The 5 Pillars of Master Data Management
Dec 21, 2011 5:00 AM PT
In the last three years, corporate views of master data management have rapidly evolved from data-centric confusion to a point where companies now focus on the consumers of master data and the business processes that consume it. In the next two to five years, the companies that use this MDM momentum will gain a strategic advantage.
Companies are often tempted to start by defining what master data looks like (the model) versus starting by asking, "which applications and processes need master data" and then asking what data they need. Consequently, IT departments find themselves with MDM deployments designed for one project, versus true MDM deployments that satisfy many consuming applications.
There are five principles that will drive MDM technology evaluation, development, adoption and success. These principles will help one understand how to quantify success, track ROI and communicate the business impact. If the principles are incorporated, companies can take advantage of this rapid MDM evolution, including an increase in customer satisfaction and the fact that organizations without MDM programs spend five times longer searching for data. Organizations can achieve the next phase in maturity by adhering to the following steps in developing an information governance program.
1: Define Your Business Problem
When you start the master data management process, it is critical to understand your business problems and develop a plan to address those issues. Consider the application or process that initially made the data unusable or bad. Initially you may be able to clean up a set of instances of bad data; the goal of your project is to solve the problem at its source.
This is why MDM is strongly linked to business processes and applications. In order to drive MDM adoption, companies should think of a consumption-centric approach -- to define who needs master data, then what data they need, and when they need it. Finally, identify the key win criteria -- the greatest ROI, biggest organizational win -- that will solve the problem identified and meet your business imperatives.
2: Plan Beyond Phase One to Ensure Success
Master Data Management should be viewed as a journey and not a single destination. To achieve a successful MDM project, you should proceed in stages that will help identify achievable wins that will generate organizational momentum. Connect the first phase with the second phase in a cohesive manner so that MDM is not just a single phase, and therefore expensive proposition. Create project timelines that aren't too short, but also deliver value to the business.
Once the first phase delivers ROI, your organization will want to deploy MDM to solve additional problems across additional data domains, other departments or using more and more sources. The MDM journey involves striking a balance between completing the initial phase in a reasonable time without impacting the second or third phases. You have to set expectations appropriately.
3: To succeed, MDM needs a strong governance program in place
For a Master Data Management program to reach its full potential, you need to have controls and processes in place. An information governance program provides the framework that helps MDM initiatives succeed. MDM brings together users and sources of data while an information governance program creates an agreement on the interaction rules among people, processes and systems. Governance also provides context and makes sure MDM is not just an IT project, but also unites users to explore the business rules for data usage. By enforcing data standards and making those governance policies more substantial, MDM makes governance more relevant and joins the theory of governance with the use of MDM.
4: Recognize That the Most Important Word in MDM Is ManagementTo understand why management is core to the program, you have to review a definition of master data management. MDM is an ongoing business and IT function that incorporates other disciplines to achieve that enterprise-wide "system of record" for core business activities. It acts as a foundation on which to develop, maintain and monitor information governance. It is that collaboration and coordination of various processes, people and technology that requires management. This definition of MDM informs what it can do for your organization and how it supports governance initiatives.
MDM is more than a technology platform or a set of tools. It is a discipline that provides a consistent understanding of master data entities and designed to accommodate, control and manage changes in your master data assets. Data changes, and data quality changes. What shouldn't change is that single version of the truth.
5) Partner With an IT Vendor Who Has Significant MDM and Information Governance Experience
It is essential with a master data management program to partner with a vendor who possesses relevant industry experience. It is not about simply implementing the technology, but organizing how you will go about a multi-step MDM process. Every industry has its idiosyncrasies, and it is important, whether you purchase a pre-built or custom-built a solution, that it is tailored to your needs.
The IT vendor should collaborate with you to build the business case, to figure out how to secure executive sponsorship and to sell MDM internally. A good IT partner will help manage the risk inherent in bringing in new projects. Finally, a successful partnership between an organization and IT vendor will help bring the people and processes and technology together. Also, you will gain access to best practices on information governance.
A single trusted view of information provides the clear insight and transparency that organizations need to have effective business processes and interactions with customers and partners. Particularly at a time when social media and new information platforms are becoming pervasive, organizations now have access to new resources offering rich customer insights. However, businesses and governments must recognize that governance has to be part of this information gold rush.
MDM is the foundation for organizational success and these five principles are core to that advancement. By applying a well-thought-out MDM strategy and prioritizing governance as a key component of this, organizations can capitalize on this wealth of information and achieve a competitive advantage.