Master Data Management: Forgiveness for All Past Data-Management Sins?

Newly released research and analysis from Aberdeen Group has uncovered one main reason why many enterprises’ interest in master data management (MDM) initiatives is growing: IT leaders believe MDM can help fix the data management mistakes they’ve committed over the years.

MORE ON CIO.com

How MDM Unified Financial Reporting at Nationwide Insurance

MDM: Companies Struggle to Find the Truth in Massive Data Flows

10 Mistakes to Avoid When Writing an MDM RFP

A recent Aberdeen survey of more than 400 end-user organizations asked them how they were leveraging MDM solutions to “improve their information integration, access, sharing and management,” according to a May 2008 research brief, titled “Master Data Management: The Approach Determines Results.”

It turns out that the top business driver for implementing an MDM system, cited by nearly half (46 percent) of the respondents, is “inadequate performance of the existing data management infrastructure.” (For a rare look at an MDM success story, see “How Master Data Management Unified Financial Reporting at Nationwide Insurance.”)

Aberdeen then prompted the respondents to cite the original business pressure that made them implement their data management infrastructures in the first place. The pressures include: competitive growth and profitability (cited by 61 percent of the respondents); increasing customer demands (40 percent); high data management costs (32 percent); regulatory compliance (23 percent); low sales conversions (22 percent); and customer defections (15 percent).

As the Aberdeen analysts point out, there is a noticeable disconnect between the top drivers for data management and MDM initiatives. That can be explained by “looking a little more deeply into the data,” the analysts note, which reveals a surprising trend.

“Eighty-nine percent of users surveyed indicate that their data-management projects began with an in-house solution,” states the research brief. “Of those, nearly half have since moved to an MDM platform solution.”

In other words, roughly half of those enterprises that tried going it on their own have had limited success and have since sought an MDM vendor’s assistance with a packaged solution. (See “Master Data Management: Companies Struggle to Find the Truth in Massive Data Flows” for more on the overwhelming adoption barriers.)

The Aberdeen report, in particular, notes MDM products from two vendors—IBM and Siperian—and the improvement that users realized in both “effectiveness of data quality” and overall satisfaction with the vendor platforms. It should be noted that survey data showed that all end-user organizations achieved “some degree of improvement through the use of MDM” initiatives, whether a vendor was involved or not. (If you’re just starting out, see “10 Mistakes to Avoid When Writing an RFP for Master Data Management.”)

To arrive at that conclusion, the key performance indicators (KPIs) that the survey measured on the internal side included: data retrieval and information access; cross-channel information sharing; automated data management and integration; and managing structured or unstructured data. That, in turn, led to improvements in key customer-related metrics, such as customer retention and customer growth; and cross-sell and up-sell revenue, according to the Aberdeen research brief. (The brief can be downloaded through the Siperian site.)

“Users must ensure that evaluation and selection of MDM solutions and vendors focus on business needs, incumbent information and technology architectures,” states the Aberdeen brief.