The Three Core Activities of MDM (part 1)
Blog by Philip Russom
Research Director for Data Management, TDWI
I’ve just completed a TDWI Best Practices Report titled Next Generation Master Data Management. The goal is to help user organizations understand MDM lifecycle stages so they can better plan and manage them. TDWI will publish the 40-page report in a PDF file on April 2, 2012, and anyone will be able to download it from www.tdwi.org. In the meantime, I’ll provide some “sneak peeks” by blogging excerpts from the report. Here’s the first in a series of three excerpts.
Defining Master Data Management
To get us all on the same page, let’s start with a basic definition of MDM, then drill into details:
Master data management (MDM) is the practice of defining and maintaining consistent definitions of business entities (e.g., customer or product) and data about them across multiple IT systems and possibly beyond the enterprise to partnering businesses. MDM gets its name from the master and/or reference data through which consensus-driven entity definitions are usually expressed. An MDM solution provides shared and governed access to the uniquely identified entities of master data assets, so those enterprise assets can be applied broadly and consistently across an organization.
That’s a good nutshell definition of what MDM is. However, to explain in detail what MDM does, we need to look at the three core activities of MDM, namely: business goals, collaborative processes, and technical solutions.
Business Goals and MDM
Most organizations have business goals, such as retaining and growing customer accounts, optimizing a supply chain, managing employees, tracking finances accurately, or building and supporting quality products. All these and other data-driven goals are more easily and accurately achieved when supported by master data management. That’s because most business goals focus on a business entity, such as a customer, supplier, employee, financial instrument, or product. Some goals combine two or more entities, as in customer profitability (customers, products, and finances) or product quality (suppliers and products). MDM contributes to these goals by providing processes and solutions for assembling complete, clean, and consistent definitions of these entities and reference data about them. Many business goals span multiple departments, and MDM prepares data about business entities so it can be shared liberally across an enterprise.
Sometimes the business goal is to avoid business problems. As a case in point, consider that one of the most pragmatic applications of MDM is to prevent multiple computer records for a single business entity. For example, multiple departments of a corporation may each have a customer record for the same customer. Similarly, two merging firms end up with multiple records when they have customers in common.
Business problems ensue from redundant customer records. If the records are never synchronized or consolidated, the firm will never understand the complete relationship it has with that customer. Undesirable business outcomes include double billing and unwarranted sales attempts. From the view of a single department, the customer’s commitment seems less than it really is, resulting in inappropriately low discounts or service levels. MDM alleviates these problems by providing collaborative processes and technical solutions that link equivalent records in multiple IT systems, so the redundant records can be synchronized or consolidated. Deduplicating redundant records is a specific use case within a broader business goal of MDM, namely to provide complete and consistent data (especially views of specific business entities) across multiple departments of a larger enterprise, thereby enabling or improving cross-functional business processes.
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ANNOUNCEMENTS
Keep an eye out for part 2 and part 3 in this MDM blog series, coming February 17 and March 2, respectively. I’ll tweet so you know when each blog is posted.
David Loshin and I will moderate the TDWI Solution Summit on Master Data, Quality, and Governance, coming up March 4-6, 2012 in Savannah, Georgia. You should attend!
Please attend the TDWI Webinar where I present the findings of my TDWI report Next Generation MDM, on April 10, 2012 Noon ET. Register online for the Webinar.
Posted by Philip Russom, Ph.D. on February 3, 2012