It has long been thought that the place to find the most accurate information about customers is in a company's enterprise resource planning system. But some within the IT industry say cloud computing applications -- and specifically Software as a Service-based sales applications like Salesforce.com -- may eventually become the place to find the most up-to-date customer data. A subtle shift in power may be underway.
Master data management (MDM) programs may someday look on Software as a Service (SaaS) cloud computing applications as the "newspaper of record" for customer data, some viewers predict. They may already provide access to the best and most recent information about customer names, addresses, phone numbers and histories, according to MDM veteran Zeb Mahmood, head of product management and strategy at SnapLogic, a data integration software vendor based in San Mateo, Calif.
When you put a bunch of customer data up [in the cloud], it needs to be cleaned. The rapid adoption of products like Salesforce and other hosted SaaS applications should not obscure that.
founder and chief research officer, MDM Institute
"We are seeing that a lot of customers are using Salesforce as a source of seed data," he said. "It has the data that is newer, and thus much cleaner than on-premises older systems."
Mahmood believes SaaS cloud applications may soon take precedence in MDM planning initiatives, and he sees this as a sign of SaaS industry maturity. "If you look at Salesforce, they have their flagship CRM product. But their CRM has matured from being the secondary CRM in the enterprise to being the primary CRM in many enterprises," he said.
Will Salesforce MDM come next?
Mahmood predicted that Salesforce.com will leverage its customer data dominance to expand into cloud-based MDM offerings.
"Salesforce needs to have MDM," Mahmood said.
For its part, SnapLogic entered the MDM in-the-cloud fray in late 2011 when it forged a deal to offer its integration platform together with Orchestra Networks' SmartGovernance.com software.
He said cloud MDM will differ considerably from on-premises MDM. That latter style now comes from a group that includes IBM, Oracle, SAP and Informatica, as well as others. Cloud MDM offerings to come will likely be easier to implement than their on-premises counterparts, he added.
Mahmood said a lot of money goes into consulting related to MDM from large vendors. "The analogy is the difference between CRM from Salesforce and [Oracle-Siebel]," he said, picturing the latter as "costly and taking a long time to implement."
The in-roads that cloud computing applications have made continue to impress others in the IT industry, as well. Where MDM issues here once centered on matching cloud-based sales automation with on-premises enterprise resource planning (ERP) systems, the cloud applications variety has expanded to include many other kinds of work -- even ERP may be moving to the cloud.
"What we are seeing is that the center of gravity continues to shift to cloud. First it was sales, then human resources and procurement applications," said Rick Nucci, general manager and founder of Berwyn, Penn.-based Dell Boomi, a cloud integration software provider that recently rolled out its own cloud-based MDM offering.
The growth of cloud applications means the industry will see lots of master data being continually replicated, he said. "SaaS applications need to be synched up with ERP. It is definitely a growing problem, one that is very adjacent to integration issues," he continued.
Still, an accommodation between cloud-centric and on-premises MDM is in the offing. "The two [types of MDM] coexist. We are supportive of co-mingling with on-premises MDM customer data. That is important," Nucci said. "But as you see the center of gravity move to the cloud, you will see more MDM [in] the cloud."
Understanding corporate processes
Still, there are drawbacks to the prospect of SaaS-centric applications like Salesforce.com becoming the center of gravity for MDM.
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"When you put a bunch of customer data up [in the cloud], it needs to be cleaned. The rapid adoption of products like Salesforce and other hosted SaaS applications should not obscure that," said Aaron Zornes, founder and chief research officer with the MDM Institute, a San Francisco, Calif.-based consulting firm. Moreover, there are inherent issues if applications like sales automation look to become the base of "master data."
"Companies have customer data all over the place. That is why they are attracted to MDM, Zornes said. Going forward, MDM efforts should include better in-house data governance planning, he added.
Understanding of corporate processes is an important guide to data governance decisions, he continued. "The questions are: 'When do we integrate data and process?' And, 'Where does the data reside?'"
He cautioned that there is value in many aspects of SaaS data. "A cloud-hosted CRM system may be the best source for the most up-to-date data on some things, for example, telephone numbers," Zornes said. But there can be a dark side to some sales automation data. "Sales people make mistakes, sometimes they even do so [on purpose] to protect their accounts."
MDM will continue even as cloud use proliferates. But of course, MDM is still evolving, he added.
"Even if all systems eventually make their way to the cloud, companies will still need to integrate customer data across applications," he said. "Should MDM run on-premises or [in] the cloud?" His answer was, "The jury is still out."