Most businesses today have a complex array of enterprise applications and information systems. Each application or system has specific functionality and handles data in its own way, stores it in a separate data store and may be unable to exchange and synchronize the data with other systems. The result is inconsistency in how data is created and used across the enterprise.
In a groundbreaking research study conducted during the summer of 2006, Ventana Research established that businesses see the need for MDM and that the first wave of innovative organizations seeking competitive advantage have adopted MDM. The next wave of companies are just beginning to assess and implement MDM as a component of their information management and business process initiatives.
A total of 230 qualified professionals participated in this new research by detailing their current and planned use of MDM. Although MDM is often thought to sit firmly in the IT domain, we worked with a dataset that included responses from business (40 percent) as well as from IT (60 percent), affording a more balanced view of how MDM is perceived in companies. The research included respondents from a variety of vertical industries: 36 percent work in a service industry, 32 percent in manufacturing, 25 percent in financial services and 7 percent in federal, state or local government.
Among early adopters focusing on MDM, 49 percent said they have a project planned or under investigation, and 27 percent have an initiative under way. Most companies reported they see the need to improve the management of multiple data entities, with customer, product and financial data the top priorities. The functional areas expected to benefit most are marketing, sales, customer service and the call center. Finance dropped to number two in the list as compared to the 2006 study, but with an intensified focus on the customer, finance needs to produce improved reporting on which customers are generating the highest margins and what products they are purchasing. In combination, these suggest that competitive pressures and regulatory requirements are forcing companies to focus more on their customers.
The results of this new research show that companies are looking to use MDM to resolve issues at two levels: analytical and operational. At the analytical level, the top priority for 34 percent of respondents was to improve the accuracy and consistency of reporting. At the operational level, the top priority for 70 percent of respondents was to create a centralized data hub that can be used to synchronize data across a multitude of application systems and the data warehouse. With a focus on the customer, it is clear that a top business priority is to create a golden source of customer data and to produce an enterprise-wide view of the customer.
The Role of Master Data Management in Business
The guiding principle of MDM is not open to quarrel: It seeks to establish and maintain a high level of consistency and reliability of data - a level that business can manage and IT can support across the organization. Using MDM, a company can put in place and then manage processes that give each line of business accountability for its data, regardless of its technological expertise, and enforces common business practices and rules for conducting business and analyzing information. Having a set of common definitions of data across the organization promotes efficiency of business processes, which in turn can improve customer service.
For all lines of business, including finance, MDM provides a way to automatically produce a unified definition and view of all customers and products without forcing every department and business unit to use the same application or format. For IT groups, it provides a way to ensure accuracy and consistency of data across the organization and to give all departments confidence in the reliability of the data they create and receive from other business units.
The research shows that companies take different approaches and go through different stages when adopting MDM. One-fifth of companies begin by addressing a specific business issue within a line of business. Almost half begin with a more widely based initiative affecting the whole company with the intention of making the initiative enterprise-wide. And 36 percent reported their initiative is enterprise wide.