Defining and Using Master Data Management

Defining and Using
Master Data Management

Your expert guide to master data management and its
use cases
In this e-guide In this e-guide:
• The gradual evolution of As data becomes a more central part of nearly every organization’s business strategies, many
companies find themselves struggling with untrustworthy or otherwise unreliable data. Master
master data management data management (MDM) is one of the ways leading companies have begun to rectify that
problem. In this e-guide, you’ll be able to see what MDM software is, how to slot MDM into
software
your existing data governance plans, and some great use cases where MDM can make a
• Data governance and your difference.
master data management

strategy
• Master data management

best practices for insurers
• Three master data

management strategies to
boost CRM-ERP success
Page 1 of 17
In this e-guide The gradual evolution of master data
• The gradual evolution of
management software
Andy Hayler, CEO
software
Master data management software has been around for nearly 15 years. Analysts bandy
• Data governance and your about wildly different figures as to the MDM market's size, but it's certainly a multibillion-dollar
industry with a compound annual growth rate of at least 9%. What's interesting is how the
master data management market is developing and how that fits into general models of industry growth -- and what it
strategy means for organizations that are implementing MDM, often in conjunction with data
governance programs.
Like other fields, master data management went through an initial excitement phase that was
best practices for insurers marked by dreamy marketing promises and the frantic acquisition of pioneers by data
management industry giants.
Then there was a stage when the reality dawned that getting large companies to change the
management strategies to way they managed shared data was hard, depending as it did as much on modifying human
boost CRM-ERP success behavior as solving technology issues. Getting a large enterprise to agree on a single golden
record of customer or product data despite a plethora of competing requirements and internal
political rivalries proved an elusive goal.
I witnessed some wildly ambitious MDM projects sink under their own weight when they tried
to impose global standardization of master data on business units that weren't ready for it, or
that were downright hostile to the idea due to their entrenched ways of working.
Page 2 of 17
In this e-guide Master data management's new phase
• The gradual evolution of This cold reality of disillusionment with master data was, to an extent, rescued by the rise of
data governance, whereby businesses came to consider ownership of data a corporate asset
master data management rather than a task foisted on them by corporate IT departments. This development neatly
complemented MDM technology and enabled it to be deployed more successfully, as the
software
initiatives were now aligned with the business side.
• Data governance and your Today's MDM projects are often smaller in scope, but they're still driven by business need,
master data management such as handling multichannel retailing or governance-driven tasks in the finance and
pharmaceutical industries. This change has seen the birth of new master data management
strategy software vendors, often focused either on a particular vertical sector or on specific business
• Master data management problems, such as improved customer experiences or the need to protect customer data
privacy in the light of tougher regulations, such as GDPR.
Recent developments in MDM technology, from both new and established vendors, have
• Three master data been partly innovative and partly reactive. For example, just about every vendor now offers
cloud deployment in one form or another as companies slowly but steadily move more of their
management strategies to processing to cloud platforms.
Page 3 of 17
A tougher nut to crack has been adapting to the
In this e-guide rise of data lakes, many of which resemble the Master data systems can
"Hotel California" of the 1977 Eagles song, potentially offer a lifeline
• The gradual evolution of except in this case data can check in any time it
to enterprises, enabling
master data management likes but never leave. Putting some order into this
mess may involve reindexing data from a data them to climb out of the
software lake into data hubs, and potentially deduplicating murky data lakes that
data in these hubs so it's in a state from which it
• Data governance and your can be queried successfully.
they're often stuck in.
Linking up such hubs to existing data
strategy warehouses via a hub of hubs may sound familiar. Indeed, it might sound remarkably like an
MDM problem. In this way, master data systems can potentially offer a lifeline to enterprises,
• Master data management enabling them to climb out of the murky data lakes that they're often stuck in and start to get
best practices for insurers some actual value from those environments.
• Three master data The current state of MDM

