Not Your Father’s List Management: MDM Matures, Part 1

Master Data Management Evolution

Information Management Magazine, March 2008

Jill Dyché, Evan Levy

The market for master data management (MDM) is maturing. Conversations with clients and prospects have shifted from “What is MDM?” to “We have some problems, and MDM can solve them. Where do we start?” That’s clear progress. So what are those problems? They cross lines of business, span subject areas and transcend operational and strategic challenges. Here are a few recent quotes from some executives who pinpointed MDM as a business solution.

• Director of e-business marketing at a brokerage firm: “I never thought I’d say it, but in the seven years I’ve been here, we’ve gone from having no data to having too much! The same customer exists in different ways in different systems. The data warehouse just represents one of many versions of customer.”
• A media company executive: “We’re constantly acquiring new companies, which means we’re constantly absorbing new systems. It’s a nightmare.”
• Director of regional sales at a medical device company: “We don’t have a hierarchy of products categorized by preferred vendor, and there are huge variations of product descriptions. We can’t keep our product catalog - never mind our Web site - accurate and current.”
• Data steward (external consultant) for a mortgage company: “I can’t even begin to quantify the amount of manual work they’ve had to do to maintain their data. Everything there is a fire drill. If I were to guess, this has cost millions. No wonder the industry is in trouble!”
• CIO at a health care provider: “It’s not just about all of our systems sharing authoritative data. It’s about synchronizing and syndicating that data across businesses and geographies. This is critical to our quality of care. That’s what keeps me up at night.”

We define MDM as the set of disciplines and methods to ensure the currency, meaning and quality of a company’s reference data within and across subject areas and systems. This lofty definition colors in the depth and complexity of MDM initiatives. Put more simply, MDM ensures that your systems leverage and reuse common, accurate business data.

The Need for an MDM Taxonomy

The companies we’ve worked with have taught us an important lesson: how master data is used has little or no bearing on MDM maturity. Terms like “collaborative” or “analytical” MDM only serve to muddy the waters when it comes to MDM functionality. How the master data is stored, accessed and propagated to the enterprise indicates MDM’s evolution in an enterprise. While data usage adds complexity to the MDM debate - and may even enrich the requisite MDM “marketecture” diagrams of some vendors - it is ancillary to how the company manages, integrates and deploys its master data.

Many MDM newcomers continue to discuss the topic in terms closer to relational databases, but most robust MDM solutions aren’t designed as reporting databases (many businesspeople would argue that there are enough of those already!). MDM systems contain more detail than a simple subject area reference list; they can contain all of the necessary details to support item identification, relationship details, security and access as well as administration and management of a company’s reference data.

MDM is more than a single image of data. Successful MDM implementations enable business data to contain rigorous and standardized content that reflects business-based logic and rules processing. In addition to offering a solution for the widespread “single version of the truth” goal, MDM offers automated tracking and reconciliation of data from different sources.

The goal of most MDM solutions is to ensure that master data includes reference details that reflect the current state of the business. As with most complex business-enabling technologies, this does not happen in one development iteration. Consequently, we’ve identified five stages of MDM maturity, shown in Figure 1, which can help you gauge your company’s MDM evolution and offer a structured and deliberate pathway forward.

Figure 1: MDM Maturity Taxonomy

The MDM maturity taxonomy reflects degrees of complexity and sophistication. It seeks not to be prescriptive so much as to elucidate the various functions that MDM provides and what’s involved in making them work. Our purpose is to help crystallize the various functions you need from MDM and map them to your company’s capabilities. The MDM model is independent of the current crop of tools and technologies; most of today’s vendor solutions will work within all levels of the taxonomy. Each MDM level supports and builds upon the capabilities of the prior level. Consider the taxonomy less a recommendation of steps - your company may or may not need to go all the way to MDM level 5 - and more of a progression of states.

MDM at Level 0

There is such a thing as no MDM (level 0). For instance, your company might have a list of assets, such as products. At level 0, each system that processes product data has its own list of products. There is no data sharing between applications. No enterprise definition of data elements exists.

At level 0, each application is responsible for managing and identifying its own product list and orchestrating change. This situation is common, particularly in companies that sell custom-packaged or specially priced products. Such products are frequently created individually within the different systems (sales, contracts, billing, fulfillment, etc.) because there isn’t an automated method of sharing this information. Each system contains its own product. As Figure 2 illustrates, data is disconnected and independently managed.