This is the final installment of our discussion on master data management (MDM). I'm going to focus on MDM standards and data governance (DG). However, in my June 2005 column, I discussed creating and implementing an enterprise-wide DG strategy. In that column, I presented the four fundamentals of a good DG strategy: commitment, process, technology and accountability.
Rather than rehash what it takes to implement appropriate standards, organizational principles and governance structures, I'm going to assume that you're in the process of developing MDM standards and implementing a DG strategy in your company. I will pose a series of simple but critical questions that you should ask yourself. I'm also going to give you, based on my 25+ years of experience, what I think the answers should be if you want your MDM initiative and DG strategy to have a reasonably good chance of achieving their desired results.
Question #1: Will we get a return on our investment?
The concrete value of an MDM initiative is often company-specific. You can, however, often quantify value by measuring actual cost savings or increased revenue generation before and after implementation of an MDM initiative. For example, you could measure before-and-after costs incurred when introducing a new product. You could also measure and quantify increases in customer satisfaction rates and decreased customer churn. Treating data as the organization's asset and measuring the effect of developing and implementing data standards can create value. Thus, you can gauge a quantifiable return on investment.
Question #2: What level of executive sponsorship do we have, and are the businesspeople participating?
In an enterprise-wide initiative as important as an MDM project, executive sponsorship is critical. Executive sponsors act as champions of the project to the organization - especially to the business users of the data. People who use the data on a daily basis are crucial to achieving the desired results of the MDM initiative. However, they are often wary of highly technical projects and if they feel their needs aren't being met will not support the project.
A committed executive sponsor can encourage participation of the business users by directing the creation of a project charter that clearly delineates roles, responsibilities, outcomes and guidelines. Then, the sponsor can monitor the project and help increase the likelihood that the guidelines are being followed toward achieving the desired results.
Question #3: How enterprise wide is enterprise wide?
In today's multinational, vertically integrated business environment, different divisions, business units and even departments probably speak different "data languages." The precise definitions and technical specifications of the most fundamental data elements, e.g., "customer" and "vendor," may vary between the European and North American divisions of a company. They may also vary between the sales and finance business units.
In a truly enterprise-wide MDM initiative and DG strategy, these differences must be resolved as much as practicably possible. Communication is the key to solving this often thorny issue. Frequent, formalized communication between teams in the various divisions and business units will help determine that everyone is at the same point in the project and that critical information is disseminated in a timely manner.
Question #4: Are we looking for and finding the right data?
Again, this seems like an absurdly simple question. But when I talk with clients about their MDM initiatives, I'm often amazed by the fact that they really haven't defined in a meaningful way which information is critical to the way they do business. They don't know exactly what their master data is. They understand the first two or three data elements, such as customer, vendor and product, but beyond that, things often get fuzzy.
Master data elements are both industry- and client-specific and include such domains as customer, product, legal entity, chart of accounts, employee, vendor, agent/dealer, channel, geography and so forth. The key to answering this question is to analyze each data element to determine whether you're really dealing with your organization's most critical, enterprise-spanning data. Master data is the data that will give you the ability to create, store, maintain, exchange and synchronize a consistent, accurate and timely "system of record" for core business functions. If a data element will give you that ability, it's the right information.
Again, I know these questions seem like no-brainers, but you'd be surprised how easy it is to overlook even the simplest things when undertaking a project as complex as an MDM initiative and enterprise DG strategy. As in most things, understanding the fundamentals is often the key to achieving the desired results. The questions I've posed here are truly fundamental ones. How well you understand their ramifications and how you answer them will largely determine the results of your MDM initiative.
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