5 mistakes even the best organizations make with product and customer data
“A doctor can bury his mistakes, but an architect can only advise his clients to plant vines,” wrote Frank Lloyd Wright. As the designer of more than 1,000 structures during his 91 years, Wright likely learned quite a lot about both doctors and architecture – and made his share of mistakes as well.
Unfortunately for CIOs, most mistakes can neither be buried nor hidden with a few well-placed shrubs. You are responsible for the lifeblood of the enterprise, its information, and your purview reaches every corner of the organization. Your mistakes can lead to a loss in productivity, a damaged corporate reputation, security breaches, lawsuits and more.
And, the pressure on CIOs has never been greater than it is today. According to a recent report by leading industry research firm Forrester Research, CIOs are leading the charge to transform their organizations digitally:
“In 2018, digital business transformation will be played out at scale, sparking shifts in organizational structure, operating models, and technology platforms. CEOs will expect their CIOs to lead digital efforts by orchestrating the enabling technologies, closing the digital skills gap, and linking arms with CMOs and other executive peers better positioned to address the transformational issues across business silos.” (Source: Forrester Research. Predictions 2018: CIOs Make the Chief Digital Officer Obsolete. November 2017).
The need to address these business silos has been a key driver in the growth of master data management (MDM). MDM integrates multiple disparate systems across organizations by streamlining the process of aggregating and consolidating information about products, customers, suppliers, employees, assets and reference data from multiple sources and formats. It connects that information to derive actionable insights and publishes it to backend systems as well as online and offline channels.
MDM is particularly popular for managing product and customer master data, as it drives key business goals like accelerating time to market, increased revenue and providing a 360-degree view of customers that optimizes the customer experience to build brand loyalty.
MDM is not a panacea for all business challenges in and of itself, however. It requires a strong vision, a well thought out strategy and the right solution partners to reach its full potential. In other words, it requires leadership from the CIO. So, how do you feed your organization the high-quality data that it needs in ever-increasing volume and velocity, without making a mistake that damages both your reputation and the bottom line? By learning from your mistakes, as well as the mistakes of others. As George Bernard Shaw wrote, “Success does not consist in never making mistakes, but in never making the same one a second time.”
Nobody is perfect, but if you know what to look out for, you can avoid the biggest pitfalls. To that end, here are the top five mistakes from which I have learned in more than 20 years of helping CIOs manage MDM and other Big Data projects.
Mistake #1: Choosing "Best-of-Breed" solutions with no master data strategy or system
Notice that I didn’t say choosing best-of-breed solutions is a mistake. These solutions are best-of-breed for a reason. They are designed specifically to solve business problems like material management, supply chain optimization, regulatory compliance, product development, marketing and syndication. By no means should you avoid best-of-breed applications. Nor should you replace them with a monolithic solution that tries to solve all these problems with a one-size-fits-all approach.
What you should not do, however, is implement these individual applications without a comprehensive master data strategy. Each application gathers and manages partially distinct, but often overlapping information about products, customers and other assets. Master data is the data that is common and essential across these different systems.
Without a master data strategy to align the processes and data used in these processes, the same information will be gathered multiple times, and the same products and customers will be defined and described differently across the organization. Consequently, people in different departments will be working against one another rather than working in concert as a single company.
Figure 1. The Seven Building Blocks of MDM
Source: Gartner March (2018)
This graphic was published by Gartner, Inc. as part of a larger research document and should be evaluated in the context of the entire document. Source: Gartner, Use the 7 Building Blocks of MDM to Achieve Success in the Digital Age, Michael Patrick Moran, Bill O'Kane, Simon James Walker, 9 March 2018.
Of course, you’ll also need a master data management (MDM) system to implement the strategy. But, the MDM system will only help you achieve your business goals if it is designed around a well-defined master data strategy, aligned with an MDM vision that reflects the organization's business vision and strategic initiatives. It’s from a business case that the MDM vision and strategy must be derived, which will in turn help define the metrics, governance parameters, people and processes that ensure the proper MDM infrastructure is implemented to meet the business goals (we feel this is reflected in a Gartner figure; see Figure 1).
