customer data stored in the customer relationship management system is inconsistent with customer data stored in the order management system.

Imagine not knowing how many places you stored your customer information, and whether a customer's address was the most up to date in each source. In fact, more than 55 percent of the respondents in the survey manage their data quality on an ad-hoc basis. It is important for organizations to document their inventory of data sources and then profile these data sources to ensure that there is a consistent definition of key data entities throughout the organization. Some questions to ask are: How do we define a customer? What is a product? How do we define a site? The goal is to strive for one common repository for master data that acts as a cross reference for all other sources and ensures consistent, high-quality master data throughout the organization.

2. Only 18 percent of respondents have an enterprise data management strategy to ensure that data is treated as an asset to the organization. Most respondents handle data at the department or functional level and do not have an enterprise view of their master data. The sales department may track all their interactions with customers as they move through the sales cycle, the service department is tracking their interactions with the same customers independently, and the finance department also has a different perspective on the same customer. The salesperson may not be aware that the customer she is trying to sell to is experiencing issues with existing products purchased, or that the customer is behind on previous invoices.

The lack of a data strategy makes it difficult for business users to turn data into information via reports. Without the key building blocks in place, it is difficult to create key linkages between customer, product, site, supplier and financial data. These linkages make it possible to understand patterns. A well-defined data management strategy is aligned to the business strategy and helps create the governance needed to ensure that data stewardship is in place and data integrity is intact.

3. Almost 60 percent of respondents have no strategy to integrate data across operational applications. Many respondents have several disparate sources of data with no strategy to keep them in sync with each other. Even though there is no clear strategy to integrate the data (see #2 above), the data needs to be synced and cross-referenced to keep the business processes running. About 55 percent of respondents said they perform this integration on an ad hoc basis, and in many cases, it is done manually with the help of Microsoft Excel spreadsheets. For example, a salesperson needs a report on global sales for a specific product, but the product has different product numbers in different countries. Typically, an analyst will pull all the data into Excel, manually create a cross reference for that product, and then aggregate the sales. The exact same procedure has to be followed if the same report is needed the following month.

A well-defined consolidation strategy will ensure that a central cross-reference is maintained with updates in any one application being propagated to all the other systems, so that data is synchronized and up to date. This can be done in real time or in batch mode using integration technology.

4. Approximately 50 percent of respondents spend manual efforts cleansing and normalizing data. Information stored in various systems usually follows different standards and formats, making it difficult to match the data. A customer's address can be stored in different ways using a variety of abbreviations -- for example, "av" or "ave" for avenue. Similarly, a product's attributes can be stored in a number of different ways; for example, a size attribute can be stored in inches and can also be entered as "'' ". These types of variations make it difficult to match up data from different sources. Today, most customers rely on manual, heroic efforts to match, cleanse, and de-duplicate data -- clearly not a scalable, sustainable model.

To solve this challenge, organizations need the ability to standardize data for customers, products, sites, suppliers and financial accounts; however, less than 10 percent of respondents have technology in place to automatically resolve duplicates. It is no wonder, therefore, that we get communications about products we don't own, at addresses we don't reside, and using channels (like direct mail) we don't like. An all-too-common example of a potential challenge follows: Customers end up receiving duplicate communications, which not only impacts customer satisfaction, but also incurs additional mailing costs. Cleansing, normalizing, and standardizing data will help address most of these issues.

5. Only 10 percent of respondents have the ability to share data that was mastered in a master data hub. Close to 60 percent of respondents have efforts in place that profile, standardize and cleanse data manually, and the output of these efforts are stored in spreadsheets in various parts of the organization. This valuable information is not easily shared with the rest of the organization and, more importantly, this enriched information cannot be sent back to the source systems so that the data is fixed at the source.

A key benefit of a master data management strategy is not only to clean the data, but to also share the data back to the source systems as well as other systems that need the information. Aside from the source systems, another key beneficiary of this data is the business intelligence system. Having clean master data as input to business intelligence systems provides more accurate and enhanced reporting. 

Characteristics of Stellar MDM

When deciding on the right master data management technology, organizations should look for solutions that have four main characteristics:

  • enterprise-grade MDM performance

  • complete technology that can be rapidly deployed and addresses multiple business issues

    end-to-end MDM process management with data quality monitoring and assurance

  • pre-built MDM business relevant applications with data stores and workflows

These master data management capabilities will aid in moving closer to a best-practice maturity level, delivering tremendous efficiencies and savings as well as revenue growth opportunities as a result of better understanding your customers. 

Trevor Naidoo is a senior director in Industry Strategy and Insight at Oracle. 

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