Analyst and researcher Aaron Zornes of The MDM Institute says that although master data management isn’t as thrilling as big data or cloud, it’s still a factor for industry disruption.
In preparation for the upcoming Master Data Management and Data Governance Summits co-hosted by The MDM Institute with Information Management and SourceMedia, Zornes shares the current state of the industry and early 2014 observations.
Information Management: From a broad perspective, what’s the current environment for master data management this year?
Aaron Zornes: I would say that MDM is on a solid, boring trajectory. It’s boring because it’s so mainstream that everyone who can do MDM is getting organized on the data management and the data governance sides. So we don’t have the thrill of cloud or big data, but cloud and big data are nuances of what we do in the MDM world. In fact, I’ve been rather disappointed that when I look at what’s been going on in the marketplace overall, it seems like some of the vendors have been totally distracted by big data. Meanwhile, the companies I talk to are still concerned about how to clean up their customer data, product data and supplier data; how to coordinate their different departments and lines of businesses so they have common reporting metrics; and how to share customer or product data with their suppliers all pretty basic stuff. It’s stuff that is not necessarily considered exciting these days, but it sure is important to the company because if they do it wrong, they’re toast. And, likewise, if they do it right they get a huge boost in their trajectory, either in terms of disrupting an industry or in terms of enabling greater customer service, greater wallet share, greater economies of scale, greater mergers and acquisition capabilities, etc. etc. So MDM is very solid.
And how about data governance?
There’s ongoing need for data governance, master data governance specifically. Vendors are very slow to provide that capability, so there’s a gap. Data governance is still a [dragged out] lengthy process, a lot of custom code, a lot of gnashing of teeth in terms of how to make all this work together with the work flow and user interface so that we can empower data stewards, data trustees, data governors, etc, to have them communicate, document, arbitrate, negotiate, all the stuff that they have to do. It’s still missing from the market except for [some startups] and except for little pieces coming out from the megavendors. So master data governance is still a vacuum of sorts, and there’s still lots of opportunities for consultancies and for upcoming software vendors to make a play there.
Another hot area that you’ve heard me beat about for years, and I’m still totally surprised that Gartner and Forrester are not on this, is reference data. We’re wrapping up a reference data survey now of a good number of large companies, and we’re finding that reference data is critical. If your SKUs aren’t accurate, you don’t have your financial codes accurate, if you don’t have your product codes accurate, if you don’t have your tax tables, your country codes, your currency tables, if you don’t have that stuff accurate including your reporting codes internally across different systems then how in the world can you accurately report and, therefore, accurately manage your business? Not to mention that if those reference codes don’t exist or aren’t managed correctly, how do you transact among your different business units and how to you transact with your customers? You get transaction failure, you get systemic failure, all sorts of things. So it’s not just bad reporting, but telling the government the wrong things, for example, or doing the wrong internal financial reporting but you also get transaction failure. We’re finding that the reference data problem is very much adept to governance, in the sense that it has to deal with getting people to work together and to manage complex workflows to authorize, master and put into production these different codes.
Are there other trends affecting the marketplace for 2014?
No conversation is complete without big data. The facts remain the same: It’s called signal to noise ratio. There’s so much data flooding into the big data systems, and big data’s all about not just managing the data but getting analytics done with the data. In order to do analytics with the data you need to rationalize and understand the data, which means MDM plays there. As IBM has proven, as Informatica is proving, as Oracle, and SAS -- they’re all proving that you need to know who is saying what about what or who. And that means you need to have matching of MDM to figure out who this person really is, this key opinion leader or whatever you want to call them, the influence of that person. And then you have to be able to figure out what they’re saying, because of the jargon and coded words in big data and the unstructured nature of it. Again that’s MDM helping to understand and keeping track of all that data in terms of the unstructured becoming structured. And then the what: What are they talking about again, uniquely identifying is it a product or service or which product, which service. So MDM enables big data analytics, and at the same time the big data analytics provides information that needs to be mastered and shared across certain organizations. So it’s quite complementary and needed that big data work with MDM.
And yet you said many organizations are still struggling with the basics fundamentals. Do you think it’s just early for big data for those organizations?
I would say, what’s more important to the average company: shipping the right product to the right customer, billing the right amount to the right customer, providing the appropriate service level to a specific customer or understanding what Facebook dilettantes are saying about your company and your product. It’s black and white. Now some big companies, some of the CPG companies, some of the online retailers have to know what people are saying about them. Are people having problems with a given product or is it just one or two naysayers who like to make big noise? And how influential are those naysayers? Or what are the features people are asking for in the products that don’t show up in the surveys? Or what are they really using our product for? And that sort of information comes out of the forums, user boards and looking at the actual usage of their products. So there are certainly companies and industries where big data is vital, fundamental to what they’re doing, especially if you’re an online company. On the other hand, the majority of the banks I’m talking to, they couldn’t give a diddle about what somebody’s saying about them on Facebook or what somebody’s tweeting about them. They’ve got bigger problems: know your customer reporting, certain regulatory reports they have to produce, and more and more these regulations being put on them every year. And it’s the same with the insurance companies, the manufacturers and so on. So if you look at mainstream business, blocking and tackling the quality of the customer, product and supplier data is vital.
Are there new challenges that exist for people in various stages of MDM and/or data governance initiatives for 2014?
As all of us are becoming increasingly multichannel, omnichannel we need the ability to better service, sell and market across multiple channels. And that includes mobile, it includes at some point set top, desktop, mobile -- it’s not just over the phone, it’s not just through the website. And so it’s the challenge to understand and service those various touchpoints is again where the MDM architecture comes into play. They’re all service oriented architecture, so that’s good because once you’ve written “add a customer,” “promote a customer,” “delete a customer” type logic then you can use it in all the different channels or all the different application packages that you buy, and they can talk to your hub using that type of Web service or service oriented architecture API. So multichannel/omnichannel is there, but I wouldn’t say that it’s prevalent. Clearly, some companies have to live with that more than the rest of us the mail order houses, online marketing companies, those types. But increasingly it has to be your Discount Tires, your PetSmart name the industry. And increasingly, transactions, marketing and the customer service experience are moving onto these other platforms.
Reference data is something that can be done in the cloud for the smaller companies that are international and highly distributed. Rather than setting up yet another server and going through all the networking and security issues, they can just host their reference data application and then the different IT departments around the globe or around the country for their company can access that. So that’s somewhat different than moving your customer data into the cloud or moving your prospect data or trying to integrate on-premise/off-premise. That starts getting pretty hairy when you start doing all that .But something that’s on the radar that companies have to watch for is how much of the data is on premise versus off premise and how to manage the relationships between them and how to manage the transaction enablement between them. So master data has a role in the cloud.
More research and insights from Zornes and The MDM Institute at the MDM and Data Governance Summits held in San Francisco, Toronto and New York in 2014. Click here for more information.