How do you calculate MDM ROI? DATE: 01 May 2009 Learn how to calculate master data management (MDM) return on investment (ROI) and find out how to measure return on MDM investments by looking at the cost benefits of MDM and increases in developer productivity.
Hannah Smalltree: How do you calculate MDM ROI?
Jill Dyché: Yeah, that's a hard one. There's actually two ways. One is looking at the productivity and the cost benefits of MDM and what we are finding with clients there is they're looking at MDM for developer productivity, so a lot of IT-driven MDM initiatives are around "You know what? For every application that we're implementing here our developers are having to become data specialists." One of the analyst groups actually did an estimation that 60% of all development time is spent finding the data. So, if we took that away from our projects and centralize that, not only in terms of technology but in terms of skill set, the economies of scale would be huge. So, development cost savings is a huge ROI driver for MDM.
And the other one is revenue generation. We're finding that a lot of our clients are actually seeing the business benefits behind finally having that operational single version of the truth and that's manifesting itself in regulatory compliance successes, target marketing successes. One of our clients, a case study in the book Royal Bank of Canada, has a great story about how they actually used common customer master data across their line of business that actually reconcile individual customers and redefine their customer segments as a result of that. Huge revenue generation possibilities there. So, cost savings versus revenue generation and again that should be driven by the business.
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