management strategies to Modern master data management software often offers more elaborate features, such as
boost CRM-ERP success graph databases, to analyze the extended relationships data can have. In the B2C world, this
may involve looking at not just a specific customer, but also at the relationship that customer
has to others -- e.g., family members.
In the B2B world, this involves ensuring that you have a picture of not just a particular supplier
or trading counterparty, but also where that company sits within a web of linked companies.
Assessing the risk of trading with a particular company is all very well, but if it turns out to
have a parent company with an entirely different name, then you need to factor that into your
counterparty risk models.
Page 4 of 17
Plenty of companies discovered this, to their detriment, when Enron folded spectacularly in
In this e-guide 2001, taking with it a series of not obviously linked companies. Mapping the web of
dependencies, whether in corporate hierarchies or with consumers, is a problem well-suited to
• The gradual evolution of modern MDM software.
The MDM industry continues to evolve to handle new business problems, as well as
software underlying infrastructure changes such as cloud computing and big data. It has matured
beyond the phase of wild-eyed excitement when master data management software was
• Data governance and your going to solve all enterprise data management challenges in boil the ocean, grandiose
projects.
strategy MDM is now moving to a more modest and sustainable phase in which it's applied to tackle
more specific, immediate business challenges supported by data governance processes that
• Master data management are driven by business leaders rather than technologists. It's a welcome transition, and one in
which the focus is shifting to delivering business value rather than putting in a new layer of
best practices for insurers corporate technical infrastructure.
management strategies to ▼ Next Article
Page 5 of 17
In this e-guide Data governance and your master
data management strategy
Andy Hayler, CEO
software
The value of data to an organization may be hard to pin a dollar value on, but over the past
• Data governance and your decade, it has been increasingly clear that data is an important business asset. Given this, it
makes sense to manage it as effectively as possible, which is what data governance is. This
master data management includes considering the availability, security, quality and integrity of all aspects of your
strategy organization's data.
• Master data management Traditionally, this had been considered the remit of the IT department, but more recently it has
become clear that it needs business leadership to take a lead on the management of data
best practices for insurers with support from IT resources. This is partly because data in most organizations is a mess,
with multiple competing and overlapping versions of data about customers, products,
• Three master data suppliers and assets strewn across multiple applications.
management strategies to One global company I worked with years ago decided to radically reduce the number of
boost CRM-ERP success brands the company ran, focusing only on the most profitable ones. The CEO was
disappointed to discover the systems in the company were entirely unable to determine the
true profitability of any individual brand, due to inconsistent ways of allocating costs, among
other reasons. This was not a rare exception: A KPMG survey in 2018 found that just one-
third of CEOs trust the accuracy of their data.
This sorry state of affairs is partly due to the sheer amount of overlap in corporate data. An
Information Difference study some years ago found that the average organization has six
Page 6 of 17
competing sets of master data for customers and nine different sets for products. Five years
In this e-guide later a repeat of the survey showed the situation had not improved.
• The gradual evolution of What is master data management?

Master data such as customer, product, asset and location data are embedded in a large
software number of applications in a typical enterprise, only one of which is its ERP system. The field
of master data management (MDM) was developed in order to try to get a handle on this.
• Data governance and your
The idea behind a master data management strategy was to either copy data out from other
systems into a trusted master data store that could then be used by other systems or map
strategy where it was stored and document the differences -- e.g., a product might be classified in a
simple hierarchy by one department or business unit but a more detailed way by another.
For example, a marketing department might care a lot about the brand of a product, its
best practices for insurers packaging and whether it is on special offer, but a logistics department cares about the
number of products in a palette, its dimensions and weight and where to deliver it. These
different needs drive different categorizations, which in turn become embedded in different
management strategies to computer systems.

Why is MDM important?
A successful master data management strategy most likely has a business-driven imperative
and operates within an established data governance program.
Some MDM projects run as large as $100 million in scale, but these projects often have an
excellent ROI despite their considerable cost. On one project I worked on, a single pricing
error on one product that had remained hidden until the master data management strategy
came along paid for the entire cost of the regional MDM project rollout.
Page 7 of 17
In this e-guide Can MDM help data governance?
• The gradual evolution of A data governance strategy needs to work hand in hand with a master data management
strategy. Many early MDM projects failed because they failed to engage with business
master data management leaders, and the IT department simply doesn't have the authority to tell the business to
change its current processes in most organizations.
software
A successful data governance program will have senior businesspeople working alongside
• Data governance and your the IT department and will assign businesspeople -- often called data stewards -- across
master data management various departments. A good program will have dispute resolution and scalation mechanisms
to address the inevitable disagreements about whose customer hierarchy is better and who
strategy has to change to the new standard.
• Master data management Analysis of an Information Difference data governance benchmark database showed that
best practices for insurers successful data governance programs, statistically speaking, had a high correlation with a
number of common traits. Among those were:
• a clear and documented process for resolving disputes;
management strategies to • documented business processes;
• regular data quality audits; and
boost CRM-ERP success • data models for key business data domains.
The key message is that MDM and data governance need to be aligned. A master data
management strategy in the absence of a solid data governance program is likely to
encounter difficulties, because the very heart of such a project is to agree on a common
golden copy of key master data across an enterprise.
This can only happen with businesspeople buying into the program and being prepared to
change what they are currently doing. The technology matters, but it is less important than the
Page 8 of 17
degree of business buy-in. The latter can be facilitated by a well-reasoned, quantified
In this e-guide business case showing ROI projections.
• The gradual evolution of A well-motivated, business-led project with a decent MDM tool has more chance of
succeeding than one with a state-of-the-art MDM product with every feature under the sun
where business leaders are resistant to change. By contrast, successful MDM projects that
software operate with the support of a solid data governance organization can achieve considerable
ROI.
▼ Next Article
strategy


