MDM and Data Governance – the Value of Planning
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Building a “Single Version of the Truth” can be more expensive than you expect, and documenting and measuring its ROI requires careful thought.
Good planning is more necessary than ever in an uncertain economic climate. The result of inadequate planning can be misdirected spending, chewing up valuable time and resources and then, six or twelve months later, having to go back and “right the ship”. And the second time around, the efforts are often overstaffed (to “make up for lost time”), while the organization as a whole might still be marching down the wrong path.
Master data management and data governance initiatives can have a disruptive effect on the organization, and the budget is often millions of dollars. Now the stakes are even higher, because in times of economic uncertainty, the pressure is on to “do more with less” and to take shortcut approaches for achieving corporate data objectives.
One such shortcut is to turn the MDM initiative into a “technology-only” project, perpetuating a “silo” approach to data and selectively purchasing the latest data quality or hub tools. This approach should be used with caution, because at the end of the day, data is still data, and without process and stewardship, even the latest technologies will probably fail to meet the intended objectives.
Because of the organizational effects (new processes, roles and responsibilities) in MDM and the budget requirements, our advice is to take the time for a readiness assessment, understand where on the maturity curve you are, see if your business drivers make a sufficient case, think through cultural issues, etc.
The results of an assessment may surprise you. Even with a strong business case and senior management buy-in, don’t underestimate the amount of preparation and time that a well conceived planning process for MDM and data governance will take.
Gathering of the MDM Tribe
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We’re really looking forward to the MDM Summit conference in San Francisco, which runs from Sunday, March 30th through Tuesday, April 1st.
This is a very exciting space. Over the past few years, we’ve seen the mega-vendors like Oracle, IBM and SAP get more and more interested in master data management. We’ve seen the best-of-breed providers like D&B/Purisma, Initiate Systems and Siperian doing very well, as they enhance their products and grow their customer bases. And we’ve seen the “piling on” factor, as companies from all over the enterprise software spectrum re-brand and re-purpose their products for the MDM market.
This is my fifth MDM Summit, and at every one that we attend, we learn more – about the technology of course, but also about the people and personalities that drive the business, about the software vendors and systems integrators, and the end user companies and how they’re succeeding with MDM.
I’ve always loved using technology to solve business problems. And master data management really appeals to me there – it’s a great combination of better technology, better processes and better people/organization, resulting in better information, which can in turn solve some really big business problems.
It’s great to get together twice a year at Aaron Zornes’ and SourceMedia’s MDM Summit conferences. They’re very well-done, and it’s a great place to see people, catch up on what’s happening in the business, and hear the latest success stories.
So if you’re going to be in San Francisco, please look me up. You can drop me a note via our web site or give me a ring at 781-836-4875.
Our First Six Months
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Hub Solution Designs, Inc. was incorporated in September 2007. At this point in our history, I thought I’d spend a few minutes reflecting on what we’ve done so far and where we’re headed.
Clients: we’ve been lucky to get off to a strong start here and have formed some great relationships. We take confidentiality seriously, but you can get a sense for the relationships in our article A Good Client Site Visit. One client said they’ve “made huge strides toward our MDM vision, and you’ve helped us work through the areas that were broken”.
Team: another area where we’ve been very fortunate. We have a strong group of experienced MDM practitioners: Tim O’Sullivan, Gaurav Arora, Eric Gustafson, and Maureen Butler. I believe that with a great team, anything is possible – and we’re very lucky to have assembled this team in the first six months or so.
Partners: from the beginning, our vision has been to partner with all of the MDM hub software vendors. Our strongest relationships on Day 1 were with Oracle and D&B/Purisma (due to my three years working at D&B, managing its alliance with Oracle). But we’ve developed great working relationships with both Siperian and Initiate Systems as well (for example, Tim O’Sullivan just attended a week-long training class on Siperian). We’ve been very impressed with the caliber and professionalism of both Siperian’s and Initiate’s people. And we’re working hard to further develop our IBM and SAP partnerships as well.
Marketing: We’ve been getting the word out on Hub Solution Designs over the last three months. In February, we launched a completely redesigned web site, and this month has been our best month ever on our corporate blog. We’ve had 4,850+ hits to date, with 1,000+ hits so far in March ’08.
We started publishing a monthly newsletter in February, and currently have almost 2,500 subscribers. If you’d like to subscribe, just visit this page and enter your e-mail address.
DM Review magazine has also been very supportive. My article on “The Politics of Master Data Management & Data Governance” was published as the cover story in the March ’07 issue. Tim O’Sullivan has an article that will be published as the cornerstone of an MDM supplement that will be mailed with their June issue. And I’ll be doing a monthly column for DM Review’s Online Edition starting in May.
