3 Keys to Successful Master Data Management: Process, Governance, and Architecture

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3 Keys to Successful Master Data Management
Process, Governance, and Architecture
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Room Survey

• Please raise your hand if you work for a company
  whose senior executives firmly believe in the
  notion that data is a corporate asset.
• If you raised your hand Please keep your hand
  up if your company has launched or is in the
  process of launching a formal Master Data
  Management (MDM) initiative to implement the
  business capabilities and technologies to ensure
  the availability of complete, accurate,
  consistent, and timely master data to your
  enterprise.

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If You Have Not Yet Launched Your MDM Initiative,
You Are Not Alone!
In a survey of over 2000 companies conducted by
the Aberdeen Group in December 2006
MDM Adoption
Informational Issues

• More than two-thirds of companies surveyed
  believe its very important to provide one common
  view of data and information to enterprise users
  and partners
• In 2006, only about 20 of the companies in the
  Aberdeen survey were engaged in using MDM
  technology to remediate the complex data
  integration problems
• A more recent survey conducted in February 2008
  shows the MDM adoption rate has only increased to
  28

• 66 of companies surveyed use spreadsheets to
  manage critical business functions
• For companies that rely heavily on their supply
  chains
• 88 cite inconsistency or outdated information in
  orders sent to manufacturers
• 69 cite data errors caused by manual updating
  which can potentially affect purchase orders and
  inventory
• 56 say business process changes result in
  interim paper workarounds until IT catches up

Aberdeen Group, Why Does Master Data Management
(MDM) Get No Respect?, December 2006
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Misconceptions and Challenges

• Misconceptions
• Fix the problem by throwing more people at the
  issue
• Fix the problem by implementing technology only
• MDM is just another IT project
• Previous ERP and data warehouse initiatives have
  addressed the problem
• Challenges
• No alignment to business objectives
• No clear ownership of the problem
• Lack of necessary business sponsorship
• No clear definition of success
• Band-aid approach to addressing problem

Many companies are still approaching MDM from
the infrastructure / IT standpoint, and thats
just not as sexy or alluring to the business
leader who doesnt fundamentally understand how
it will improve his or her business Jill
Dyché, Business Consultant, Author of Customer
Data Integration Reaching a Single Version of
the Truth
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What Well Cover

• Positioning the business context and benefits of
  MDM
• Defining MDM and reviewing the MDM program
  roadmap
• Aligning MDM with your companys business
  objectives
• Designing the right data governance model
• Walking through a complete MDM solution
  architecture
• Wrap-up

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Business Context
More than ever before, enterprises today rely on
complete, accurate, and timely information in
order to compete effectively
Internal Complexities
Business Dynamics

• Functional organizations are becoming more
  distributed and dispersed
• The amount of data in an organization has
  escalated dramatically in recent years
• Loosely coupled IT and business infrastructures

• Globalization Initiatives
• Markets
• Operations
• Extended Business Ecosphere
• Business Partners
• Contractor
• Shared Services
• Mergers and Acquisitions

Delivering complete, accurate, and timely
information to the right person, application, or
service at the right time is becoming an
increasingly difficult proposition
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Business Context (cont.)

• While companies will be spending billions to
  renovate enterprise applications through
  composite applications and service-oriented
  architectures, not many are developing the
  critical master data management capabilities
  required to produce information of high quality
  and consistency to make all enterprise
  applications work seamlessly.

And without the most complete, accurate, and
up-to-date information available, these
investments will not enable the best business
decisions and deliver maximum business value.
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A Mature MDM Program Can Deliver Measurable
Benefits

• In its Winning Master Data Management Strategies
  for 2008-2009 report, the Aberdeen Group
  reported
• Among the Best-in-Class companies focused on
  customer data quality, 94 improved integrity,
  95 improved usability, and 89 reduced the time
  required to make customer data ready for use ...

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A Mature MDM Program Can Deliver Measurable
Benefits (cont.)

• In its Winning Master Data Management Strategies
  for 2008-2009 report, the Aberdeen Group
  reported (cont.)
• And among the Best-in-Class companies focused
  on data migration, 94 improved on-time project
  completion, 88 improved on-budget project
  completion, and 68 improved data usability ...

