Organizations are citing improved business processes and better performance management as two of the top reasons to invest in master data management (MDM), according to new research from Stamford, Conn.-based IT analyst firm Gartner Inc.
Gartner surveyed 300 user organizations ahead of its recent Master Data Management Summit in Los Angeles and found that the somewhat difficult-to-define link between business process management (BPM), MDM and corporate performance management (CPM) is becoming a topic of interest for data management professionals. Gartner says 49% of survey respondents cited process improvements as the key business priority driving interest in MDM.
"For the last four to five years, [MDM investments have] been mostly driven [by] better decision making and analytics," Gartner data management analyst Andrew White said during a recent webcast. "This year, finally, we saw a breakthrough in that business performance and improved business processes were on top of that priority list."
White noted, however, that few organizations today can claim to have mature MDM, BPM and CPM programs in place. In fact, most organizations aren't even participating in all three areas simultaneously. But generally speaking, he said, many organizations have matured to the point where they are starting to see opportunities to leverage the disciplines in a more unified fashion.
"If you are doing all three, you are certainly innovators," White said. "The innovators out there are trying to figure out how to bring these three things together. [They're not] merging them completely, but [making them more] interactive."
MDM seen as 'an enabler' of BPM
While early adopters are already finding ways to unify MDM and BPM initiatives, most companies -- like insurance provider HealthNow New York Inc. -- are still just getting started on the disciplines.
HealthNow has just begun its first MDM effort around member data and ultimately plans to expand the initiative to cover supplier information as well, according to Robert Myers, an enterprise data warehouse solution architect with the company.
The company does not yet have a well-defined BPM program in place, but Myers said he can easily see how MDM is an enabler of improved business processes and, ultimately, corporate performance. To illustrate the link, Myers used his company's claims processing operation as an example.
Suppose that HealthNow decided to outsource its claims processing business but still wanted to maintain complete control of its data for security and regulatory compliance purposes. A comprehensive MDM program would make it easier for the company to make business process changes around the claims processing operation.
"If we had that [claims information] in an MDM solution, that would allow us to start thinking about some of that process change," Myers said. "So I think that MDM is an enabler in process change."
Deciphering the link between MDM, BPM and CPM
From a bird's-eye perspective, MDM and BPM practices ideally come together in support of a comprehensive CPM program. But to understand the link between MDM and BPM at a more granular level, White said, it's a good idea to start with some basic definitions.
MDM is a relatively new but increasingly popular methodology that aims to synchronize a company's all important “master data” across applications, servers and business units. Master data includes identifying information about customers, product or suppliers. As Gartner puts it, MDM combines data governance practices with technology in an effort to improve consistency and arrive at a "single source of the truth."
BPM is a discipline that seeks to improve the outcomes of the processes upon which a business runs. Those processes might include new product development, order to cash and customer or supplier recruitment. The goal is to increase the visibility and efficiency of business processes in an effort to improve results.
"MDM and BPM are not meant to be uber-disciplines that are going to try and solve everything in your organization up-front. They are meant to be focused on something very narrow," White said. "Ideally, they'll be focused on the same kinds of things. If new product introduction is a key process identified for improvement, your BPM discipline will help you identify, define and improve that process. MDM itself would be focused on [achieving a] single version of [the] product."
CPM combines management techniques, methodologies and metrics to help organizations identify, monitor and generally do a better job aligning and achieving key business objectives. While there is a technology component, White noted, CPM mostly centers on improving the way that human beings operate and achieve results in a business environment.
"You don't actually buy performance management," White said. "But you might buy some applications that are enabled to support your performance management strategy."
The connection between MDM and BPM centers on the notion that more consistent master data will lead to improvements in the business processes which rely on that data, White said. Better business processes, in turn, lead to improved corporate performance by "by driving operational excellence and business agility."
"MDM treats information as assets that indirectly contribute to enterprise performance by improving process execution via data consistency," White wrote in his presentation slides. "BPM is a management discipline that treats processes as assets that directly contribute to enterprise performance."
Gartner offers MDM and BPM recommendations
The idea of linking MDM, BPM and CPM is so new that there are few resources available on the subject. According to White, that means organizations will have to do a whole lot of soul searching to determine the best ways to leverage the disciplines together.
Companies should begin by thinking about areas within their organization where MDM, BPM and CPM operations intersect -- and how those areas might be improved. For example, White said, the intersection of the three might be most evident when the business is changed or expanded in some way.
But it's also a good idea to look at areas where an organization might be able to achieve some quick wins, White said. That might include an examination of MDM initiatives that support processes around business intelligence and analytics, for example.
"Start small, but start. Don't wait for vendors to tell you [what to do]," White wrote in his presentation slides. "Drive exploration and initiatives to business value."