Speaking engagements: We’re speaking at the Spring 2008 MDM Summit in San Francisco next week, and in the MDM track of the Oracle Applications Users Group COLLABORATE 08 conference in Denver in mid-April.
The MDM Summit session, which will be presented jointly by myself and our client, Shirlee Collins from ADP Dealer Services, is entitled “Real World Data Governance” (Tuesday, April 1st, 4:00-4:30 pm PDT). We’ll talk about establishing a data governance organization, improving underlying customer data quality, and creating a robust process to enrich customer data in Oracle Customer Hub with D&B information. The ADP Dealer Services story reflects a pragmatic approach, aligning Sales Operations and Finance, and balancing each group’s needs and priorities in managing customer master information.
I’m also speaking at COLLABORATE 08 in Denver, CO, which is the annual conference of the Oracle Applications Users Group (OAUG), and which will have a Master Data Management track for the first time. The session, “Best Practices in MDM and Data Governance” (Tuesday, April 15th, 9:45-10:45 am MDT) will present some useful best practices, and will also cover what works and what doesn’t, the importance of a holistic approach, how to get the political aspects right, and how to address more than just the technology elements.
So at this point in our firm’s development, I couldn’t be more excited about the overall MDM market, about our great clients and team members, and the future potential we’ve got for the remainder of this year and beyond. We’re building a great company from the ground up, working hard for our clients, and having a lot of fun in the process.
Data Governance Critical to MDM Success
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I was reading a whitepaper by Aaron Zornes today (“2007-2008 Scorecards for Data Governance in the Global 5000 Enterprise”) and came across an interesting quote:
“Although many organizations have improved end-to-end business processes through CRM implementations, the challenge of developing a unified customer or product view has not been fully addressed by the application suite vendors. For example, enterprise CRM solutions such as Siebel Systems supposedly were to integrate sales, marketing and service functions but in reality provided mostly automation of the sales force with arduous and fragile interfaces between sales, service and marketing. Concurrently, enterprise resource planning (ERP) was marketed as the integration among accounting, manufacturing and distribution. In practice, large enterprises are now turning to MDM as the service-oriented architecture means of unifying both CRM and ERP individually as well to integrate the front office (CRM) and the back office (ERP) together. “
In my experiences over the past twenty years or so, the enterprise software implementations I’ve been part of have treated data and process integration as a “necessary evil”. Almost like a difficult proof in a college math class, where the professor takes you up to a certain point, and then as the class ends, calls out that “the rest of the proof is left as an exercise for the class”.
I’ve seen projects where several systems were supposed to be integrated but never were, or where the front office and back office were integrated through “manual integration”, i.e. manual re-keying of key customer and product information between the two systems.
Little wonder, then, that ERP and CRM investments in many cases failed to deliver their expected return on investment. And now large enterprises are turning to Master Data Management (MDM). Given that successful MDM implementations requires five essential elements (data governance, a hub platform, integration, data quality and external enrichment capabilities), the temptation is there for people to de-scope important aspects of MDM.
Just as critical interfaces were de-scoped from earlier ERP and CRM projects, we’ve started to see people trying to do MDM without data quality, and even without adequate integration.
But let’s collectively resist these temptations. MDM and data governance are “hot” right now because they offer the promise of accurate, complete, timely and consistent information across the enterprise.
If we start to compromise on the essential elements of MDM, or fail to address MDM’s interconnected nature of people, processes, technology and information by focusing only on the technology, then in the not-too-distant future, MDM will not only go through Gartner’s “Trough of Disillusionment”, but it will be largely discredited. The industry will miss out on some huge future opportunities, and global enterprises will miss out on the ability to invest in their people, redesign their processes, implement new technology for MDM and service-oriented architecture, and weave in external information to supplement their internal data.
We all understand the pressure in the corporate world to deliver results in one quarter or less, but let’s make sure our short term approach doesn’t compromise the long term vision so much that the longer term return on investment becomes unachievable.
I think we’ll see data governance leading the way. In the conclusion of Aaron’s white paper (which was published by The MDM Institute on behalf of Purisma, by the way), he says:
“Data governance is critical to these master data management efforts and ultimately is the tipping point as to whether the MDM program’s business outcome achieves its intended ROI and long-term sustainability.”
So resist the temptation to identify the need for Master Data Management, and then immediately run out and engage a systems integrator to help you evaluate, select and deploy some MDM technology. Remember to invest (either up front or in parallel with your MDM selection and deployment) in defining a workable data governance organization with accompanying business processes.
