Master data management has gained importance in today's complex and harsh global business landscape due to demanding suppliers, trading partners and customers as well as financial challenges and government regulations. Despite the recent economic crisis, analyst firms have declared MDM to be "recession proof" as businesses strive to dramatically reduce costs, meet compliance reporting mandates, deliver increased sales and marketing effectiveness, and provide superior service to customers and suppliers. MDM and its variants - customer data integration, product information management and data governance - all significantly contribute to these tactical business priorities.
Capitalizing on MDM in times of crisis, however, requires an understanding of key underlying business and technology trends. Data from the MDM Institute's quarterly "MDM Reality Check" shows some escalation in scope and funding of MDM and data governance programs in the first half of 2010. The findings from this survey will be presented at the series of MDM Summit conferences throughout 2010 including London, New York City, San Francisco, Sydney and Tokyo.
Enterprise MDM is a major IT initiative being undertaken by a large number of market-leading global 5000 enterprises. Both as an IT discipline and an integrated set of technology solutions, MDM continues to evolve at a rapid pace. Research analysts at the MDM Institute annually produce a set of 10 milestones to help global 5000 enterprises focus efforts for their own large-scale, mission-critical MDM projects. For planning purposes, we identify these milestones with strategic planning assumptions that offer an enlightening view of trends and issues facing IT organizations.
An MDM roadmap helps global enterprises and IT vendors selling into this space utilize strategic planning assumptions to focus their own roadmaps on large-scale and mission-critical MDM projects.
1. MDM Market Maturation
During 2010, the MDM market will broaden and deepen as megavendors repackage/reprice solutions below $1 million. Concurrently, Microsoft and other midmarket solutions will address departmental and small to midsized business needs at prices below $100,000.
Through 2011-12, verticalization/horizontalization of MDM solutions will expand beyond corporate financial reporting, enterprise master patient index (EMPI) in health care, etc. into financial services, government and higher education especially. At the same time, both MDM and packaged application vendors will deliver products (vertical and horizontal) that are natively aware of master data services - and increasingly integrated and dependent upon such master data services.
By 2013, the combined software and services market for enterprise MDM solutions to address both customer and product/thing master data will exceed $4 billion (compound annual growth rate of 15 to 20 percent during 2010-13).
2. MDM Market Momentum
During 2010, large enterprise megavendor MDM solutions from IBM, Informatica, Oracle and SAP will monopolize majority market share in the global 5000 enterprise; midmarket solutions from DataFlux, Information Builders, Kalido, Liaison Technologies, Microsoft, Oracle and Stibo Systems will also prosper. At the same time, specialty MDM applications (such as those from Amdocs, Fiserv, GoldenSource, Orchestra Networks and VisionWare) will continue to thrive by geography and industry.
Through 2011-12, MDM solutions will cannibalize the traditional master customer database business of data service providers (e.g., Acxiom, Austin-Tetra, Dun & Bradstreet, Epsilon and Experian) as these vendors sprint to deliver on-premise data hub solutions in addition to data as a service (hosted/cloud MDM).
By 2012-13, "stack wars" will wane as MDM-centric applications from IBM, Microsoft, Oracle, SAP and Teradata dominate over MDM infrastructure vendors (such as Progress Software, Red Hat and TIBCO).
3. MDM Market Consolidation and Diversification
During 2010, enterprise IT megavendors (IBM, Informatica, Oracle and SAP) will continue M&A-driven R&D gyrations in moving to an enterprise MDM-centric portfolio. Oracle and SAP will be challenged additionally in moving from siloed application architectures into service-oriented types of models (Fusion and NetWeaver).
By 2011, M&A attention will have shifted from MDM hub vendor targets into the more esoteric yet related technologies such as semantic databases. Concurrently, the last standing independent/standalone data quality providers (Clavis, Human Inference, Pitney Bowes Business Insight and Trillium) will succumb to acquisition.
