When should firms collaborate with competitors to govern master data?
Could you collaborate with your competitors – and partners – to create and govern your master data? Sure, why not?
I saw an interesting article in the US print edition of the Financial Times recently. It was titled, “Tesco and Carrefour seal supply deal“.
The story reports how two competing retailers, one from the UK and one from France, are joining forces to create a joint purchasing deal. The two companies will work together – pool their spend, as it were – on own-label product acquisition. The point being that together they get more clout with suppliers and should be able to develop more efficient cost-driven supply chains.
The two firms may or may not compete head to head on the sales side in their retail stores, but that level of competition is not (I presume) that mortal. Perhaps they don’t compete as strongly as, say, Tesco and Casino, or Carrefour and Casino.
The idea of competitors actually working together is not new. In fact its probably a very, very, very old idea. In the last 10 years there have been some interesting twists on this idea. Pharma and life science competitors, once owners of very expensive and silod drug discovery supply chains, have got together on the back-end to help reduce overall costs.
The point being that at some point along the drug discovery supply chain, or in this case value chain, the two collaborators agree up front where to draw the line, share the IP, and then continue as competitors as normal. The purchasing deal noted in today’s paper is not that dissimilar to this.
But what if we looked more broadly? What if we looked at the data that underpins drug discovery and good-for-resale procurement? What if we looked at that small amount of data called master data (see How Much Master Data is there in the World?) that sits at the center of every outcome, every decision? Master data is not unique.
Master data is not the secret of your success. The data you append to it – application data, transaction data, and other data, is what starts to add the uniqueness and value; how you use the master data and other data is where the value lays. So why can’t competitors, and partners, work together for the common good and master the core data they all share anyway?
Maybe 12 years ago one very large consumer goods company asked me the same question. They had spent millions of dollars on their Master Data Management program and it had gotten nowhere. Admittedly the MDM program in question was not really MDM at all – it was more of a boil-the-ocean, manage-all-data-in-ERP that such vendors promote, using the name MDM.
Nowadays an MDM program should be very small, nimble, light and right-sized for the business, by the business. See Effective data and analytics governance finally! and webinar. But this client was all alone. Few others firms, partners, customers, competitors or otherwise, were asking the same question.
Several vendors have operated over the years in the supply chain, trying to make a buck selling master data. And some exist today – look at D&B and other data brokers or data-as-a-service vendors. But there is a lot more master data than what one vendor can sell; and there many kinds of master data, and there are industry and global dimensions at play too.
So vendors have a hard time working out an effective business model making money on this. Yet competitors, locked in a challenging embrace, probably know their businesses enough they might be able to create a consortium or shared business investment that easily sets up a pooled-master data skill set and operation. Why not?
I think all that is needed is:
- Clear boundary for the master data in question (domain, attributes).
- Visible shared P&L to monitor mutual investment and nominated return/value.
- Independent/shared IT infrastructure and service (part of 2).
- Clear time frame for implementation and use (could take a few months to set up but then could operate for years).
What else is needed?
(This post originally appeared on Andrew White's Gartner blog, which can be viewed here).