Enterprises Face Complex Master Data Challenges

Summary
Most large and midsize companies manage day-to-day transactions for orders, accounting, sales, the supply chain and other business areas using a variety of information systems. This complex network poses an impediment to having consistent master data to use across them all. In October, Ventana Research completed research on master data management (MDM), surveying more than 500 qualified organizations to identify the maturity of MDM implementations along with trends and directions in its use. The research found widely disparate data and a lack of master data in these enterprises, a situation that can produce a range of problems harmful to the business. We urge organizations to assess their data environments and make appropriate changes to ensure that they realize the benefits of MDM.

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Master data management can help organizations define, deploy, rationalize and use consistent master data across their operational and analytic systems. This is not a simple task because of the diversity (and frequent incompatibility) of underlying transactional systems and analytic information systems such as data warehouses and business intelligence deployments. Just how complicated it can be was revealed in the results of Ventana Research's MDM research, sponsored by IBM and SAP and by media partners ASCET, BI Review, BusinessIntelligernce.com, The CFO Project, ICCM, Intelligent Enterprise, IT Business Edge, Manufacturing.net, SearchDataManagement.com, SearchOracle.com, SearchSAP.com and Technology Evaluation Centers. In July 2006 we surveyed and analyzed responses from 515 qualified organizations in manufacturing, services and public sector industries.

The research found that most organizations have a hodgepodge of systems across which they need to manage master data, whether operational or analytic, to assure consistency and accuracy. Yet we also learned that only 4 percent of organizations surveyed have implemented MDM; another 33 percent have projects underway.

In the operational sphere, more than 70 percent of respondents said they have deployed some form of packaged customer relationship management (CRM) or enterprise resource planning (ERP) system or both. The most frequently mentioned suppliers of these systems were Oracle (which now includes JD Edwards, PeopleSoft and Siebel) and SAP. While the plurality of companies have only a single instance of their ERP system, equally as many (36 percent) have from two to 50 instances. Similarly, 25 percent of companies have from two to 50 instances of their CRM system. And although fewer companies have deployed supply chain management (SCM) systems, the number of instances among those that have is significantly higher than for CRM or ERP. In our view, all these findings point to a need for what we call Operational MDM, which focuses on the distribution, synchronization or exchange of master data to ensure consistency in transactional operations.

For analytic systems, data storage and access pose challenges. Most organizations (64 percent) have deployed an enterprise data warehouse in addition to their transactional systems. The largest group (45 percent) has implemented it as a single central system, but 31 percent have implemented regional or local data warehouses. And one-third of organizations have not yet implemented any sort of data warehouse to facilitate business reporting across their concern or do not have data warehouses at local, regional or enterprise levels. Add to this the many types of business intelligence (BI) tools that reside on legacy information systems, and it's easy to see a need for Analytical MDM, which is required for aggregation and analysis.

Assessment
The combination of many divergent information systems across large and midsize businesses and the small number of companies that have implemented MDM adds up to a large risk for the many organizations that operate with inconsistent definitions of data. To integrate consistent master data across systems, they will require interfaces to existing systems and will have to rationalize or eliminate legacy systems that do not permit MDM. Companies should develop a strategy for moving to a flexible data services and integration architecture that will enable them to adapt those existing systems. Ventana Research recommends that organizations complete a full inventory of their operational and analytic systems to determine their priorities for implementing MDM across the enterprise.