Demystifying
MDM
By: Ashraf Mohammed
Demystifying MDM:
Demystifying MDM is the first in a series of whitepapers. In Demystifying MDM, Ashraf introduces the concept of Master Data Management with examples and illustrations and explains why having a new age MDM strategy is so crucial for today’s enterprises. We are also introduced to the different types of data, and the position of Master data in the data landscape.
What is MDM? (Master Data Management)
There are multiple divisions or domains in an enterprise such as Invoicing, Marketing, Sales, Finance, Human Resources, Procurement, Manufacturing, Supply Chain and so forth. Each of these domains typically uses one or more IT systems and applications to record their transactions. Transaction volumes vary from a few hundred data records each day to a few million data records each day. To complicate things further, the different IT systems are not integrated or designed to share data with each other or update one another in real time. They function as independent data silos. If the day to day transactional data is not captured accurately and managed efficiently, it can lead to some serious troubles for the business. Let me explain how
For example: There is a customer SARA WALKER who purchases a laptop computer from SMART COMPUTE INC. Information about the same customer is entered by three different IT systems in three different ways as illustrated below!
As evidenced above, there is no uniformity in how each division captures information about the customer. This raises some serious doubts, problems and questions:
1. Are Sara Walker and Sara Waters the same customer? 2. Or is Ann Walker the same as Sara Ann?
3. How is she related to Judy Walker from NY -12046? 4. Is she her daughter, mother, sister or totally unrelated? 5. Is 100 Main St, the same as 100 East Main Street?
From a business executive’s perspective, replicate the same scenario millions of times. Duplicate data and inconsistent data records are an epidemic. Independent market research indicates that 20 to 30% of
Name: SARA ANN .W Address:
100 Main St.E Manhattan NY- 12046
DOB: April 10th Name: SARA WATERS
Address:
100 Main St. NY- 12046
DOB: April 1970
Name: SARA WALKER Address: 100 East Main St. Manhattan NY DOB: 04-10-1970 CRM System 100 Main St.
all enterprise data are duplicates. Data duplicates cost enterprises US$ 600 billion annually. Bad data leads to bad business outcomes. The monetary cost of each instance of bad data US$ 60/- This is reason enough for enterprises to ensure they Manage their Master data by implementing MDM.
Let me illustrate this with the same example: The laptop computer purchased online by Sara Waters of Manhattan was instead delivered to Sara Walters also of Manhattan. From the business’ perspective,
What actually happened
Impact on Business
1. Initial delivery truck /fuel surcharge Increased cost
2. Sara Waters is unhappy that her laptop did not reach her on time Poor customer satisfaction
3. Sara Walters is upset about being Invoiced for an item she didn’t purchase in the first place, it’s unlikely that she will return to SMART COMPUTE INC. in future
Poor customer retention
4. The cost of re- routing the laptop to the right customer Increased cost
5. The wasted time of a customer service representative who works to resolve this mistake
Inefficient business operations
6. The lost time of the truck driver was wasted Increased cost
7.
Smart Compute INC.’ Billing department and Invoicing department are wasting their time and effort trying to reconcile the wrong Invoice and re-issue the Invoice to the right customer
Delay in closing Books
8.
Since the business does not really know their customer SARA WATERS, they are unable to target her household for future demographic specific marketing campaigns
Missed opportunity for cross sell, upsell, bundling Master Data Management (MDM) is a concept designed to avoid business scenarios such as the one illustrated above. MDM leverages the information asset of an enterprise and packages it in a way that the enterprise stands to gain from it, by reducing costs, increasing efficiency, improving cross sell and upsell opportunities, providing enterprises with better customer insights, and so forth.
Business perspective
MDM is a strategic and foundational initiative to support mission critical business operations by offering uniform and trusted data across the enterprise. It enables enterprises to decrease costs, increase efficiency in operations, improve customer satisfaction, increase customer retention, allows targeted marketing campaigns to capitalize on upsell, cross sell and bundling options, ensure compliance with government and other regulatory authorities and so forth.
• MDM empowers business in making correct decisions based on accurate data
• MDM improves business operation by ensuring availability of uniform, trusted data across the enterprise.
• Provides business a 360 degree view of key master data like Product, Customer, Contracts etc. • MDM leverages key business domains such as
• Customer Relationship Management (CRM) • Enterprise Resource Planning(ERP)
• Item and Inventory Management • Order Management
• Supply chain • Manufacturing • Human Resource
An Analogy to explain MDM:
Imagine there are 10 persons in a room. 1 American, 1 Japanese,1 German, 1 Indian, 1 Chinese,1 Greek, 1 Italian , 1 Mexican, 1 Ethiopian and 1 French. Imagine each of these persons speaks and understands only one language- their own. Having these ten individuals in 1 room trying to communicate with each other in their own language, to solve a complex business problem is impossible. Now imagine, you add to this room just 1 INTERPRETER who is a certified language expert in each of these 10 languages. Suddenly, the idea of the 10 foreigners working together to achieve a common goal is very possible and as easy as pie. The Interpreter stands in the middle and translates, orchestrates and moderates the conversation in the entire room and soon the mission is accomplished.