Mistake #2: Implementing big data without MDM
Everyone is excited by the possibilities of big data, the ability to mine the profusion of unstructured or loosely structured information to learn new insights into consumer preferences or product capacities. As a CIO, you recognize the potential to improve operational excellence and drive new insights through analytics, but you also realize the challenges inherent in storing, processing and querying the ever-increasing volume, velocity and variety of data.
You’re not alone; CIOs across the globe have been looking for solutions to these challenges for years, and they have continued to grow. According to Gartner, “In 2014, [big data] was the main focus of the IT's industry hype. In 2016, that hype has shifted to the IoT, which promises to expand the horizons of big data to ‘no-limits dimensions’ data. By 2020, Gartner forecasts that the number of IoT endpoints will reach an installed base of some 21 billion units.” (Source: Gartner. Mastering Master Data Management. Andrew White, Bill O’Kane, Refreshed: 16 November 2017 | Published: 11 July 2016).
The problem with big data is that without access to high-quality, structured master data to complement the unstructured assets, you cannot take full advantage of what it has to offer. You may have the information to perform analyses like logistic regression, for instance, but without an effective set of product and customer master data, your capabilities for predictive analytics and continuous improvement are limited.
For example, imagine that your company is running a marketing campaign to boost sales of bicycle shorts. With big data, you can develop a customer list to target with your marketing programs, and you have the ability to track the performance of a particular SKU via the ERP system. But, it is very difficult to connect the separate data outputs to develop deeper insights into the effectiveness of the campaign.
By complementing big data with master data and applying MDM strategies via a multidomain MDM solution, you would empower your organization with robust new capabilities.
For example, you would have enhanced visibility into the impact of marketing campaigns not only the performance of a single SKU but on whole categories of bicycle shorts – as well as to algorithmically group sets of products together into complementary, “you may also like” items. With comparable, parametric information about the specifications and marketing features of those products, this buying information can help to drive merchandising and marketing decisions for whole classes of products. Additionally, you could begin to classify customers into different groups who have similar needs, which will help you better target campaigns to more likely prospects going forward, as well as improve the customer experience.
Mistake #3: Thinking locally, but not acting globally
I know that the common phrase is “Think globally, act locally.” However, in the context of a global company with regional marketing and distribution arms, the temptation is too often the opposite. Regional teams tend to focus on their own market and tailoring messages to local customers and prospects with no regard for the corporate brand and the need to present one voice to an increasingly global marketplace.
To be effective, regional teams need the autonomy to market, sell and distribute products in their local environment. However, doing so without adherence to global tools and processes risks losing control of the corporate brand and missing out on the benefits that come from having globally recognized products. While the specific needs of customers may be different by region, the quality of products and their associated marketing materials should be the same at any spot on the globe.
An effective strategy for overcoming this tendency in global enterprises is to integrate MDM strategies and systems with the marketing and e-commerce systems. If regional teams are pulling product descriptions, images and attributes, corporate logos, company descriptions translated into local languages, etc., from a central repository of master data, it enables organizations to tailor the customer experience by region, while maintaining a consistent product and company brand.
A good example of this principle at work is the global office supplies and services powerhouse Office Depot, which sells to companies and individuals in 56 countries through a network of 1,800 stores, as well as websites and business-to-business structures. The company recently was challenged with feeding customers increasingly detailed product information that came from numerous departments as well as third-party suppliers, lacking any consistency.
To streamline the process, Office Depot implemented an MDM system. Starting with one country, one region and one channel, the company identified key data on products, customers and locations and stored the data in a central repository used to feed the organization’s other systems (e.g., ERP). An inventory of guidelines ensured that each department would know what information it was expected to supply, who was responsible for data entry and how it would all be combined. By ensuring the right criteria of data are met, all data in the MDM systems is created to a global gold standard, a so-called golden record, regardless of the data’s origin.
Mistake #4: Delivering information from an assembly line, rather than a firehose
Typically, we describe getting too much information at once with the pejorative “drinking from a firehose.” In the context of feeding product and customer information to key stakeholders across a global enterprise, the firehose approach is preferred to the “drip, drip, drip” of an assembly line.
