Managing Multiple Data Entities is a Top RequirementThe results show that companies need to manage multiple data entities, with customer data the number-one priority of respondents and product data number two. Overall, 83 percent of companies include customer data as part of their MDM initiative. Companies also are looking to standardize financial and other data that is needed as the source of information used for analysis; this is more important to those working in business units than to those in IT. We believe this indicates a growing realization that in competitive markets, companies need a more consistent definition and understanding of customers to increase their own operational efficiency and respond more effectively to customers' needs. The respondents prioritized much more highly data that affects external business with customers than they did more inwardly facing data about, for example, employees and suppliers.
Customer-Focused Departments and Processes will Benefit Most from MDM
Providing consistency in customer definitions and interactions across an organization is imperative in today's cutthroat global business climate. Doing this effectively requires coordination of the marketing, sales, service and finance functions that have customer interactions at the core of their processes. All of them must have the same information, and it must be accurate, up-to-date and comprehensive. MDM can establish and enforce such consistency.
In this research, 31 percent of organizations named Sales and Marketing as the functional area most likely to benefit from MDM. This is a change from previous research which had Finance as the top area. This reflects the growing importance of the customer to companies, as does the fact that customer service and the call center are ranked as number three.
Finance took second place as the area most likely to benefit from MDM. Tracking activity and revenue from customers is obviously critical to profitability and efficiency. This prioritization demonstrates business managers' sense of the importance of having information technology support a broad set of systems that are externally facing but operate in house. We conclude that the priority given to customers reflects a strategic emphasis on augmenting revenue and improving customer interactions and satisfactions.
MDM Enables Data GovernanceThe push for data governance and the increasing pressure of regulatory mandates both require control over information and the ability to demonstrate its validity. To meet this requirement, companies and their IT groups need to assure consistency, which can be done best through a centrally controlled MDM system. However, a combination of research responses shows that far fewer companies have progressed to creating centralized hubs of key master data. Most still have significant numbers of legacy systems that maintain different versions of the same master data.
Nearly two-thirds (64 percent) of companies have some form of data governance or data management initiative in progress; 79 percent of respondents said that establishment of a data governance council and/or policies is part of their MDM initiative. These initiatives are enterprise-wide in 75 percent of those companies, and data governance boards include members from across the enterprise, such as the CIO (in 36 percent of cases) and the CFO (24 percent). The prevalence of these boards, and the fact that they have executive authority (36 percent) or an advisory role (40 percent) in matters to do with data management, indicate that companies now see data management as a major business issue. MDM can support data governance in defining and publishing master data across the business processes and information systems.
MDM Can Alleviate Negative Business Consequences.
Key parts of the justification for MDM are two avoidances: the avoidance of errors in key data; and the avoidance of the risk of losing business through declining customer satisfaction and poor responsiveness to opportunities caused by the lack of clear, consistent information to analyze and on which to operate the business. These negative factors carry the potential for serious financial costs as well - lost business, fines by governmental agencies, extra work time by staff to correct mistakes, slower development of products and programs, and even a drop in share price for having material errors in data that is reported in financial statements.
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Mark is responsible for the overall business and research direction of Ventana Research and drives the global research agenda covering both business and technology areas. He defined the blueprint and methodology for improving business by using benchmark research to provide guidance across people, processes, information and technology. Mark is an expert in enterprise software and business technology innovations including: business analytics, big data, cloud computing, business collaboration, mobile technology and social media. Mark has held CMO, research and product development roles at research and software companies. Mark started Ventana Research more than a decade ago; he has worked in the software industry for 25 years leading innovations in research and technology. Mark was rated the 2011 software industry analyst of the year by The Institute of Industry Analyst Relations (IIAR). Mark will also be ranked as one of the top ten technology influencers in 2012 by Human Resources Executive magazine. Check out Mark's Klout Score or check out his Kred Score. Mark can be found on Twitter at @marksmithvr, on LinkedIn, on Google+ and can be reached via email at email@example.com and read his blog at http://marksmith.ventanaresearch.com