By paying attention to the integration between data governance (i.e. the people and processes) and the MDM techology (hub platform, integration, data quality and external enrichment), you’ll dramatically increase your chances for the successful delivery of expected functionality and ROI, on time and on budget.
Our Monthly Newsletter on MDM Best Practices
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We just published the March issue of our monthly newsletter on MDM Best Practices.
This issue has a great article on “How to Write an RFP for Master Data Management” by Ravi Shankar of Siperian. We’ve also got a new team member who joined us recently, Maureen Butler, with a strong background in MDM and SAP, and upcoming speaking engagements at the MDM Summit in San Francisco (March 30 – April 1) and the Oracle Application Users Group conference in Denver (Apr. 13-17).
If you’re a subscriber, you should get it shortly. If you’re not a subscriber but would like to be, just go to http://www.hubdesigns.com/newsletter.html and fill in your e-mail address.
The February issue is available here, and you can download it as a PDF here.
Monthly Column in DM Review’s Online Edition
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I don’t want to interrupt the flow of Maureen Butler’s great series on “Building the Business Case”, but I just spoke to Julie Langenkamp, Editor-in-Chief at DM Review, and I’ve agreed to become a monthly columnist for their online edition.
The column will run on the fourth Friday of each month, with the first one appearing on May 23.
Please take a minute to comment if there’s a particular topic you’d like to see me cover.
Building the Business Case (Part 2) – Cost Reduction
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When it comes to building the case for an Information Management strategy, cost reductions alone may generate enough benefits to justify your business case, or they could further enhance your economic arguments.
Here are some examples of where you may uncover potential cost reductions:
1) IT costs, such as managing redundant systems/databases, data duplication and/or reconciliation, consulting fees, and software maintenance fees
2) Delivery costs due to inaccurate data, such as product returns, shipping fines, direct marketing waste, returned employee mailings, and Day Sales Outstanding (DSO) costs from invoicing delays
3) Productivity costs due to inefficient processes creating workarounds, redundancy, or rework. Also consider costs associated with audits, time to search for customer records, and time wasted matching customer files
Start by interviewing internal business partners to determine where they have issues. If your partners identify problems and participate in the business case development, they’ll have a vested interest in supporting it. Here are some business areas to consider:
- Finance / Credit / Accounting
- Sales / Contracts
- Corporate Development / Mergers & Acquisitions
- Marketing
- E-Commerce
- Customer Service / Call Center
- Operations / Production
- Human Resources
- Product / Vendor Management
- Merchandising
- IT
Ways to identify and measure costs include:
- Quantify shipping fines, returns, or other operational expenses
- Quantify mail return rate, response rate, and delivery hit rate (did the mailing actually make it to the intended person?) Check with Direct Marketing, HR, Finance/Accounting/Credit, Mailroom, or any other outbound mail services for these costs.
- Identify rework or workaround activities such as returned mail, product, and invoice corrections, product information corrections, report reconciliation, multiple databases, merge/purge and data matching errors, etc. Some partners, both leadership and end users, may accept this as ‘business as usual’, so be careful not to appear threatening or overly challenging.
- Conduct process mapping or other continuous improvement activities to identify & quantify problem areas. Always keep a broad perspective and analyze both up and down-stream processes.
- Conduct time studies on processes or transactions that appear inefficient such as customer service, warehouse, manufacturing, vendor management, payroll, reporting, data management, selling, marketing, planning, forecasting, customer maintenance, mergers and acquisition, etc.
- Conduct satisfaction surveys to measure customers’ experience with duplicate mailings, wrong customer information, delayed shipments due to bad data, credit problems, customer look-up time, etc.
- Work with UPS, USPS, FedEx and other carriers to determine how to improve shipping/postal rates
Cost improvement opportunities will exist all around the business; the trick is determining where you will get the “big wins”. It’s good to have a Finance partner participate throughout this process, so your assumptions and calculations are ‘blessed’.
To find out how to identify business growth opportunities and align business leaders, stay tuned for the next two articles in this series by Maureen Butler.
Building the Business Case (Part 1) – Risk Management
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When you’re building the business case for an Information Management strategy such as MDM, CDI, Data Governance, or Data Quality, start by articulating the business problems or opportunities. By building a compelling case and getting executive sponsorship, you’ll have a stronger chance of gaining organizational priority, funding and resources.
This 4-part series will review typical business challenges and provide pointers on how to make a compelling case for an Information Management strategy.
Part I: Risk Management
If your company’s leadership team is strongly focused on business risks, then focusing the business case on Risk Management is a good start. The following are some typical risk management issues:
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Regulatory Compliance such as financial reporting, Sarbanes-Oxley, environmental
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Legal Compliance such as contracts, pricing, compensation, privacy, human resources
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Other concerns, including diversity programs, quality programs, business system performance, etc.