Through 2012, IT megavendors (IBM, Oracle and SAP) will dominate the high end of the MDM market with niche/best-of-breed vendors (DNB/Purisma, Information Builders, Informatica/Siperian, Kalido, Microsoft, Progress Software, Teradata) thriving in specific industries and horizontal/corporate applications.
Through 2010-11, global 5000 enterprises will spend $1 million on average for their initial MDM software, with an additional $3 million to $4 million for integration services. SMBs will benefit from enlightened pricing of $250,000 to $500,000 for entry-level MDM from IBM, Oracle, SAP and Informatica. Despite the recession, the majority of MDM programs will receive initial or ongoing funding due to relentless demand for the cross-selling, up-selling, compliance and M&A enablement afforded by MDM programs. On their own, most IT organizations will struggle to justify MDM's business value due to a lack of cooperation across lines of business, high entry-level costs and difficulties in launching appropriate accompanying data governance structures and processes.
Throughout 2011-12, skill shortages will greatly inhibit MDM and data governance program execution and inflame project costs as demand for experienced individuals outstrips market supply for directors of data governance, MDM architects, etc. Concurrently, systems integrators will fill the void but, with the small talent pool available, present the risk of baiting and switching rookies for veterans.
By 2012-13, the MDM job market will stabilize as sufficient numbers of SI benchwarmers retreat back to the comfort of global 5000 enterprise full-time employment. Until then, enterprises will struggle with refilling and reskilling the same resources multiple times (as data management technologies such as Fusion and NetWeaver mature) and protecting these resources from SI recruiters.
5. Data Governance
During 2010, the majority of enterprises will struggle with master data governance as they attempt to evolve from maturity levels one and two (anarchy, feudalism) to levels three or four (monarchy, federalism).
Through 2011, major systems integrators and MDM boutiques will focus on productizing data governance frameworks while MDM software providers struggle to link governance processes with MDM hubs. Concurrently, the MDM megavendors will begin delivery of integrated active data governance frameworks to augment the passive governance of data steward consoles.
By 2012-13, integrated/active data governance will increasingly be the tipping point in MDM solution evaluations. At the same time, data governance solutions will start to transform from project-orientation to asset lifecycle orientation.
6. MDM Convergence
During 2010, party and product/thing data interdependencies will continue to broaden MDM requirements (i.e., from "customer" to "product" to "vendor"). Concurrently, select vendor dogma will promote nouveau approaches such as collaborative MDM to assuage the multi-entity conundrum. Also, global 5000 enterprises will broaden their MDM business initiatives from single use case, single entity to multistyle, multi-entity.
By 2011-12, select best-of-breed vendors (Data Foundations, Information Builders, Kalido, Orchestra Networks and Progress Software) and megavendors (IBM, Informatica and Oracle) will provide multihub (entity, architecture and brand) connectivity via hierarchy management extensions, semantic overlays and identity resolution cross-system mappings.
By 2013, semantic database technologies will begin to provide alternatives to MDM discontinuities as enterprises struggle to avoid building MDM silos. Concurrently, MDM vendors catch up to their business process management counterparts in providing workflow orchestration to synchronize the trusted sources that comprise a federated master data store.
7. MDM Architecture and Data Models
During 2010-11, vendors will expose MDM capabilities as "always on" SOA services in loosely coupled data integration architectures. Enterprises will establish central data management teams, led by the business side, with embedded data quality and external data update services in the flow of core business processes.
Through 2011, IBM, Microsoft and Oracle will focus significant resources on rationalizing "registry versus hub" dogma via semantic abstract data model layers and hierarchy management to provide integration (not migration) among purpose-specific MDM hubs.
By 2012-13, 50 percent of global 5000 enterprises will have deployed two or more MDM solutions (from different brands) to support their enterprise MDM strategies. Concurrently, MDM megavendors and MDM infrastructure vendors (Progress Software, Red Hat and TIBCO) will deliver foundational software to nascently support MDM application integration.
