Multi-Entity Master Data Management: The 4th Generation of MDM
To help IT organizations and their business partners focus on the more desirable longer term MDM strategy, vital issues that this NEW STRATEGIES TOPICS ON GLOBAL ISSUES entry addresses include:
• What is multi-entity MDM? • Why is multi-entity MDM considered “evolutionary” while domain-specific MDM data marts viewed as “myopic”? • When will multi-entity MDM graduate from “early adopter IT project” to Global 5000 strategic business initiative? • Which use cases are most amenable to benefit from multi-entity MDM? • How does an organization plan for multi-entity MDM deployment?Introduction to Multi-Entity MDMStrategic planning assumption: MDM convergence
Since 2006, the MDM Institute (formerly the CDI-MDM Institute) has semi-annually hosted in North America, Europe and Asia-Pacific the world’s largest gathering of IT professionals focused specifically on master data management strategies(MDM), customer data integration (CDI), and data governance[1]. These sold-out events offer MDM professionals and their business partners opportunities to: (1) create and grow a strong network of data integration colleagues; (2) validate and further their understanding of best practices and potential pitfalls; and, (3) stay current with the latest research, trends and technologies.
In our meetings with the MDM implementation teams at these and other venues, we have noted that the requirement for commercial MDM solutions to provide support for multiple types of master data (“domains” or “entity types”) is increasingly on the minds of business technologists at these large enterprises.
Specifically, the overarching concern is to avoiding “repaving the cow paths.” This occurs when an IT group executes on a shortsighted strategy of mastering the master data in one given business area with a specific brand of MDM solution and then discovers that another division or line of business has chosen a different brand of MDM product (and architecture) to solve their MDM issues. All too often these different product-specific MDM solutions do not offer the capability of integrating master data “across” the great divide between “party” master data (customers, suppliers, employees) and “product”.
Thus the goal of this MDM Institute MarketPulse™ NEW STRATEGIES TOPICS ON GLOBAL ISSUES entry is to outline the requirements for such capabilities while providing an industry road map that highlights the planning assumptions necessary.
Summary findings include:
• Master data management strategieshas matured from “early adopter IT project” status to become a mainstay “Global 5000 business strategy”
• SOA[2]-based master data management strategieswith multi-entity support is desired to manage master data domains (customers, accounts, products, etc.) that have significant impact on (and span across) the enterprises’ most important business processes – e.g., compliance, cross-sell/upsell, and customer service
• Master data management strategiesis increasingly concerned with the notion of “multiples” – multiple data domains, the multiple relationships among them, and the multiple usage styles
• Most vendors approach master data management strategiesfrom either specific usage/domain pairing, or broad tool – e.g., a rudimentary data model and set of tools for data quality, workflow, etc. to build out the enterprise’s own master data management strategiesinfrastructure
• An example of customer-centric MDM hub evolution to include product/pricing master hubs is the success story at Carlson Hotels Worldwide where greatly enhanced guest identification processes via multi-faceted MDM (party/guest data employed in both operational and analytical MDM usage styles) is broadening to include product mater data such as “hotel configuration” master information for operational and analytical applications
• Conversely, an example of product-centric master data management strategiesevolution broadening into master “party” data (customers and retailers) for build-to-order product management strategiesand more effective marketing
Clearly, enterprise MDM is a major IT initiative being undertaken by a large number of the market-leading Global 5000 size enterprises. Most enterprises and solutions vendors are finding near-term success with the single-faceted approach inherent with the third generation of MDM solutions. Increasingly, however, these same enterprises are determining that this myopic strategy of focusing solely on a single data domain and usage style is detrimental to the longer term business strategy of integrating supply, demand, and information chains across both product intra- and extra-enterprise boundaries. Coming to market during 2008-09 are multi-entity MDM solutions which are characterized as the fourth generation of MDM solutions which address the requirement for multiple domains and styles as well as the roles of the consumers.
To help IT organizations and their business partners focus on the more desirable longer term MDM strategy, vital issues that this NEW STRATEGIES TOPICS ON GLOBAL ISSUES entry addresses include:
• What is multi-entity MDM?
• Why is multi-entity MDM considered “evolutionary” while domain-specific MDM data marts viewed as “myopic”?
• When will multi-entity MDM graduate from “early adopter IT project” to Global 5000 strategic business initiative?
