Diving in to MDM: A Perspective on the Complexities and Potential of a Market In Transition - http://bit.ly/eOjIlN

Author: Michael Zuckerman, Queplix CMO

Master data management (MDM) is a market in transition. The realization of the return on investment, operational benefits and ultimately the strategic advantage associated with the application of MDM technologies can be very significant. Yet, the goals of MDM have not been fully realized for many organizations. Projects have been put on hold or on extended delay. The reasons for this are numerous and the barrage of countervailing forces will continue to threaten these projects. Other organizations have been unable or unwilling to fund MDM projects for reasons that may include perceived difficulty, scale and the overall return on investment.

MDM requires a substantial investment in software, hardware, professional services and integration services. At the core, MDM is a huge data integration project. The investment in professional services and integration services is many times the actual cost of software licenses for the typical implementation. The ratio between the software and the services in fact suggests that MDM is primarily a services and integration offering. Many of the consultants involved would immediately agree. In fact, there are many costs which are often not captured that relate just to the many meetings, communications and organizational dialog both to gather necessary knowledge and reach consensus as to the plan of action. MDM is certainly an organization-wide dialog that impacts every IT component, both centralized and distributed, in information technology and within the individual lines of business.

In 2007, the market for master data management was predicted by one analyst to be “over $5 billion by 2011.” Yet, in 2010 the market reached a far different place. Past projections for growth and size were missed by very substantial margins.

These are the predictions of three different top industry analysts in 2010 about the MDM market:

•  “Estimated to be $2.2 billion this year.” (2010)

•  “MDM is projected to top $2 billion by 2012”

•  “PIM and customer master software revenues potentially exceeding $2 billion in 2012”

The question that immediately comes to mind is, "What happened?” What slowed this market down? Where is this market today? How should that impact my decisions to implement MDM processes and tools? What, if anything, is wrong with current MDM processes and tools? What approaches are available to me to reach the same or better savings with higher return on investment, greater speed of implementation and lower risk?

Prevailing winds came towards MDM from several sources. The first strong headwind was the collision between any multi-year project and the economic trauma of 2009. In a state of budget cutbacks and economic losses, any project that spanned more than a single budget cycle/year without measurable and beneficial results was in jeopardy. Notwithstanding the milestones for any MDM project, the operating business units may have been less likely to support these projects given all of the choices pressuring cutbacks. Further, consider that most of the expense for the current MDM paradigm is wrapped around consulting services. These projects are expensive and replete with professional services and integration services that go far beyond any license cost for the MDM software.

Master Data Management implementations for most corporations, unless they had a previous failure, were one-time events. The experience curve was new. At the same time MDM is perhaps the largest and most complex data integration project in the information technology world today. This only raises the probability of project management challenges and project failure. As Sun Tzu said centuries ago, and I'm paraphrasing, "never go into a battle unless you know you can win." Yet many of us did.

Other prevailing winds came from the broad array of difficult and time consuming technology issues. The implementation of the current MDM paradigm is certainly on the very short list with the most complex and difficult technology challenges in information technology. Consider that you must integrate every major application (and ultimately every application that touches the data being aligned) across the organization to achieve success. This is not a one time, static data slice like a data warehouse but can be living, breathing data in operational systems. The practical considerations of doing all of this are enormous.

Beyond the physical connectivity and security, you need to consider the differences in data sources. You need a complete understanding of every system’s data structures, metadata and the semantic content of this data across all of your major systems on a worldwide basis. Legacy applications typically are relational in nature and use tables and columns. New applications may be object oriented. This was further complicated several years ago with the strong emergence of cloud-based computing. Clouds hold your data – not you. Public clouds such as salesforce.com will not integrate the same way as your on-premise systems. Compliance issues abound and effect both transactional and non-transactional data. All of this adds complexity to the technology considerations.

The process of implementing Data Governance, and, of course, MDM, requires many necessary and discrete milestones. However, most of the user community and the senior management in your organization do not view it that way. The senior management community only views success, in any part, as a function of the visibility of fully synchronized data across the operational system. Anything short of this is generally viewed as something other than successful.

Next time I'll try to identify the challenge areas in MDM so we can begin to craft strategies that lead us to victory (project success and return on investment). Onward.

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