November 17, 2008 - Worldwide master data management (MDM) software revenue is on pace to total $1.3 billion in 2008, a 24.1 percent increase from 2007 revenue of $1 billion, making the market for MDM one of the fastest-growing software segments, according to Gartner, Inc. The market will experience steady growth through 2012 when revenue will total $2.8 billion.


Gartner analysts said that despite the current economic crisis, ongoing requirements for businesses to increase effectiveness, reduce costs and meet compliance requirements are driving the adoption of MDM technologies.


“MDM technology can help organizations achieve and maintain a single view of master data across an entire enterprise, enabling business and IT initiatives to perform in better unison, allowing for opportunities to increase revenue, reduce costs, achieve effective compliance, reduce risk and improve business agility,” said Chad Eschinger, research director at Gartner. “The technology continues to mature and has great potential for enabling more-efficient and effective business processes in the future.”


North America and Western Europe held 85.7 percent of MDM software spending in 2007. North America is expected to exceed $800 million in MDM software revenue in 2009, but it will grow at a slower pace than other regions through 2012. Europe, the second-largest market, is expected to grow at about 25 percent during the next two years, coming close to sharing parity with North America by 2012. Asia/Pacific, with 6 percent of the addressable market today, is expected to have the highest growth, reaching 9 percent share by 2012.


With regard to industry, the largest markets for MDM in 2007 were manufacturing, retail and financial services, which combined accounted for 53 percent of the market. Gartner expects that these industries will remain dominant throughout the forecast period as current adopters continue to expand their MDM initiatives and because of a vast addressable market that has underinvested in MDM technologies. Industries that are forecast to offer greater-than-average growth rates include communications, government, health care and utilities.


Nevertheless, despite Gartner’s optimistic outlook, several challenges still exist for MDM software vendors. A stall may occur as businesses wait until MDM’s value is widely proved and as they wait to purchase technology to support most MDM data domains from a single vendor, as has occurred in other markets, freezing and limiting opportunity. In 2008, we have seen an increasing number of organizations facing challenges in their MDM programs because they have been too IT-led or because of inadequate technology.


Gartner advises MDM vendors to continue to improve their multidomain, multiuse case capabilities while also focusing on industry-specific capabilities to maximize their appeal. Gartner also recommends offering flexibility on payment terms with customers to enable them to weather the current economic period and buy new products and extend projects in the short term. Finally, Gartner advocates helping key stakeholders in MDM create a strong business case that focuses on hard benefits, such as compliance, risk management and costs savings, as well as a softer benefit, such as supplier and customer experience management.

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