Getting a handle on your silos of information

CXO. What are the main MDM challenges that companies are currently facing?
Bill Hewitt. Simply put, it’s data, data everywhere. For many companies, the last decade has been about automating every process, from order management, to customer management to financial management. The result? A glut of data captured in different systems, at different times, in different formats. This inconsistency makes it nearly impossible to gain consolidated views of enterprise performance or compare results across the organisation. First and foremost, these companies need to define their ‘master data’; the definitions of customer, product, location, employee, and so on, which mean different things to each department and system. While most companies have recognised this problem, it can seem overwhelming to actually try to solve – particularly in the midst of keeping the lights on every day.

CXO. What should they be doing to overcome these challenges?
BH. It differs business by business. First, you have to determine what is most important to you. If you are a B2C company, customer data is paramount. If you are a construction company, asset and people data may top the list. Most companies need to stop worrying about implementing ‘master data management’. Take stock of your specific business needs; figure out what will make the biggest impact on your organisation and focus on addressing that problem.

Regardless of where you start, you’ll need to address inherent data governance issues. Unlike automated data quality, MDM requires business involvement and human judgment (and therefore governance). A business can tackle a small piece of the data in their organisation – finance data perhaps – to learn how to develop data governance practices and use MDM tools to effectively manage the process in a way that works for them.
 
CXO. What are the risks to companies of not efficiently managing their master data?
BH. It’s very similar to what happened with KPIs and scorecards. I talked to one CEO that told me he had over 300 KPIs for running his business! The risk is you accommodate too many custom business practices and avoid the difficult task of structuring your governance process. As a result, business intelligence tools may give managers different answers depending on which way they ask the question. That inconsistency can lead to hours spent massaging and reconciling data in spreadsheets to get numbers that are ‘close’ to the truth. In short, inaccurate master data can lead to bad reporting, bad decisions, bad customer service, and ultimately – a bad reputation and bad business.

CXO. What return on investment can companies expect from deploying an MDM solution?
BH. By focusing on the business, companies can identify the biggest area of potential return and target that area for the initial phase of the programme. For example, one Kalido customer has saved tens of millions of Euros annually due to increased shipping efficiency/accuracy and reduced transaction volume with high-risk customers. Another customer cleaned up the master data within the procurement department (overlaps were created due to a merger), and reduced procurement costs by millions of dollars in the first year.

For other customers, the savings has been softer; increased efficiency in R&D, better inventory management, improved customer satisfaction or a reduced risk of misstated financials.

CXO. What new data storage technologies are being developed to help companies more effectively manage their master data?
BH. A successful MDM solution is about the data governance processes required to improve master data, not the hardware. The time has come to apply business process to data management, and that is in effect what MDM is. The right technology will help you automate, guide and implement that data governance process, and ideally, provide you with the tools you need – a repository for the ‘approved’ master data, for example – that will help the program succeed. Select a technology that is business user based; one that has extensive workflow capabilities to help guide the data governance process. Find one that enables the business to set the rules and models based on how the business is run, not how the data is stored. Ideally, look for a technology that can manage any kind of master data so that you’ll be covered as your program expands to new areas.

Bill Hewitt, President and CEO of Kalido, has more than 20 years of executive-level leadership experience in enterprise software, hardware and services markets. During his career, he has worked closely with senior executives from Global 2000 and midmarket companies to ensure that their projects deliver quantifiable business results.