• Which use cases are most amenable to benefit from multi-entity MDM?
• How does an organization plan for multi-entity MDM deployment?
The value of multi-entity MDM can be intuitively recognized in a range of business initiatives – from short-term fixes to a narrow set of problems such as capturing customer privacy preferences across product lines to long-term enterprise-wide initiatives to delivering infrastructure agility by embracing SOA.
________________________________________
[1] The MDM Summit series takes place in San Francisco and New York in the U.S.; Frankfurt, London, and Madrid in Europe; and Sydney in Asia-Pacific. In the U.S. there are 600+ attendees per event with 40+ exhibitors and 60+ speakers. The non-U.S. events draw between 2-300 attendees and are also “sold out”.
[2] SOA = Service-oriented architecture
Industry Terminology
Master Data Management strategies(MDM). Authoritative, reliable foundation for data used across many applications and constituencies with the goal to provide a single view of the truth no matter where it lies.
Multi-Entity MDM. An MDM solution to concurrently manage multiple, diverse master data domains (customers, accounts, products) across intra- and extra-enterprise business processes. By centralizing the most critical data to a single trusted source within a cohesive data lifecycle, multi-entity MDM provides configurable process integration across multiple data domains.
Customer Data Integration (CDI). Processes and technologies for recognizing a customer and their relationships at any touch-point while aggregating, managing and harmonizing accurate, up-to-date knowledge about that customer to deliver it ‘just in time’ in an actionable form to touch-points.
Data Governance (DG). Formal orchestration of people, process, and technology to enable an organization to leverage data as an enterprise asset.
Introduction to Multi-Entity MDM
During the past several years, MDM solutions have matured from “early adopter IT projects” to become “Global 5000 business strategies”. The industry consensus is that “multi-entity MDM” is a software solution to concurrently manage multiple, diverse master data domains (customers, accounts, products) across intra- and extra-enterprise business processes. Additionally, enterprises are determining that master data must be presented via multiple views to accommodate the wide range of data consuming and creating roles that exist across an organization. By centralizing the most critical master data to a single trusted source, and managing this within the context of governance-driven data lifecycle, multi-entity MDM provides flexible business process integration across multiple data domains and usage types. Multi-entity MDM solutions deliver such complex and collaborative business processes such as identifying the most valuable customers, introducing new strategies products rapidly, crafting new strategies product bundles more quickly, and managing threat and fraud risk more effectively.
Global 5000 size businesses are rapidly ramping up plans to consolidate “master” data into data hubs using a combination of off-the-shelf data hubs, EAI/EII/DQ toolkits, and even custom-built IT projects. The current commercial off-the-shelf solutions available to enterprises are commonly characterized as 3rd generation solutions.
What are the “vital signs” of a 3rd generation CDI-MDM solution? In our experience with the MDM Institute Advisory Council membership, “type A” MDM project leadership within very large scale IT organizations advise of these five “DNA markers” as good indicators:
1. SOA/shared services architecture evolving to “process hubs”.
Rather than re-invent the “data hubs” that are inherent within enterprise CRM and ERP vendor solutions, savvy IT organizations understand that the real need is to centralize and manage “business policies” such as pricing discounts, privacy preferences, etc. In turn, this will require major attention by the vendors to such issues as business process management/workflow API compatibility – i.e., BPEL compliance alone is not enough to enforce BPM compatibility. See also “Dysfunctional Data Hubs - 2006-07 Strategic Planning Assumptions for CDI-MDM and Business Services” January 19, 2006.
2. Sophisticated hierarchy management.
The management strategiesof data about organizational structures such as subsidiaries, business units, and sales regions, etc. is a complex and costly endeavor for all businesses but especially critical for businesses selling to other businesses. Because it is difficult to "know" these complex customers and to consolidate information about the business relationship, “hierarchy management” is fundamental to such CDI business initiatives. CDI and MDM are inherently about managing the “relationships” among parties such as customers and suppliers. While is somewhat reminiscent of the OLAP data mart trends of years past (everyone creating their own slice of the data with a drillable view based on their dimensional views), such “hierarchy-by-anarchy” philosophy counters the basic premise of MDM wherein enterprises are looking to capture, manage and leverage “standard” master data and relationships (hierarchies). Nonetheless, it is vitally important that a 3G CDI-MDM solution support flex-hierarchies to both manage relationships across data hubs (different ERP general ledgers for example) as well as import and map to industry standard hierarchies such as D&B’s DUNSRight legal entity hierarchies. See also “Milestones on the 2008-09 Master Data Management strategiesRoad Map".
