Master Data Management a Key Strategic Priority Say Global 2000 Users

Information Management Online, September 26, 2005

The emergence of master data management as a key strategic priority for the world's largest companies was the primary theme at the fifth annual Kalido User Group meeting held this week with customers and partners. A survey of the event attendees found that almost two-thirds of Kalido customers see tackling master data management (MDM) as a top three priority for their organizations in the year ahead. Despite this, 90 percent of respondents felt that the IT industry as a whole has neglected the issue of MDM. The results are a barometer of prevalent IT thinking in large organizations given that Kalido's customers, such as BP, Philips, and Unilever, are drawn from some of the world's highest revenue-earning companies.

"Master data" is business reference information such as customers, brands, suppliers, financial indicators - subject areas which are analyzed to gauge enterprise-wide performance, such as global sales by individual customers or total spend with a single supplier across all territories. One hundred per cent of respondents see the management of master data ranging from important to absolutely vital for effective enterprise information strategies.

When asked why MDM is needed, the top two answers from respondents were to develop standard business definitions (56 percent) and to improve data governance (56 percent). The central role that MDM plays in enabling successful business intelligence reporting was also highlighted. Fifty percent of respondents viewed MDM as key to generating faster and more accurate business reporting, and 41% said that gaining a consolidated view of enterprise performance was a major business driver.

Delegate presentations and dialogue at the Kalido User Group also pointed to the emerging trend for business executives to take ownership of MDM instead of the IT department. In correlation, 41% of survey respondents found that enabling ownership of master data by the business is also a key driver for implementing master data management solutions.

Paul Highams, technical architect, Unilever Global Solutions, commented: "Unilever is implementing organizational structures and processes to improve the quality and timeliness of enterprise information. Master data management plays a key role in this strategy and is now the responsibility of finance, not the IT department."

The chief financial officer and the finance department emerged as the primary internal customer for MDM projects, as cited by almost half of the survey respondents. The chief marketing officer and the sales and marketing function emerged as the second most likely internal customer.

A customer delegate explained that the need for 'one finance language' at their organization is a top priority. To address this, they are in the process of implementing a master data management strategy using KALIDO MDM as the key enabler to provide more accurate and consistent data for finance and risk reporting functions at all levels of the organization.

This strategy will help their organization better address legislative requirements such as Basel II, International Financial Reporting Standards (IFRS), US GAAP and Sarbanes-Oxley. This initiative is also expected to support internal reporting such as risk adjusted return on capital (RAROC), a faster close and client value reporting. Their long term goal is to integrate finance and risk reporting processes, systems and data.

Another customer highlighted the importance of MDM for their worldwide business intelligence and performance management initiatives, based on KALIDO MDM and enterprise data warehousing software. With KALIDO MDM mapping their business definitions held at the local level to a central repository of master data, they have been able to improve their global consolidated reporting on areas such as marketing revenue investment in brands and campaigns, as well as on customer and product profitability and debt.

This customer also emphasized that MDM is a strategic priority owing to the fact that their organization, like many others, holds many definitions of business information within multiple enterprise resource planning (ERP) and other operational systems, each with differing codes and coding structures. The survey revealed the scale of this MDM challenge; more than three quarters of respondents said they needed to manage more than 25 types of master data, and over 40 percent managed more than 100 types. Such a wide variety of master data, if not managed correctly, often leads to fractured and delayed enterprise reporting and costly errors caused by inconsistent and inaccurate references to information such as financial indicators, customers, products and suppliers.

Terry Ryan, founder, Knightsbridge Solutions, said, "Master data management improves the consistency, quality and reliability of information. As such it is one of the critical components of an enterprise information management strategy, alongside enterprise meta data management and enterprise data warehousing. Successful master data management can support regulatory compliance initiatives such as Sarbanes-Oxley, Basel II and Safe Harbor legislation. With master data management frameworks and processes in place, management and supporting teams are freed to focus on driving true business value."

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