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MDM Best-in-Class Capabilities and Enablers
Companies enjoying Best-in-Class performance
share the following common characteristics
Key Technology Enablers
Key Business Capabilities

• Data/information federation/ integration
  solutions, including metadata and metadata
  repositories, data warehouses and marts, and
  tools for federating and managing them
• Data/information consistency, migration, quality,
  and transformation tools (ETL)
• IT and Intellectual Property (IP) access control,
  management, and security solutions

• Well-defined, documented, and enforced policies
  and processes governing master data management
  and quality
• Support by cross-functional teams of
  stakeholders, including senior executive
  management
• Well-documented, regularly reviewed, and updated
  operational execution plans driven and supported
  by key business processes

ETL Extract, Transform, and Load
Aberdeen Group, Winning Master Data Management
Strategies for 2008-2009, April 2008
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What Well Cover

• Positioning the business context and benefits of
  MDM
• Defining MDM and reviewing the MDM program
  roadmap
• Aligning MDM with your companys business
  objectives
• Designing the right data governance model
• Walking through a complete MDM solution
  architecture
• Wrap-up

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Group Exercise

• Lets play a word association game
• Shout out loud any word that comes to mind when
  you think about MDM

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MDM Definition

• Master Data Management is the application of
  policies, procedures, standards, governance, and
  tools needed to create, maintain, and share
  high-quality reference or master data throughout
  an enterprise

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MDM Program Roadmap
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What Well Cover

• Positioning the business context and benefits of
  MDM
• Defining MDM and reviewing the MDM program
  roadmap
• Aligning MDM with your companys business
  objectives
• Designing the right data governance model
• Walking through a complete MDM solution
  architecture
• Wrap-up

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Business Strategy Enablement
Business Capabilities
Business Imperatives
Customer External Requirements
Case for Action
Current Limitations

• One Face to the Customer Sales
• Customer Collaboration (e-Commerce, VMI, CPFR ...
  )
• New Product Development and Introduction
• Supply Chain Integration and Optimization
• Global Procurement Initiative
• Shared Corporate Services
• Accounting to Reporting Process Optimization
• Corporate Performance Metrics

Business Initiatives
Vision and Mission
Strategy and Plan
Goals and Objectives
Change Management
MDM initiatives are means to realize well defined
business strategies and objectives
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Business Strategy Alignment
DESIGN
Business Initiative
Business Initiative
Business Initiative
DEPLOYMENT
Business Initiative
Business Initiative
RESULTS
Business Initiative
OPERATION
Master Data Requirements
Portfolio Management Governance
Process Data Standards
MDM initiatives are intended to provide a
holistic approach to aligning and managing master
data requirements across the enterprise
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Aligning Program Scope with Business Objectives
Define MDM program scope and program success
metrics based on the intended business results of
your business initiatives
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Aligning Program Scope with Business Objectives
(cont.)
For both internal and extended end-to-end
business processes
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Defining a Business Case for MDM
The business case of MDM has to be inextricably
linked to the full realization of benefits
associated with your business initiatives
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Defining a Business Case for MDM (cont.)

• In addition to linking the business case for MDM
  to your strategic initiatives, you can also
  indentify specific benefits MDM can contribute in
  the following areas
• Operations
• Opportunity to streamline day-to-day operations
• Opportunity to reduce costs
• Opportunity to increase revenue
• Better and faster decision making
• Through better visibility to business situations
  and events
• Compliance
• Ability to better meet increasingly stringent
  regulations
• Opportunity to reduce costs of compliance

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Other MDM Program Definition Recommendations

• Clearly and completely define your source systems
• Conduct a data quality assessment early!
• Design a solution that will meet your long term
  strategic needs but implement a tactical MDM
  pilot intended to fix or improve a specific
  critical process
• Ensure your MDM initiative is executed by a
  cross-functional team representing all impacted
  business and IT stakeholders
• Ensure your MDM initiative is actively sponsored
  by senior executive management

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Be Sure to Leverage the Applicable Industry
StandardsIn Your Design

• ISA
• GS1 US BarCodes and eCom
• RosettaNet
• SCOR Supply Chain Council
• GS1 EPCglobal North America
• United Nations Standard Products and Services
  Code (UNSPSC)

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What Well Cover

• Positioning the business context and benefits of
  MDM
• Defining MDM and reviewing the MDM program
  roadmap
• Aligning MDM with your companys business
  objectives
• Designing the right data governance model
• Walking through a complete MDM solution
  architecture
• Wrap-up

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Data Governance Why Is This Such a Key Issue?

• Prior to the advent of enterprise application
  consolidation and data warehousing projects,
  accountability and ownership of master data was
  pretty clearly defined

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Data Governance Why Is This Such a Key Issue?
(cont.)

