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By R. "Ray" Wang and Rob Karel with Kyle McNabb and Norman Nicolson

EXECUTIVE SUMMARY

Information and knowledge management professionals continue to turn their attention to defining master data management (MDM) strategies. However, early adopters in 2008 will focus on mitigating the organizational, process, and business case challenges an enterprisewide, multi-data-domain MDM business capability introduces before considering comprehensive technology architectures. Even with these daunting challenges, MDM's goal of delivering trusted data throughout the enterprise shouldn't be ignored this year. Recognizing and planning for enterprise MDM as a multiyear, multiphase maturing business capability allows I&KM pros to deliver trusted quality customer, product, and other critical data.

WITH MDM, ACTIONS SPEAK LOUDER THAN WORDS — BUT INACTION REIGNS SUPREME

You'd be hard pressed today to locate a senior executive at a large, public company who hasn't stood in front of her employees, customers, or shareholders and announced that the company's corporate data is a critical asset that must be nurtured and protected. Sound familiar? Unfortunately, MDM requires much more than rhetoric to survive its adoption barriers. The most common roadblocks cited by early adopters and successful implementation teams include:

Considering MDM as purely a technology initiative. IT organizations still drive and sponsor many MDM initiatives. Business stakeholders who ultimately define the value of these efforts in improving their business processes provide minimal participation and sponsorship. For example, data architects often benefit from a cross-enterprise perspective, allowing them to recognize the business impacts of a data-quality problem often not even visible to the business stakeholders themselves. Hence it's natural for IT to evangelize early MDM efforts. Risks increase when IT takes ownership of not just the enabling technology solution, but the business data definitions and rules that must come from their business customers.

Assuming that dirty data is just an IT problem. Poor data quality is a critical business barrier. No longer relegated to the IT teams as a technical exercise, business units require accurate and up-to-date information to make key decisions. Without accurate information on product inventories, customer locations, and relationships, enterprises lack the ability to act on key initiatives such as serving customers efficiently, managing compliance and risk, and optimizing install base value.

Managing the vast complexity of multiple data domains without proper techniques. Cross-enterprise MDM—which Forrester defines as "transactional, bi-directional synchronization of multiple data domains across your information supply chain including all points of data capture, update, and usage"—is complicated. Really complicated. Many packaged MDM software solutions help to reduce this complexity by providing common data models, integration APIs, and Web-service-enabled features that can help to coordinate the information supply chain. The technology, unfortunately, is the easy part. In fact, the data governance, prioritization, people, and process aspects of implementing an MDM solution will likely derail the project before the technology fails.

Prioritizing funding and managing costs. MDM is expensive. The software license costs for an average-sized implementation of a cross-enterprise operational MDM solution range anywhere from $500,000 to $2 million. But the license costs are hardly the end of your investment. Enterprises often find it costs $2 in professional services costs for every $1 in software licenses just to implement MDM technology. When you consider the eventual costs of synchronizing the MDM solution throughout your entire data management infrastructure, some large organizations can approach a 5:1 professional service to software cost ratio, leading to a potential overall investment exceeding $10 million.

Underestimating the level of executive sponsorship required for success. Hearing senior executives say that data is their company's most critical asset energizes many I&KM professionals evangelizing MDM. However, discouragement soon follows when these same executives fail to provide the necessary resources, funding, and prioritization to mitigate the risks associated with bad data. These scenarios often reflect an organization's inability to incorporate a business case for MDM into overall corporate strategy.