Fellow Roundtable writer David Loshin has commented in the past that: "MDM is popular because it is presented as a cure-all solution to all data problems in the organization."
Many people see master data management (MDM) as the silver bullet to all of their business and data woes. But in reality, MDM is a journey – not a project. You need to phase your MDM journey and be clear on what business objectives you'll be able to influence versus that fall outside of your scope for each step of the journey. The business also needs to aware of its responsibilities.
How will MDM change (and improve) working practices? What will a single view of equipment, customers, locations and other domains mean for the business model?
In this post, I want to outline a few steps you can take to help you get started on the journey. Feel free to add your experiences in the comments section below.
Step 1: Understand the mission of executive management
MDM is a dry topic for executives and senior managers. To make it relevant, we need to relate it to their world. If we take a techno-centric viewpoint of MDM, we will quickly lose our target audience. We need to start by understanding what challenges senior managers are facing right now.
When I've spoken to executives in the past I've discovered that typical examples could be goals, such as:
- Improving customer service performance.
- Increasing the cross-sale of products.
- Reducing customer churn.
- Improving customer payment collections.
- Providing better quality management information.
Speak to your senior stakeholders and document what their current motivations are. Because all the technology and frameworks in the world aren't going to impress a manager if you can't show a dotted line between MDM and what they're trying to achieve at a personal level.
Step 2: Identify the master data deficiencies that are preventing them from achieving these goals
Now we understand executives' goals at a personal and corporate level; the next step is to connect these goals to the impact of poor master data.
For example, an insurance firm implementing MDM explained in a past interview that their drive toward MDM stemmed from a difficulty in resolving inconsistent data from multiple sources. Through historical acquisitions, they had ended up with several policy administration systems and no single customer view.
They also had limited control over the creation and standardisation of their core business data. In particular, customer contact details, business partners and campaign descriptions. This made it harder to arrange cross-sale campaigns and work with partners to increase sales. The same organisation also had no data governance procedures or clearly identified ownership for enforcing data standards across the business.
All of these issues were impacting the goals of executives.
How does this translate to your organisation? What master data impacts are you experiencing? Which management goals are they inhibiting?
Step 3: What are the costs of these impacts?
Demonstrating ROI will always be high on the agenda for any executive. So you need to carry out some due diligence on what your current approach to master data costs the organisation in real terms.
For example, what is the lifetime value of a customer? What is the cost of customer churn? Is customer churn on the rise? Is poor MDM a factor? Can you cite examples of anecdotes and trends?
The most compelling business case will not just influence the bottom line – it will also demonstrate personal impacts, either on workers, partners, managers or customers.
One local government organisation I interviewed stated that their business case was simply to help find vulnerable children more effectively. If having more accurate data about a child's whereabouts and situation could prevent even just one child from coming into danger, their business case was justified.
What are the hard (and soft) costs of your current approach to master data?
Step 4: Identify the key components of MDM that address those issues
By now we should have a clear view of the issues organisations face as a result of poor master data and the likely costs or impacts. Our next task is to demonstrate a clear path from the problems presented to the MDM element that will improve the situation.
One danger point to avoid is trying to tackle too many MDM-related matters in one massive initiative.
You will have more success by adopting a gradual deployment. In this approach, you introduce MDM to one piece of the business or to one data domain, solve the business obstacle there, and then move on to other areas with more data domains and bigger business problems.
Step 5: Consider at least three different alternative approaches to addressing those issues
MDM is a strategy, not a product. There are always alternative options to take into account before crafting an MDM solution. Executives will typically push for several alternatives to what will always be perceived as a disruptive, multi-year, MDM project.
Brainstorm the different ideas so that you can present at least three alternative options before you start to calculate the associated costs and impacts of each suggestion.
For example, one alternative may be to maintain the status quo. You'll need to gather impact data on what the effects of that decision would be.
Step 6: Calculate the total cost of ownership for each of the alternatives (including MDM)
The economic buyer or senior stakeholder for MDM will want to see the total cost of ownership (TCO) for the proposed MDM solution and any options – including doing nothing. They need this information to make an informed decision. Because most stakeholders are more concerned with the costs they will incur rather than the gains they may receive.
Step 7: Identify the most cost-effective MDM approach
Following your analysis of the alternative MDM proposals, you should be able to determine the likely costs and benefits involved.
If a full-scale MDM initiative makes sense financially, then build the case for a pilot deployment to help validate the chosen way forward and the expected results. This will help you validate the likely costs involved and the related benefits the business can expect.
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