Your business case should identify specific risks that are of concern to the executive team:
- Reporting discrepancies, inaccuracies, gaps, timeliness, lack of reporting, etc.
- Lawsuits / litigation
- Audit risks and/or audit findings
- Loss of certifications
- System performance, data archiving/retrieval
- Company reputation
Whenever possible, quantify existing or potential costs if risks are not mitigated or eliminated:
- External and internal audit costs
- Fines / penalties / legal costs
- Reporting inaccuracies
- Lack of standards, controls, policies, processes, procedures
- Workarounds, rework and other quantifiable process inefficiencies
Determine which business partners could be your allies. The more you engage, the stronger your business case and the easier it is to get leadership support. Examples include:
- Legal
- Internal Audit
- Finance
- Sales / Contracts
- Human Resources
- IT
- Quality
Risk Management is a great place to start, but if your organization doesn’t have compelling risk-related issues for some reason, or if you need to enhance your business case further, stay tuned for the next 3 articles in this series by Maureen Butler to find out more.
A Good Client Site Visit
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Some client quotes at the end of a recent site visit:
“It’s not possible for one person to have all the necessary expertise, so we underutilize a lot of the tools. We struggle for the fixes, for the process; we don’t know next steps. But it’s amazing how quickly you can make a cake when someone knows the recipe.”
“And in this process, we’ve upgraded our expertise as well. We’ve made huge strides toward our MDM vision, and you’ve helped us work through the areas that were broken. You’ve helped turn talk into action. And renewed our hope.”
This is the stuff that makes consulting so much fun!
Multi-Domain and Federated MDM Hubs: Two Key Considerations
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As the early adopters of Master Data Management are starting to move beyond their single data domain implementations and branching out to other domains, we’re seeing the timely arrival of MDM hubs capable of handling data from multiple domains. So, what are multi-domain and federated hubs? What are some key questions to consider? And what are companies tending to adopt for global strategies? Here’s my take on these questions.
The first key consideration is “what business problem are you trying to solve with MDM?” The answer will point you in the direction of what data is required to solve that business problem. Invariably in this “business process centric” approach to MDM data, you’ll discover that you need data from multiple domains to solve the problem.
The term “multi-domain” has emerged as a way of distinguishing MDM hubs capable of managing more than one primary domain of data. The need for the term arose to distinguish single domain hubs (such as a dedicated product information management or PIM hub) from “multiform” MDM hubs from Siperian, IBM or Oracle, all of which are capable of managing multiple domains of data such as customer, supplier, product, location, and their associated hierarchies.
The rollout strategies that companies are adopting for their MDM initiatives are to start small and then build from there. In the “business process centric” approach, as each additional business problem is tackled by an organization, additional domains of data are added to the MDM hub, using the same methodology for each successive problem.
While this approach sounds similar to a data warehousing analyst, the key to the MDM approach is that data stewards (reporting to the business function) will manage the data within a data governance framework. In other words, a business process solution which is capable of being managed by the business.
The second key consideration is “how will you achieve enterprise MDM?” That is, managing MDM data on a global basis using a centralized hub vs. a series of federated hubs. While the term “federated” has been used in association with Registry style MDM hub implementations, the term is now also used with the Persistent style hubs, but using a different architecture from Registry style hubs.
Companies have two options in addressing a global deployment of a Persistent style MDM initiative.
The first is to implement a centralized hub in a single location that will be accessed from all other locations as data is needed. This requires constant synchronization of data between global source systems and the centralized persistent hub.
The second option is for each location to maintain its own local hub and then federate across the local hubs to a single corporate hub. The federation of persistent hubs requires the infrastructure to maintain data and metadata synchronization between local hubs and a corporate hub. Data sources will be synchronized at the local level with each local persistent hub.
The deployment strategies that most global corporations are following with Persistant style MDM hubs is to use federation across local persistent hubs rather than a single centralized hub in one location that must be accessed from all other locations for MDM data.
The federated approach avoids overlapping data in local hubs and with a common set of technologies in all global locations supports a consistent data stewardship approach.
For those of you who have implemented master data management in your organization, please let us know whether you’ve chosen a centralized hub or a series of federated hubs.
Cover Story in “DM Review”
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We wrote the cover story in this month’s issue of DM Review magazine.
The article is on “The Politics of Master Data Management & Data Governance”, and you can find it at: http://www.dmreview.com/issues/2007_45/10000894-1.html.
Please let us know what you think!
