:White Paper: Unveiling MDM Business Value

Unveiling the Business Value

of Master Data Management
Master Data Management (MDM) is a response to the fact thatafter a decade of enterprise
application integration, enterprise information integration, and enterprise
Data warehousingmost large organizations still struggle with redundant and inconsistent data
from their corporate databases resulting in operational and reporting issues.

Jose M. Tam
Chief Architect
February 2010

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MDM Business Value
! Paper: Unveiling
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Master Data Business Challenges

For information and process driven business environments the ability to standardize core enterprise information is
of strategic importance.

In most organizations, core information remains in data prisons, preventing a single,

integrated enterprise-wide view of data across applications.

Companies have numerous needs related to their corporate information that over the years have been losing
quality and increasing the complexity to manage it. Several questions arise when a Company needs to support its
business strategies with systems related to master files, such as: Customers, Product, Items, Employees, Cost
Centers and Chart of Accounts, etc:

1. What are systems of records for Customer, Product, and Item masters?
2. How can I access a single view of my customer records and use it to enrich my customer interactions?
3. How do we measure product and service profitability when my product definitions are not consistent?
4. How do I ensure that replicated sources are consistent with the system of record?
5. I have multiple implementations of the same application plus custom applications with their own data
models; how do I exchange data between different applications?
6. Why do we re-invent the wheel for product and customer data when we develop a new application?

Related to these questions about their Master Data NEORIS has found that companies have:

Inconsistent and complex business rules for the same information

Poor data quality in their master files as a result of multiple mergers and acquisitions where it has been
difficult consolidated information visibility

Islands of isolation resulting from lack of organizational integration around Business Units, Geographies
and Functional Silos

No enterprise-wide leadership ensuring the definition of efficient and effective processes and the
subsequent execution of those processes

Poor integration between those who define information needs, those who provide the information, and
those who actually use the information

Inability to effectively translate volumes of data into relevant information

Lack of standards around data, decision-making, and global roles and responsibilities

Lack of consistent information across transactional applications

Lack of automated processes or controls in place to validate and manage data

Data fragmentation originated by their growth (organic or by acquisition)

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Customer mandates, regulatory requirements for standards based master data synchronization with trading
partners
As a result, the business costs of inconsistent Master Data are:

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MDM Business Value
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Master Data
Master Data is the information required to create and maintain an enterprise wide application, called
also a system of record for your core business entities in order to capture business transactions and
measure results for these entities.

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MDM Business Value
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There are several drivers that can result from Master Data Management initiatives, such as:

Disparate, uncoordinated enterprise systems

Serving functional silo needs

Cross functional inefficiencies

Disconnected business decisions

Need for composite processes and applications - SOA

Competitive advantage business driver identified

Referential integrity critical

Cross silo processes and analysis Internal and External

Need for complete, richer superset of information

Expanded capabilities

Bridge to modern solution sets

Collaboration with trading partners

Compliance

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MDM Business Value
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What is Master Data Management?

IT Analysts as Gartner Group and Forrester Research have analyzed data quality and data management
challenges related to MDM, and their definitions are:

MDM is a workflow-driven process in which business units and IT collaborate to harmonize, cleanse, publish and
protect common information assets that must be shared across the enterprise. Gartner Group.

Forresters reference to MDM is that it operationalizes the acquisition, distribution, and management of core data
entities...

According to Alex Berson and Larry Dubov, MDM is the need to clean up the old stuff and create an accurate,
timely and complete set of data needed to manage and grow the business.1

Master Data Management is the framework of processes, applications, and technologies that are followed with
discipline to manage and harmonize the system of record and system of entry for the data and metadata
associated with the key business entities of an organization.

1 Master Data Management and Customer Data Integration for a Global Enterprise: Alex Berson, Larry Dubov. McGraw-Hill Osborne Media, (May 24, 2007),
ISBN-13: 978-0072263497.

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Is MDM Mature?
Gartner group publishes their Hype Cycle curves and in their 2008 version, MDM was classified in the early
adoption stage where the technology has been triggered but it has not been even in the peak of inflated
expectations.
From this point of view, apparently the maturity of MDM is not yet recommendable, and only early adopters should
consider MDM.
Multidomain MDM

visibility
Master Data Management of Product Data
Formerly Product Information Management

Analytical MDM

Master Data Management

for Customer Data

Entity Resolution and Analysis

Master Data Management
Suites
Master Data Management
of Asset Data
Enterprise Information
Management Programs

Enterprise Asset Management

Master Data Governance

Data Quality Tools

Global Data Synchronization

Procurement-Centric
Master Data Management
Information-Centric Infrastructures
Enterprise Metadata Taxonomy
and Ontology Management

as of september 2008
Technology
Trigger

Peak of
Inflated
Expectations

Trough of
Disillusionment

Slope of
Enlightenment

Plateau of
Productivity

time

Years to mantain adoption

Less than 2 years

2 to 5 years

5 to 10 years

more than 10 years

obsolete before plateau

Source: White, A., et al. (2008). Hype Cycle for Master Data Management, 2008. Gartner Research

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MDM Business Value
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!

However, if we see the different components involved in an MDM solution, all components have already passed
the peak of expectations. Integrating them in a framework helps us understand that MDM is more mature, despite
the role that MDM plays .

Multidomain MDM

visibility
Master Data Management of Product Data
Formerly Product Information Management

Analytical MDM

Master Data Management

for Customer Data

Entity Resolution and Analysis

Master Data Management
Suites
Master Data Management
of Asset Data
Enterprise Information
Management Programs

Enterprise Asset Management

Master Data Governance

Data Quality Tools

Global Data Synchronization

Procurement-Centric
Master Data Management
Information-Centric Infrastructures
Enterprise Metadata Taxonomy
and Ontology Management

as of september 2008
Technology
Trigger

Peak of
Inflated
Expectations

Trough of
Disillusionment

Slope of
Enlightenment

Plateau of
Productivity

time

Years to mantain adoption

Less than 2 years

2 to 5 years

5 to 10 years

more than 10 years

obsolete before plateau

Source: White, A., et al. (2008). Hype Cycle for Master Data Management, 2008. Gartner Research

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MDM Business Value
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!

MDM Business Value

Master Data is the backbone of an enterprise information system. A well developed Master Data Management
plan in place allows an enterprise to operate and transact efficiently across channels and departments, with
reduced errors, provide consistent and accurate reporting based on a single version of the truth, make strategic
decisions based on well defined information (no second guesses), and enable a flexible and adaptable

operational structure that can respond to rapid changes.

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MDM Business Value
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10

NEORIS can help you quickly setup a project structure and keep the momentum going, ensuring fast results. On
a high level, the approach proposed by Neoris follows of the following steps:

1. Understand MDM challenges and design an MDM roadmap and plan.

2. Identify Data Quality requirements, define a remediation plan.
3. Remediate Data Quality.
4. Identify MDM architecture and define synchronization, harmonization and management of MDM.
5. Define Data Governance to manage Master Data.