3. High availability identity management.
The essential identity matching and linking capability is necessarily high-RAS (reliable, available, and scalable). This is because the ability to positively identify a customer, for example, is critical in online financial services transactions. Another example would be the initialization of a call center inquiry based on the inbound phone number used to dip into an ANI database and determine the caller’s account number, credit rating, next-best offer, etc. – all at speed-of-thought. In today’s increasingly 24x7x365 business climate, an enterprise cannot go offline for maintenance nor suffer outages when it comes to identifying customers or suppliers – or when serving up pricing policies, etc. A vital distinction is that this functionality is more than match/merge capability as such identity matching capabilities must also materialize and match on hierarchy and other relationship attributes.
 |
| Master data management strategies(MDM) overview |
4. Data governance-ready framework.
Every MDM vendor and consultancy seems to have gotten “data governance religion” yet there remains the huge disconnect between methodologies and processes with the actual MDM software that enforces such MDM policies. To be generous, MDM solutions evaluators need to acknowledge this age old metadata problem still challenges the software vendors, however, 2H2007 will see pressure on the mega vendors to provide at least a “lite” methodology with integration to the underlying MDM software stack given that such solutions will be offered from best-of-breed or 3rd party vendors. See also “Corporate Data Governance - From De Rigueur to De Facto to De Jure” November 2005 DM Review.
5. Registry, persisted, & hybrid architecture flexibility.
Architectural forms vary in terms of the amount of instantiation of master data – varying from a fully virtual registry style cross reference index (e.g., web portal) to a fully persisted physical data hub (e.g., enhanced operational data stores). More common is the hybrid model which allows both in one solution to better support operational, analytical and collaborative “use case” MDM styles.
Strategic planning assumption: MDM convergence
Why “multi-entity MDM”? Why now? During 2008-09, “party” and “product” data interdependencies will quickly broaden MDM requirements across data domains and the relationships among them – i.e., from “customer” to “product” to “vendor”. Currently most MDM solutions vendors are focused on one or the other major entity – hence our use of the descriptive term conundrum to describe this riddle.
Most vendors approach MDM from either specific usage/domain pairing, or broad MDM tool – e.g., rudimentary MDM data model and set of tools for data quality, workflow, etc. to build own MDM product.
Currently, the mega vendors for the most part offer one center of gravity or the other. For example, SAP offers a product-centric MDM solution with its “customer” model being the product-centric view of “business partner” rather than the pure play B2B customer. Oracle on the other hand has a native Product Information Management strategies(PIM) Data Hub that does not relate well to its counterpart Customer Data Hub, and also has from its Siebel acquisition a Universal Product Manager solution that is a B2C customer-centric view of product (as seen from the Siebel Universal Customer Master solution).
IBM has taken the bold step of integrating both of its MDM acquisitions (DWL and Trigo) during 2008 such that the data models, the SOA services, and underlying middleware all share a common stack that enables both “party” and “product” to reside co-equally.
Additionally, the future MDM landscape will be influenced by these “multiples”:
• Multiple data domains
• Multiple relationships
• Multiple usage styles – analytical, operational, and collaborative
• Multiple views/roles of master data consumers including linkages between operational data domains (e.g., using collaborative or analytical MDM to integrate the processes)
• Multiple phases of implementation that are suited to the enterprise’s unique needs
Clearly, the future direction is to also grow all reference masters into operational masters, e.g., pricing and location style masters into transactional support roles via operational, analytical, and collaborative MDM linkages.
Through 2008-09, Global 5000 enterprises will broaden their MDM business initiatives from single use case, single entity to multi-style, multi-entity. By 2010-11, enterprises without a long-term multi-entity MDM strategy run the ironic risk of building “MDM silos” which will need to be patched/fused together via middleware – in effect, recreating the original MDM problem associated with master data segregated and isolated within ERP and CRM instances.
4th generation MDM solutions
During 2008-09, both mega vendors and best-of-breed MDM vendors will not only have embraced and delivered the five key 3G MDM capabilities but will also be well on their way to the next generation of MDM solutions. These 4G solutions can be characterized as “full spectrum” hubs due to their support for both structured and unstructured information.