• With the propagation of enterprise applications
  such as SAP ERP, SAP CRM, and SAP SCM, composite
  applications, and service-oriented architectures,
  companies need to establish data governance teams
  charged with resolving data conflicts that cross
  organizational boundaries

Legal Entity A
Legal Entity D
Legal Entity B
Legal Entity C
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Data Governance Model Decentralized
Business Users

• No dedicated master data management organization
• Business users are responsible for maintaining
  master data based on established data standards
  and procedures

MDM
ERP
PLM
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Data Governance Model Centralized
Business Users
Central Master Data COE

• All master data management activities are
  performed by a central organization
• Business users place master data create and
  change requests

MDM
ERP
PLM
COE Center of Excellence
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Data Governance Model Federated
Central MDM coordination with admin.
responsibilities being distributed to several
local authorities
Global Level
Regional or Bus. Unit or Functional Level
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Data Governance Model How to Decide Whats Right
for You

• One model does not fit all master data objects
• You have to align the data governance model to
  your business objectives

Region
AP
Application
EMEA
Amer
Initiative
SAP BW
SAP NetWeaver BI
SAPCRM
Order-To-Cash
SAP PLM
Product Dev.
SAP SCM
Supply Chain
SAP ERP
Procurement
Centralize when it makes sense and decentralize
when it makes sense!!
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What Well Cover

• Positioning the business context and benefits of
  MDM
• Defining MDM and reviewing the MDM program
  roadmap
• Aligning MDM with your companys business
  objectives
• Designing the right data governance model
• Walking through a complete MDM solution
  architecture
• Wrap-up

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The Anatomy of a Complete SAP NetWeaver MDM
Solution
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Best Practice Follow a Rigorous ETL Process
Perform all data filtering, translation, and
formatting in one place
Import all rows and all columns!
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Why Are Data Governance Tools So Important?

• Illustration SAP Material Master Creation How
  many screens?

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E.g., A Manufactured Finished Good Material
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Why Are Data Governance Tools So Important?
(cont.)

• Illustration SAP Material Master Creation How
  many participants?

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Why Are Data Governance Tools So Important?
(cont.)
SAP Material Master Creation Without Data
Governance Tools
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Why Are Data Governance Tools So Important?
(cont.)

• SAP Material Master Creation With Data
  Governance Tools
• Active data governance tools are designed to
• Shield the complexity of the underlying
  application
• Provide a more applicable role and task framework
• Automate key process tasks and overall workflow
• Deliver predictable and repeatable results

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Advances in Data Governance Solutions
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Passive Data Governance Tools
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Source BackOffice Associates
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Active Data Governance Tools
Source BackOffice Associates
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What Well Cover

• Positioning the business context and benefits of
  MDM
• Defining MDM and reviewing the MDM program
  roadmap
• Aligning MDM with your companys business
  objectives
• Designing the right data governance model
• Walking through a complete MDM solution
  architecture
• Wrap-up

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7 Key Points to Take Home

• Master Data Management (MDM) is an essential
  prerequisite to realizing the full benefits of
  other enterprise business and IT initiatives
• MDM establishes the capabilities required to
  produce information of high quality and
  consistency to make all enterprise applications
  work seamlessly thus enabling the best business
  decisions and delivering maximum business value
• MDM is not just about technology MDM should be
  thought about as a holistic solution comprised of
  information standards, standard processes, formal
  governance, and system tools
• An MDM program needs to be defined in alignment
  with business strategies and objectives
• The primary business case for MDM should be
  linked to the business initiatives it enables

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7 Key Points to Take Home (cont.)

• Design a solution that will meet your long term
  strategic needs but implement a tactical MDM
  pilot intended to fix or improve a specific
  critical process
• Ensure your MDM initiative is executed by a
  cross-functional team representing all impacted
  business and IT stakeholders and that is actively
  sponsored by senior executive management
• Define your data governance model in alignment
  with business strategies and objectives
• Centralize when it makes sense and decentralize
  when it makes sense!
• A complete MDM solution needs to include a data
  migration (ETL) tool as well as active/passive
  data governance tools

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The GROM/BackOffice Partnership

• Aligned Approach
• Methodology
• Roles Responsibilities
• Governance
• Architecture

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Resources

• www.sdn.sap.com/irj/sdn/nw-mdm
• SAP Developer Network (SDN) informational
  resources for SAP NetWeaver Master Data
  Management
• www.uc-council.org/
• GS1 US Inc. is a not-for-profit organization
  dedicated to the adoption and implementation of
  standards-based, global supply chain solutions
• www.aberdeen.com/
• AberdeenGroup is a leading provider of fact-based
  research focused on the global technology-driven
  value chain
• www.datagarage.net/
• Official website of BackOffice Associates, LLC,
  leader in SAP data quality, data migration and
  data governance solutions
• Data migration and data governance white papers

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Your Turn!
How to contact me Jeff Clark jclark_at_grom.com
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