Page 9 of 17
In this e-guide Master data management best
practices for insurers
Joseph Carew, Assistant Site Editor
software
Master data management strategies have found a home in the insurance industry. As a
• Data governance and your discipline that demands centralization and uniformity, insurance needs MDM to consolidate
data across applications and systems within enterprises.
Data is essential for modern insurers to function and understand their clientele and what
strategy makes their company successful. But with different departments accumulating similar data
• Master data management sets or not communicating what they know, insurers sought a new approach.
best practices for insurers But master data management (MDM) requires the right data and any successful deployment
depends on the right approach. When it comes to master data management best practices,
• Three master data companies understand the needed investment and commitment this discipline requires.
Breaking down MDM
Typically, MDM is defined as a technology-enabled discipline for businesses and IT
organizations in which enterprises work together to ensure the uniformity, accuracy and
accountability of a shared master data asset.
An MDM approach is one that pools all customer information together and distributes it to
customer-facing systems. This is in opposition to a traditional approach in which data
gathered from different departments of the same enterprise are not shared, increasing the
potential for duplication.
Page 10 of 17
"We are seeing a focus on digital transformation, the delivery of exceptional customer
In this e-guide experiences, operational agility and product innovation as examples of corporate strategies
that all require a solid foundation of master data management," said Malcolm Hawker, senior
• The gradual evolution of director analyst at Gartner.
MDM can benefit insurers by putting them in a better position to launch the aforementioned
software strategies. Through a transition to this discipline, companies can provide better service to their
customers, operate in a more agile way and innovate more easily because of the
• Data governance and your centralization of data that MDM demands.
master data management Hawker has found that data and analytics leaders that support the revenue generation and
strategy operational efficiency of these strategies are using MDM to provide the data used to deliver
these priorities.
The key to this approach is the accumulation of high-quality data. As with many things in the
best practices for insurers insurance industry, operators are reliant on their data being accurate.
• Three master data "Reliable customer and vendor master data is the foundation for much of these end-to-end
processes, governing which organizations [to] do business with, how they do it, and how or
management strategies to when either party gets paid," said Danny Thompson, SVP of market and product strategy
boost CRM-ERP success at Apex Analytix.
There is potential with MDM, but, as with most things, there is risk involved. Business value is
not guaranteed through an investment in MDM. For insurers to successfully embrace the
discipline, a significant amount of planning and groundwork are necessary. MDM can't be in
addition to another strategy but rather the fulcrum on which a business plan pivots.
Page 11 of 17
In this e-guide MDM strategies
• The gradual evolution of MDM is built to help reduce business risk and fraud, avoid duplicate payments, achieve better
spend analytics and operate with greater efficiency.
Lack of meaningful or prolonged executive sponsorship, failure to quantify the expected
software outcomes and inadequately focusing on data governance can all make insurance companies
less likely to deliver business value from an investment in MDM, Hawker said.
With the proper amount of investment and attainable goals, insurers can see positive impacts
from MDM.
strategy
"First, insurance companies need to compare their vendor and customer master data with
• Master data management authoritative sources of correct data in order to identify gaps and errors, and then actually
amend and correct the data as flaws are found," Thompson said. "Second, they need to
best practices for insurers ensure every captured record is complete and accurate when it is added. Finally, they need to
continuously monitor vendor master data for regulatory risks, fraud and vendor changes."
When it comes to claims-related data, MDM for insurers can accelerate the process of
payments to customers and optimize their relationships with vendors and suppliers, as well as
boost CRM-ERP success improve customer satisfaction.
"Effective mastery of claims-related data can have significant positive impacts on insurers --
particularly when it comes to understanding the full breadth of the relationship between the
insurer and all parties to the claim," Hawker said.
Having a centralized repository for all data gathered by the insurance company begets easier
search for important details between the company and vendors and customers. MDM can
Page 12 of 17
also add levels of automation for claims processing, provide aggregated and full views of
In this e-guide relationships across systems and businesses and make claim submissions easier.
• The gradual evolution of "It can also improve the customer experience by enabling insurance companies to make it
easier and faster for customers to interact with them," Hawker said. "Gartner is seeing
insurance companies large and small leverage MDM for their competitive advantage."
software
• Data governance and your ▼ Next Article

