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New study: Master data management (MDM) projects on the rise

Master data managements (MDM) deployments are on the rise, according to a new survey, with data quality and data governance playing a major role.

Master data management (MDM) may be turning a corner, with not just early adopters but mainstream technology users...

beginning implementation projects, according to a new survey.

Of 131 companies surveyed by U.K.-based analyst firm Information Difference earlier this year, 42% said they had implemented or were in the process of implementing an MDM project. Nearly a third reported having deployed two or more MDM programs.

Less than a quarter – just 22% -- said they had no plans to implement MDM.

"This suggests to me that we've moved past the stage of pilot projects and people are actually starting to do things for real," said David Waddington, an Information Difference analyst who analyzed the survey's results.

The pressures of globalization may be one of the driving factors behind increasing MDM deployments.

"Organizations are beginning to realize that they really have to do something about sorting out their master data if they're ever going to be able to run international or global businesses," Waddington said.

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 As successful businesses transcend international borders, Waddington said, they increasingly work with multiple partners, suppliers and reseller networks. That results in significantly more customer, product and other data that must be reconciled in order to run the business as efficiently as possible.

The recent economic turmoil has also highlighted the need for companies to make the most of their data assets in order to find and retain customers, he said.

The survey also asked participants about the make-up of MDM project teams. The average team is made up of eight individuals, the survey found, with 25% of those being business staff, 40% IT staff and 35% consultants from third-party systems integrators.

That one in four workers dedicated to MDM is from the business side of the house is encouraging for the success of those projects, Waddington said. MDM projects are not one-time deployments but ongoing events requiring dedicated staff and resources year after year. Getting the business involved in the projects from the start increases the likelihood of sustained investment in MDM, he said.

He also said systems integrators play a key role in MDM projects, especially at companies that are implementing the technology and defining employee roles around MDM for the first time. "What systems integrators bring is experience," Waddington said.

The survey also found that the median MDM implementation takes around six months and involves around three million master data records. Of those, the majority are either customer or product data, though supplier, inventory and other data domains are increasingly being considered in MDM projects.

Build a business case and recognize MDM is more than software
One disturbing survey finding was that of those organizations that had implemented an MDM program or were planning to do so, about one-third hadn't developed a business case for the project. A solid MDM business case, Waddington said, will ensure an ongoing commitment to MDM by the business side of the organization, though he acknowledged it is no easy task.

"It's still a struggle to get business people involved in these projects," Waddington said.

To help build a business case for an MDM initiative, Waddington suggests finding specific examples of how a lack of consistent master data impacts the company's bottom line. Errors in master data, for example, could result in products being shipped to the wrong customers or in inventory backlogs.

Determining how much money such errors are costing a company can prove a compelling business case for MDM technology.

MDM, however, is much more than software. According to the survey, software costs accounted for only 25% of total expenditures around MDM projects. The rest went to staff and resources, much of it dedicated to improving procedures around data quality and data governance.

"If you want to get consistent data, it's a lot more than just putting in some nice new pieces of glittering software," Waddington said. Fully 30% of MDM-related costs went specifically to data quality initiatives, he said.

That's not to say technology does not have a role to play. According to the survey, around 70% of MDM implementations use commercial MDM, data integration and data quality software. Just 20% developed their own custom MDM software, mainly due to the "complex nature" of MDM, Waddington said.

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