In this analogy - MDM is the certified interpreter and the different IT systems and applications in the various divisions of an enterprise are the 10 foreigners. The image below illustrates this.
iClassic
MDM
SAP
Finance
ERP
Oracle
HR
Salesforce.
com
Compliance
Supply
Chain
Plant
Mgmnt.
MDM is a centralized application that delivers pristine enterprise master data. This enables
management to make accurate and quick business decisions based on data that they can trust. MDM provides a 360 degree, consolidated view of a customer or product, across an enterprise in real & near-real time to the subscribing systems in support of their business processes. It is backed by governance and rich data services that perform data cleansing, enhancement, cross referencing, matching, de-duplication, hierarchy management, security and synchronization across enterprise applications. MDM provides the foundation for implementing system process flow. Examples of Master data include Customer, Product, Vendor, Employee and so forth.
What is Master data?
Master data is defined as the key business data such as customer, product, supplier which are needed
for day to day operations. Master data is shared across many business domains. Transactional data does not alter Master data definitions, and Transactions such as Order Creation, Invoicing and Billing cannot be performed without master data.
The definition of Master data is subjective. Each enterprise should be free to define master data depending upon their Industry, division and nature of their operations. For example: Product may be considered the master data of a Manufacturing enterprise, but to a Service Consulting Firm, Employee Skillset may be their definition of master data.
Why enterprises need MDM - the Top reasons
No single source of truth. Master data is updated by different source applications such as CRM, ERP, Billing and so forth, whereby multiple versions of same data are stored across different silos by different business units
Duplicate versions of the same data are stored by enterprises. According to TDWI, data duplication costs enterprises US$ 600 billion annually. In fact 20% to 30% of enterprise data records are duplicates.
Inconsistent customer and product hierarchy- this affects financial reports, loss in upsell and cross sell opportunities, derails targeted sales campaigns
Inconsistent reporting and analytics resulting in poor business reports, affecting financial projections, directly affecting key business decisions
Sales and finance data do not reconcile, impacts closure of books, increases risks of violating compliance and missing opportunities
Numerous applications perform the same operations across different Business Units, burdening the IT infrastructure team
Multiple powerful and expensive servers with high capital and maintenance cost are needed without cloud MDM
Compliance and governance rules are unable to be enforced
Master data is not secure, data is accessible and editable by any one Uniform Data standards are unable to be enforced
Information management is lacking
Unable to use social media analytics and trend about a customer due to bad data
Types of data
There are many kinds of data such as: Transactional data Meta data
Big data
Reference data and Analytical data.
Master data acts as the foundation upon which all the above types of data and their many sub-divisions depend upon. This is illustrated in the diagram below.
Master data is essentially the information asset of an enterprise
Out of all the above kinds of data, master data is the key. It is the foundation without which a business cannot operate. Other types of data depend upon master data. If master data is inaccurate it has a domino effect and taints the data in every domain that it touches. Without Master data, transactions are not possible. Master data is essentially the information asset of an enterprise. Therefore in order to create and maintain its business edge, a business needs to successfully manage its master data.
In my next paper, I will talk about the common causes for MDM project failures and how iClassic MDM is specifically designed to overcome them.
About the Author
Ashraf Mohammed is a TOGAF and IBM Master Certified Information Architect specializing in MDM – Master Data Management. Ashraf has worked at reputed IT concerns like IBM, Oracle and Siebel in delivering MDM projects across industry verticals such as agro-chemicals, finance, telecom, multi-media, publishing, e-government, retail, O&G and so forth.
As an MDM specialist he has seen first-hand the lofty MDM visions set forth by corporate executives fall flat due to wrong technology choices, glaring deficiencies in existing MDM solutions, faulty strategy and surprisingly common, yet, avoidable MDM pitfalls.
Realizing the phenomenal benefits Master Data Management can provide to an enterprise, he believed the time was right for an MDM solution, designed specifically to solve the complex data challenges faced by enterprises, in today’s age of the internet, mobile computing, social networking, intuitive applications and cloud solutions. Thus was born Enterprise Technology Solutions, LLC and –––– iClassic MDM.
In designing iClassic MDM, he has consciously eliminated many limitations seen in current MDM solutions. iClassic MDM is an agile, cloud based, flexible, highly configurable, end-to end MDM solution seamlessly built using the latest and greatest in technology and Information Architecture. See
www.ETSonDemand.com