strategy


Page 13 of 17
In this e-guide Three master data management
strategies to boost CRM-ERP
software success
Tony Kontzer,
If there's one thing that's clear to Gabriele Bauman, it's that providing the best possible
customer experience means creating effective master data management strategies. And
strategy thanks to today's robust integration capabilities, that's exactly what she's been doing.
• Master data management Bauman is vice president of global CRM delivery for London-based educational publisher and
assessment provider Pearson, where she's been part of an effort to transform a complex,
best practices for insurers acquisition-fueled environment filled with numerous CRM and ERP applications into an
• Three master data integrated, finely oiled machine that taps a master data management system as the
authoritative source of data.
"Do we really need ERP in every single country," Bauman asked during a well-attended
boost CRM-ERP success presentation at Salesforce's mammoth Dreamforce 2018 conference in San Francisco this
week. "Do we need all that data circulating multiple places at the same time? No."
Bauman and the rest of Pearson's IT team are wrapping up a four-year effort designed to
make certain that Pearson's CRM and ERP environments, as well as its web, e-commerce,
royalty management and telephony systems, are governed by the best master data
management strategies possible.
Page 14 of 17
The team has been taking stock of the company's various SAP, Oracle and Salesforce
In this e-guide applications -- many of which are duplications that resulted from acquisitions -- in an effort to
establish business process continuity across a global organization with 30,000 employees in
• The gradual evolution of 70 countries.
software
1. Align data
One of the most important master data management strategies is to align data, and that's
• Data governance and your been true for Pearson. Due to having so many systems, the company was finding a plethora
master data management of data discrepancies.
strategy Indeed, how the various systems identified customers and products was creating chaos. What
should have been a single customer record, for instance, might have been seen by Pearson's
• Master data management systems as multiple customers, because data points didn't match up. For instance, one
best practices for insurers system might have identified a customer that worked at the University of California, Berkeley
as working at "UC Berkeley," while another might simply have said "Berkeley." Or, one might
• Three master data have said the customer worked in the "biology" department, while the other said "bio."
management strategies to Bauman said Pearson made this discovery while working to establish an Oracle master data
management system as the final word, feeding reliable data to and from the various systems
to which it's connected. Bauman's team found discrepancies in account and contact
management, quote management and order management data. Whenever information on
products or the customer didn't match up and align with legacy systems, difficulties followed.
What's more, having the "bad data," as Bauman called it, circulating through the company's
ERP environment was causing interfaces to fail. There were also problems with downstream
satellite apps that were too removed to be tested. For example, one of the company's ERP
systems relied on a third-party reporting tool that was operating with missing attributes, and
that led to further upstream data issues.
Page 15 of 17
"Customer data and product data have to be uniform across systems," Bauman said. "The
In this e-guide data has to be as clean as you can possibly imagine. If you think it's clean, clean it again."
• The gradual evolution of 2. Get stakeholders involved

For Bauman, another important master data management strategy was getting the kind of
software buy-in that only comes from making business users a part of the solution.
• Data governance and your To get Pearson's data clean enough, Bauman and her team went business unit by business
unit, country by country, through all of the systems and data pools, consolidating and
cleaning. Along the way, she asked business unit and business process stakeholders to
strategy define how they wanted things to operate going forward. She didn't want IT staff making those
decisions; she simply wanted them to build what was needed.
"You have to keep the business involved in all decisions," Bauman said. "Every executive
best practices for insurers stakeholder needs to be involved."
3. Establish authority and oversight
Once the data in Pearson's master data management system had been validated, Bauman's
boost CRM-ERP success team started deploying the architecture in stages, going live in the U.S. and Canada two
months ago. The U.K. is next.
The master data management system has become what Bauman called the "system of
authority," with interfaces between it and the company's Oracle ERP and Salesforce CRM
environments running around the clock.
To ensure the ongoing quality of data, Pearson established customer and product governance
teams with executive oversight, and the company is looking to squeeze more out of the data
Page 16 of 17
with a global business intelligence initiative that's just getting underway. Eventually, the
In this e-guide company plans to augment that effort with the capabilities of the Salesforce Einstein AI
platform.
In the meantime, the company is looking forward to being able to migrate additional
Salesforce instances into the architecture, with the ability to integrate them seamlessly with its
software various other systems.
• Data governance and your It wasn't easy getting to that point, but Bauman made it clear the benefits were well worth the
four-year effort. She strongly recommended attendees consider promoting similar efforts and
master data management using the most effective master data management strategies to increase the value of their
strategy own organizations' data.
"You can run your company in a much more streamlined way," Bauman said. "And executives
can see the data they need to see."
• Three master data ▼ About searchDataManagement.com

SearchDataManagement.com is a knowledge guide for data management professionals and
boost CRM-ERP success business intelligence leaders. With our offering of news articles, learning guides, expert
advice, and customized research, we offer a rich collection of insight, tips, and advice on how
you can efficiently manage your data supply chain.
Page 17 of 17

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What are the benefits of master data management?

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Defining and Using

Master Data Management

master data management

• Master data management

• Three master data

• Three master data The current state of MDM

• The gradual evolution of What is master data management?

boost CRM-ERP success

• Master data management

• Three master data

• Data governance and your ▼ Next Article

• Master data management

• Three master data

• The gradual evolution of 2. Get stakeholders involved

• Three master data ▼ About searchDataManagement.com

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