Big data – that’s all you hear about these days. But master data continues to be a critical concern for large and medium-sized enterprises. In industries such as financial services and life sciences, which were early adopters, companies are going through their second or third master data management (MDM) initiative. And as the technology reaches mainstream status, other industries are now starting to implement their first MDM solutions.
Master data is the lifeblood of most enterprises. Companies can’t conduct their day-to-day business without having basic records on customers, products, suppliers, employees, locations, assets and more. Across virtually every industry, the volume of operational information is rising exponentially in both size and complexity.
Unfortunately, in most organizations, this operational information is duplicated and scattered across multiple systems and applications. As it evolves independently, it becomes error-prone and keeps decision makers from having a unified view of operational intelligence. The disparate information also prevents customers from getting the accurate and timely information they need to make purchasing decisions.
In fact, most transactional data is linked in some way to master data. So missing data, low quality information and untrustworthy or inaccurate records have a big impact on revenue, productivity, costs, compliance, agility and decision making. Therefore, managing this master-level information proactively as it flows through the organization is essential to improving business performance.
Comparing the Two Approaches
Multidomain MDM is a software solution that manages multiple types of master data in one repository. With “single domain” MDM, each major type of master data (such as customer data, product information, supplier records, etc.) has its own unique data store and business logic.
Common sense tells you that when you’re trying to build a “single version of the truth,” a multidomain MDM approach would get you there faster. If you’re pulling together related master data from all over the company, it’s simpler and less expensive to store the “golden records” on customers, products, suppliers, employees, assets, locations – the people, places and things of master data – in one seamless technology stack.
But that’s not how the MDM industry evolved. The first implementations of master data management were known as customer data integration (CDI) solutions – which dealt with customer data, and product information management (PIM) – which managed product data. You’ll still hear people refer to CDI and PIM; usually old hands who occasionally lapse back into the now-dated jargon.
The MDM Software Market
The MDM software industry is divided into categories and includes mega-vendors, best of breed and startups. For first-time buyers of MDM solutions, the vendor selection process can be daunting. While the concept of MDM is not new, it’s a rapidly evolving marketplace that has become crowded with “me too” applications and a blur of sameness when it comes to marketing messages and positioning. There are a handful of vendors that make similar promises and claim comparable feature sets, but when you look under the covers it is important to understand the difference in MDM approaches.
For instance, single domain MDM solutions tend to be from the mega-vendors and the multidomain MDM solutions are typically from the other categories. The reason for this is that the larger vendors started developing their solutions prior to 2004. They have since acquired other companies with different MDM technology, and are slowly integrating them. While the larger vendors are gradually shifting to more of an emphasis on multidomain MDM, the smaller vendors generally designed multidomain capability into their first offering or have pivoted from being a CDI or PIM provider to offering multidomain MDM.
Benefits of Multidomain MDM
Proactively managing operational information as it flows through the business requires a full-cycle, multidomain approach. After all, integrating all operating and multichannel units and linking all types of information together into one management platform helps executives receive accurate information as it happens. As a result, it provides them with the information they need to impact revenue, lower operational costs, reduce risk and enhance agility.
For instance, a multidomain MDM platform was critical to increasing efficiencies and improving margins for UK’s leading restaurant and pub retail group, Mitchells & Butlers (M&B). Operating 1,600 pubs and restaurants across 16 brands, the company serves 125 million meals and 425 million drinks each year and is one of the largest operators within the UK’s £70 billion eating and drinking-out market.
Mitchells & Butlers manages 30 active menus, 1,300 live recipes and more than 80,000 items at any given time. There are more than 100 range changes per year, including changes in wine and beer ranges, which require constant updating and management. Mitchells & Butlers has also seen a fivefold increase in food volume over the last 10 years, coupled with increasing consumer expectations for innovative new menu items.
Due to the company’s growth, Mitchells & Butlers’ supply chain had become increasingly complex and now includes over 250 suppliers, 5,000 supplier items and 3,500 stock items. By leveraging a multidomain MDM solution, M&B can manage product data, supplier information and ingredient recipes in one central location.
The main benefits of multidomain MDM include:
- Cost-effectiveness – as the platform can be implemented in a single instance. It also avoids the redundant cost, training and maintenance that result from managing numerous data silos.
- Easier to maintain – with simpler architecture, unified governance, better analytics. Single data silos on the other hand act as barriers to unified definitions, standard handling of common reference data and unified governance practices, and processes that allow correlating critical information.
- The ability to proactively manage operational information – as it flows through the business resulting in cross-functional collaboration and overall performance improvements. The worst outcome of utilizing a single domain MDM application is that it can defeat the entire purpose of MDM, which is to enable an integrated view of the enterprise’s most critical information as it flows into the processes that drive the business and decision-making.
- Prevention of MDM failure – a multidomain MDM platform provides a single technology stack for managing data instead of distinct, uncoordinated approaches to separate master data domains (built on multiple technology stacks).
The growth of multidomain MDM has kept pace with the enterprise-wide data needs of global companies. Single domain MDM solutions don’t really address today’s business problems, which almost always span more than one master data domain.
For example, the pharmaceutical and medical device industries now must contend with the new Federal Sunshine Act, which requires the reporting of aggregate spend by physician. This may involve as many as 70 different domains of master and reference data. There are “person parties” (individual professionals) and “organization parties” (healthcare organizations), plus products, employees (sales reps), marketing events, geographies, government agencies and vendors – all redundantly stored in various CRM, ERP, accounts payable and expense reporting applications across the company.
Trying to get an accurate view of this information from an MDM hub originally designed for a single domain is challenging.
A single, enterprise-wide data model for master data provides a simpler architecture. Unified governance is made possible by a single data quality foundation, with a single set of business rules and user interface. Better analytics are achieved once the master data from the multidomain MDM hub is combined with the transactional data from the CRM and ERP systems, and then made available through a data warehouse or business intelligence solution.
A multidomain MDM solution supports cross-functional collaboration and improves performance because everyone in the enterprise is working from the same underlying data (probably for the first time), and people aren’t wasting time every month reconciling multiple sets of redundant master data.
One of the main purposes of MDM is to break down silos within the company, not to dramatically increase the number of them. Imagine senior management’s reaction if your company has implemented multiple, disconnected master data efforts, instead of a unified, multidomain platform. That’s not only hard to explain but could result in the failure of your MDM project.
A Gradual Shift Toward Multidomain MDM
Early on, single domain MDM was the only way to go. But the technology has evolved a lot in the last 10 years; most of the newer MDM platforms have multidomain capabilities, and companies are gradually shifting in that direction.
Many companies struggle with the incredible speed of change in today’s business world. Mergers and acquisitions are an almost-constant fact of life, new technologies emerge to disrupt current business models, and increasing competitive pressures to grow revenue and cut costs put executives in a tough position. Multidomain MDM offers a solution that helps companies respond to the pressures to eliminate, simplify, standardize and automate. And in the process, regain their competitive advantage.
About the authors: Dan Power is the founder & president of Hub Designs, a global consulting firm specializing in developing and delivering high impact master data management (MDM) and data governance strategies. You can reach him at http://hubdesigns.com/contact_us.html.
Mikael Lyngsø is CEO of Stibo Systems, provider of a leading and award-winning multi-domain master data management (MDM) solution. For more information contact him at StiboSystemsCEO@Stibo.com or visit www.stibosystems.com.