8. Identity Resolution
During 2010, independent/standalone data quality vendors (Clavis, Pitney Bowes, Human Inference and Trillium) will focus on name and address cleansing as they struggle against better-funded match/merge and data profiling capabilities increasingly integrated with megavendor MDM. Also at this time, a dearth of non-aligned matching algorithms (such as those from Digital Trowel, Infoglide, Omikron and Uniserve) will engender "algorithm envy" among disenfranchised MDM providers.
During 2010-11, MDM capabilities will evolve to support "party" via classifying, discovering and archiving of party relationships. Concurrently, users will remain challenged to discern price, performance, scalability and accuracy of matching algorithms.
Through 2012, use of cross platform/cross brand customer keys (e.g., EMPI) will remain core to enabling seamless loyalty programs and online services. Sophisticated MDM hierarchy management capabilities will include global IDs as mainstay features to link both legacy and newly built hubs with trusted data service providers' enrichment data.
9. Data Quality
During 2010, enterprises will accelerate their shift from downstream data quality to pervasive/upstream data quality via MDM. Concurrently, solution providers will offer integrated data quality via partnerships with trusted data sources combined with an emphasis on "party data quality" (consumer, subscriber, owner, member, vendor, establishment and contact).
Through 2011, quality metrics will increasingly be defined specific to the purpose of a particular business function (product development, marketing, sales, order administration, service, compliance, analytics, etc.) and in turn will be driven by enterprise-wide data governance initiatives. Such dashboards will increasingly call out business impact metrics more so than discrete IT-specific measurements.
By 2012-13, the majority of global 5000 enterprises will have widely deployed data integration architectures (loosely coupled, SOA and "always on"), which will catalyze consumption of both master data and highly optimized data quality functions.
10. Enterprise Search/Semantics
Through 2010-11, the unique properties and behaviors of master reference data will spawn a series of vertical applications and specialized features within MDM solutions (i.e., industry exchanges). Additionally through 2010-11, semantically enabled metadata will increasingly enable search for both structured and unstructured information across a variety of applications such as catalog management plus deep Web and enterprise search.
By 2012-13, enterprise semantics and SOA-enabled data services will provide the technology foundation for policy hubs as the fourth generation of MDM hubs that innately support and integrate with proactive, integrated data governance. During this time, crowdsourced glossaries or vocabularies will strengthen the business utility and acceptance of enterprise data governance.
For the global 5000 enterprise (and increasingly the SMB), approaching enterprise MDM as an IT infrastructure development project is career-challenging. There is very little economic rationale in building such custom middleware (with associated high maintenance costs) when commercial off-the-shelf software meets the performance, reliability and scalability requirements of almost every industry and size organization.
The value of enterprise MDM can be intuitively recognized in a range of business initiatives - from short-term fixes to a narrow set of problems to long-term enterprise-wide initiatives to delivering infrastructure agility. Most enterprises and solutions vendors are finding near-term success with the single-faceted approach inherent with the third generation of MDM solutions. Increasingly, however, these same enterprises are determining that this myopic strategy of focusing solely on a single data domain and usage style is detrimental to the longer term business strategy of integrating supply, demand and information chains across both intra- and extra-enterprise boundaries. Coming to market during 2010-11 are multi-entity MDM solutions (characterized as the fourth generation of MDM solutions) which address the requirement for multiple domains and styles as well as the roles of the consumers. Moreover, the tipping point for enterprise MDM product evaluations during 2010-11 will increasingly be centered on the roadmap and delivery of integrated, active data governance capabilities.
Survival of our businesses as well as future prosperity, market leadership and business process transformation during economic crises is dependent upon achieving a single view across the enterprise of key assets such as customers, products, suppliers and employees. Hopefully, the milestones discussed above will catalyze discussions (and consensus) within your IT organization regarding the roadmap IT professionals must craft for the next 12 to 24 months.
See you at the next MDM Summit in your hemisphere.
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