Five Essential Elements of MDM and CDI

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I think you can boil a successful Master Data Management (MDM) or Customer Data Integration (CDI) initiative down to these five essential elements:

(1) a Hub of some type – there are three major types of MDM-CDI hubs. In a Persistent Hub, all of the critical data is copied from the source system into the hub. In a Registry Hub, only the identifying information and key identifiers are copied into the hub. In a Hybrid Hub, a mix of both styles is used, giving you the ability to fine-tune how much transactional data is copied into the hub.

(2) some kind of data integration or middleware – because it’s important to be able to dynamically synchronize data into and out of the central hub. The synchronization doesn’t have to be real-time, although a lot of organizations seem to be heading that way, or at least to “near real-time”. But since the whole point of these types of projects is to build a “Single Source of Truth” on a particular domain like customers or products, having out of date information in the hub, or even worse, not synchronizing the data quality improvements you make back to the original source system, defeats the whole purpose of the project.

(3) data quality capabilities – most companies quickly realize (through data profiling, which is strongly encouraged) or just through looking at the data manually, that their information starts off with a low level of data quality. So some type of data quality tool can be very helpful in standardizing information (changing “Massachusetts” to “MA”), correcting information (when someone spells “Xerox” as “Zerox”), and filling in missing information (when someone doesn’t provide a value for state or province). A good data quality tool can make the difference between a failed project and a successful project.

(4) external content – also known as enrichment. Having formerly worked for D&B, one of the leading providers of information on businesses, I consistently saw the value of providing information you didn’t already have. It could be something as straightforward as SIC codes, or as complex as corporate family trees and credit ratings. But when you don’t know what you don’t know, having an external content provider can be a big help.

(5) data governance – I put this last, but it’s actually the most important of the five. Without the people and processes that you’ll need to develop around your central hub, the technology is (at best) going to be “a solution in search of a problem”. The business won’t accept the solution unless they’re driving it, and resolving difficult questions of data ownership or correctness is going to take some kind of cross-functional group in your business, with an executive sponsor, business data stewards, IT support, etc.

Bringing together the previous four elements of an MDM or CDI hub is difficult enough – don’t try to do it without the support of a data governance council to own the solution as it is developed and deployed.

I’ll write in a future post about the holistic approach I recommend to deploying an MDM or CDI solution, combining attention to People, Process, Technology and Information. But it reinforces a lot of these basic points.

Useful Definitions for MDM

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The following first appeared in an article I wrote for DM Review, “Clean, Accurate and Synchronized: Overcoming Master Data Management Challenges,” which was published in its February 15 Special Report on Customer Data Integration.

Introduction

In today’s complex enterprises, companies need to put an organization and processes in place, supported by the appropriate technology and trusted external content, to manage critical master data across the enterprise in order to increase revenue, reduce costs and improve compliance.

This holistic combination of organization, process, technology and information is referred to as Master Data Management (MDM), and these techniques and approaches, when applied to the “customer” domain within the enterprise, are known as Customer Data Integration (CDI).

Defining Master Data Management

MDM is a set of disciplines and processes for ensuring the accuracy, completeness, timeliness and consistency of the most important types (or domains) of reference data in the enterprise – across different applications, systems and databases, and across multiple business processes, functional areas, organizations, geographies and channels.

Some critical MDM capabilities include data quality, identity management, data enrichment, grouping, synchronization and process management.

Data quality is critical to ensure that only accurate, completely, timely and consistent data is being synchronized across the enterprise.

Identity management serves three important and related functions:

• recognize an organization or person (and whether they’re a prospect or an existing customer) regardless of which channel (call center, web store, etc.) they use to interact with you,
• validate identity so you’re confident people are who they say they are, and
• prevent duplicates, so you avoid adding a new record unless it’s “truly” new.

Data enrichment brings in external information on an organization or person, telling you valuable things you didn’t already know.

Grouping links organizations and persons in useful ways, typically in corporate hierarchies when dealing with businesses and households when dealing with consumers.

Synchronization and process management (usually through middleware and business process management software) allow you to not only move information from Point A to Point B in the enterprise, but also to do more sophisticated things than simply move information. You can have processes that are long running, tightly monitored and controlled, and span multiple applications and even enterprises.

Closing

Without a systematic way to manage critical master data, collaboration across the enterprise, between the diverse IT systems and the various business functions, can be difficult and costly. But, as Master Data Management becomes more widespread, organizations are starting to figure out how to build robust MDM solutions, using a combination of off-the-shelf hubs, middleware and process management tools, plus data quality software, web services, Service-Oriented Architecture and custom components.

Evolving this architecture will prove critical in the future as organizations need better information, increased agility, more efficient processes and less costly compliance to compete in today’s increasingly “flat” and competitive business environment.