Thursday, 13 October 2011

MDM (Master Data Management) Business Scenario


Introduction
Master Data Management (MDM), the process of creating and maintaining master data. As per definition Master Data Management (MDM) is a set of coordinated processes, policies, tools and technologies used to create and maintain accurate master data. Master data describes key area of business like customers, products, employee, suppliers, etc. It is stored in multiple, disconnect systems/databases. Unmanaged master data is inaccurate as well as incomplete. Unmanaged master data may lead to poor business decision because of discrepancies.
MDM is required in Relational Model as well as in Dimensional Model (OLAP, BI Analytical data model). In the Relational Model following are example of MDM:
·         Customers, suppliers, employees, and sales representatives
·         Products, equipment, assets, and stores
·         Contracts, licenses, and bills of material
·         Company locations  and customer geographic divisions
Dimension data (Product, Customer, Employee, Department, Geographical regions, etc.) should also be considered as example in Dimensional model because master data can be used for both models.
Master data is a very important part of data. It is crucial and it must be known and correct. We can’t think of master data without quality. Master data typically changes with a much slower rate than transactional data. Master data follows classical CRUD cycle: Create Read, Update and Destroy.
Advantages
Advantage of MDM is categorized below based on area:
Sales
1.       Single shared view of customer may lead to overall customer satisfaction, service and retention.
2.       Sales people will be able to effectively up sell and cross-sell to customers because they get access to an accurate customer data.
Products
1.       Centralized governance of corporate data will immediately launch new product.
2.       MDM will facilitate the new product introduction to market faster. New product launch can be shorter and more agile.
3.       Product data will be shared by supplier to customer on timely basis.
4.       Increase visibility between suppliers and products.

Cost & Operations

1.       MDM in procurement can stop duplication of products.
2.       MDM can produce the same effect for the supplier part master, enabling companies to better understand at a macro level from whom they are buying.
3.       Expanded margin and lower costs.

Risk Management

1.     MDM can enable enterprise wide view of credit risk exposure. It will also reduce business exposure/risk.
2.     MDM can increase capitalization on market opportunity with new product.

Reporting for executive

1.     Faster, more-effective decision making affecting revenue, costs and agility.
2.     Competitive advantage through process agility, and enterprise wide ability to adopt and adapt end-to-end business processes.
3.     It will enable to manage resource effectively.

MDM Values
As per Gartner research MDM can bring value to the business falls into below three categories:

·         Run the business: Resources consumed and focused on the continuing operation of the business. It includes all nondiscretionary expense as part of the "run the business" cost.

·         Grow the business: Resources consumed and focused on developing and enhancing IT systems in support of business growth (typically, organic growth). Discretionary investments are included in the grow the business" cost.

·         Transform the business: Resources consumed and focused on implementing technology systems that enable the enterprise to enact new business models. This is very much a "venture" category.

Scenarios
Data that needs versioning, auditing, or any other kind of maintaining of history, is typically master data. Finally, we give more attention to data that we reuse repeatedly. Re-usage increases value of data for us. The value of the data can increase because of other factors as well like quality and integration.MDM is useful when we need any kind of cross-system interaction, like doing analysis over data from multiple systems.
Below are the scenarios where MDM can be used effectively:

1.     Customer data integration (CDI) to enable overall customer satisfaction, service and retention as well as increase sale people effectiveness.

2.     Product information management to increase revenue various lead and cycle time reductions.

3.     Procurement-oriented MDM to expanded margin and lower costs.

4.     MDM in risk management can contribute to reduced business exposure and risk.

5.     MDM for executives in a form of report can enhance decision making faster. It can contribute towards more-effective decision making affecting revenue, costs and Agility.

6.      MDM in Business performance/agility as in service-oriented architecture (SOA)/data service environment can give competitive advantage through process agility, and enterprise wide ability to adopt and adapt end-to-end business processes.

7.     Development of a product catalog for supporting selling processes.

8.     Integration of multichannel selling, marketing, and service process unifying product, customer and location master data.

9.      Support for a marketing campaign using multiple customer files for a year-end sales drive.

10.   Unification of identity management (user application logon and security).

11.  Business analytics framework to facilitate faster execution and realization of benefits from mergers and acquisitions.

12.   Alignment of master data across BI, performance management and operational business applications.

13.  Alignment of application development practices with business process management suite BPMS) tools.

14.  Maintenance of product, price/discount, packaging and configuration rules for reference by selling and customer support processes.

15.  Support for field maintenance and warranty services over the lifetime of a product and customer relationship.

16.    Migrating of legacy and multiple ERP systems to a smaller number, or even one, ERP structure over a multiyear effort.

Conclusion
MDM can add value to the business in many different ways, most often indirectly, as an enabler for other business and IT initiatives. MDM enable broader and more complex data integration. It eliminates redundant data management activities and redundant integration activities. It also improves decision making, data quality and simplifies data integration. While creating a clean master list can be a challenge, but it will definitely bring many positive benefits.

Acknowledgement & References:
2.       Gartner Research Case Studies: Where MDM Adds Value to the Business by (Andrew White, John Radcliffe).

1 comment:

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