Are You Ready for Master Data Management?


Data not only drives revenue, it can also streamline processes, increase customer insight, and improve a company's green reputation. Two recent reports by Forrester and Aberdeen highlighted these areas by examining trends in handling, collecting, and analyzing data.


Are you ready for master data management?

Master data management (MDM) helps companies to create a consistent view of customers across the enterprise. It generally requires a heavy investment in technology and a cultural shift at most companies to be successful. A Forrester Research report called The ROI of Master Data Management, by analyst Rob Karel, describes what businesses should consider when looking at MDM.

"Currently MDM in its branded form is a broad initiative that is expensive and long term, which has significant up-front costs," Karel says. "Fortunately, companies don't have to start with a big-bang approach. In developing a maturity model for MDM, we've created five levels that allow companies to build data competency from the bottom up."

Karel developed list a maturity level, accompanying technology, and usage scenario for each of the five levels. They range from minimal data integration, requiring some custom code, to cross-enterprise MDM with comprehensive technological upgrades and a service-oriented architecture.

The three lowest levels of Forrester's MDM maturity model don't involve any software upgrades at all. In fact, Forrester recommends that companies start with a single domain (data source) within the company to familiarize employees with the initiatives. Surprisingly, Karel says that choosing technology is "nearly irrelevant" when implementing MDM.

"Technology is important for governance and developing processes, but I rarely speak to clients who fail at this because the technology didn't work right," he says. "The majority of cases that fail did so because of lack of ownership or sponsorship, especially at the executive level."

One reason some programs fail is that companies fail to recognize there's no magic bullet for MDM. Despite what some vendors may claim, Karel says there should be no single methodology for master data management ROI. Every organization is unique in terms of the drivers that determine what the costs and benefits are from implementing a program. The key is deciding which stakeholders need which datapoints, and finding an economically viable way to achieve that, Karel says.

Even data can be green
Aberdeen released a report in February that examines how green marketing is impacting direct mail. According to the study, technology vendors offering green tools are finally catching up to the consumer demand that companies embrace environmentalism.

Although companies undertake green marketing initiatives for various reasons, the process almost always involves cleaner, more accurate data to reduce inefficiencies. In fact, 50 percent of the "best-in-class" companies in the report recognize the need for customer data management solutions, and 73 percent of respondents with a green initiative have or will have data integration solutions in place by the end of 2008. Environmental awareness doesn't end with recycling programs and installing solar panels; it's a mindset for companies that penetrate all divisions in the organization.

In the report Aberdeen offers three steps to success for reducing direct mail waste. First is to focus on customer data integration. Eliminating duplicate records and cleansing lists of customers who don't respond increases efficiency and reduces cost. Second is empowering (and enticing) customers to act, which reduces outbound marketing and focuses resources internally. Finally, streamlining information by creating a central repository for customer data means employees don't need to check duplicate systems for disparate information.

With less time and energy focused on finding, compiling, and analyzing customer data manually, companies can direct their limited resources on customer-facing initiatives.