If you build every attribute value for your products through human workflow processes, your time to market and scale are limited by the number of people you can employ, or cause your vendors to employ, to provide you with product information. On the other hand, if you gather product information from a variety of sources and use automated mechanisms to match, cleanse and enrich it, then your human investment can be focused on quality review and the creation of differentiating content.
Once again, Office Depot provides the perfect example of efficiency through the employment of centralized systems and automation. “The departments responsible for our publications and merchandising were spending too long categorizing products,” explains Norbert Donders, Office Depot’s Manager of Product Data Management. “While we should have been focusing on selling products, sometimes it seemed like we were only processing data.”
The result of the company’s “do it once, do it right” methodology was not only consistency across all channels and all countries; it also delivered an incredible improvement in efficiency.
“By implementing a content management system that’s fed with data from MDM, we’re able to develop our online catalog 30-40% faster,” says Donders. “Using master data has also improved our online search functions, meaning that our customers can now find products more easily with fewer searches being abandoned prematurely. As our websites are now fed with MDM, rather than manually, we’ve also managed to reduce the number of errors.”
The company was also able to reduce new product time-to-market by 60%.
Mistake #5: Using one process/system to support all items regardless of source, tier or channel
I’ve convinced you that centralizing processes and methodologies is the key to consistency and efficiency, right? Allow me to clarify the point. You need a consistent global strategy and brand to manage product and customer information in diverse regions effectively. And, a centralized process for distributing golden records of master data is key to efficiently feeding consistent information across the organization. But, that does not mean that you should manage all your processes and support all items across the organization in a single system.
As a CIO, you are aware of the diversity of processes that your IT infrastructure supports. Your company develops and delivers a multiplicity of products. Your shipping departments are responsible for drop shipping products, managing the warehouse and delivering products ordered in-store or online, as well as special orders. Your customer service department takes calls from a myriad of customers, each with specific needs. Is there any conceivable way that one single system can effectively manage all of these processes? Even if you’re in the fifth year of a two-year, multimillion-dollar ERP implementation that your team championed, you know in your heart there is no way that’s possible.
More likely, you’re struggling to manage the dozens of legacy systems you have in place already. They may not be perfect, but they are meeting your KPIs. Even if they aren’t, you can’t afford to rip and replace them with a one-size-fits-all system anyway. And, there’s no need. By implementing an MDM system to capture, cleanse, enrich and manage key master data from each of these systems, you can keep the investments you’ve made in place while making them more efficient and productive than they’ve ever been.
To prove this point, consider SGMW – a joint venture between SAIC Motor, General Motors (GM) and Liuzhou Wuling Motors in China – currently one of the largest manufacturers of microvans in China. SGMW produces approximately 1.5 million microvans per year and handles a multitude of data types from its ERP or business users. To help the company better manage its vast quantity of data and data types, SGMW implemented an MDM system to act as an aggregator for all its internal and external data sources and shore up limitations of its current ERP system.
The MDM system now allows SGMW to upload all necessary information easily and acts as a central hub for all part, factory, BOM, logistic, assembly and supplier data. As a result, SGMW has been able to reduce idle time in the assembly line and accurately, and visibly, monitor the data flow of automotive parts – from supplier to individual assembly line workstations. These changes produced dramatic improvements for SGMW in data quality, performance, process transparency and product lifecycle processes.
Bonus Mistake: Thinking these mistakes are the end of the world
Comedian Stephen Wright once quipped, “When I woke up this morning, my girlfriend asked me, ‘Did you sleep well?’ I said, ‘No. I made a few mistakes.’” I love this joke because it is a reminder of how easy it is to make mistakes. Sometimes we can even screw up sleeping.
As a CIO, the pressure on you is tremendous. Every employee in your organization, from the CEO to the salesperson to the customer service representative, depends on the decisions you make to ensure optimal efficiency and productivity. If you recognize one of the mistakes I’ve outlined above, don’t beat yourself up. I have worked with a lot of CIOs on numerous projects over the years; trust me, you are not alone. Mistakes are not the end of the world; they are a chance to learn – and to help others learn from our mistakes as well.
If you have learned from these, or other mistakes in your career, I would love to hear from you. I am sure we can learn from one another.