Additionally, we expect to see greater emphasis on extreme “enterprise scalability” while concurrently delivering “master data search” capability. The latter is a relatively new strategies MDM ecosystem category furthering the utilization and ROI of such enterprise information management strategies(EIM) by incorporating “search” for both structured and unstructured info across a variety of applications such as catalog management, deep web search, and enterprise search.
Our five key “DNA markers” for 4th generation MDM solutions focus on:
1. Multi-entity MDM.
An MDM solution will need to concurrently manage multiple, diverse master data domains (customers, accounts, products, etc.) across intra- and extra-enterprise business processes. Moreover, a 4G solution will provide the capability to expand on relationships among entities – i.e., evolve from the 3G requirement of a single primary data domain and other supporting domains into becoming the system of record for multiple data domains and relationships among them.
2. Multiple “use case” styles.
4G MDM solutions should support all users and usage requirements for master data – e.g., different functions to define and create data (collaborative), use and maintain (operational), and derive insight (analytical). Additionally, this implies multiple deployment capabilities including the ability to start as an index for one domain and grow into full multi-entity over time.
3. Process/policy hub architecture.
Clearly, BPM workflows are critical to achieve value from MDM and to ensure that the outcome of such data governance infrastructure is actually orchestrated across business units and master data hubs. Just as clearly, there are major ROI and other benefits from centrally managing such policies within a single trusted policy/process hub. In short, 4G MDM will support the linkage of MDM styles into the actual business processes.
4. Integrated data governance.
While relentless near term business drivers (such as compliance in Financial Services) are now requiring enterprises to institutionalize data governance, the longer term goal is to integrate, measure and manage data governance metrics within the context of the master data lifecycle. Clearly, effective data governance is integral to delivering reliable and usable MDM to develop master data as a corporate asset.
5. Enterprise search & support for unstructured info.
During 2008-09, semantically-enabled metadata will enable “search” for both structured and unstructured information across a variety of applications such as catalog management strategiesand deep web search, and enterprise search. By 2009-10, enterprise semantics and SOA-enabled data services will further provide the technology foundation for policy hub. While the majority of contemporary MDM solutions focus on the structured data held in CRM and ERP applications, the reality is that a plethora of valuable customer, product, supplier, employee, etc. information resides in what is characterized as “unstructured” information, e.g., emails, instant message log files, voicemails, etc. To provide a robust “universal customer view”, etc., it is clearly desirable to incorporate these valuable information sources as part of the composite view.
Conclusion
With a 4th generation MDM platform, an enterprise will be better able to:
• Identify and provide differentiated service to its most valuable customers via their relationships (households, hierarchies); also cross-sell and upsell additional products to these customers
• Introduce new strategies products and product bundles more quickly across more channels to reduce the cost of New strategies Product Introduction (NPI)
• Provide improved enterprise-wide transparency across customers, distributors, suppliers, and products to better support regulatory compliance processes
This NEW STRATEGIES TOPICS ON GLOBAL ISSUES entry has highlighted some of the most representative experiences and lessons learned concerning the evolution towards and the business for multi-entity MDM.
To summarize these as prescriptions, the MDM Institute recommends that Global 5000 size enterprises:
• Promote MDM as essential business strategy with IT deliverables to leverage high-value info used repeatedly across many business processes
• Position MDM as enabler of key business activities such as improving customer communication and reporting – rather than an important infrastructure upgrade
• Begin MDM projects focused on either customer-centricity or product/service optimization
• Plan for multi-entity MDM solutions evolving from “early adopter” status into “competitive business strategy”
• Insist on MDM software capable of evolving to multiple usage styles and data domains (“multi-entity MDM”)
The value of multi-entity MDM can be intuitively recognized in a range of business initiatives – from short-term fixes to a narrow set of problems such as capturing customer privacy preferences across product lines to long-term enterprise-wide initiatives to delivering infrastructure agility by embracing SOA.
Clearly enterprises must plan now to realize economic strategies value and competitive differentiation via multi-entity MDM during the next 2-5 years. The evaluation process of such an enterprise MDM solution needs to accommodate the reality that such infrastructure is “mission-critical”.
Aaron Zornes is chief research officer of the MDM Institute. For additional info on this topic or other MDM Institute offerings, please contact info@the-MDM-Institute.com.
