Navigating the Business Case for an MDM Implementation
One of the most challenging aspects of a Master Data Management (MDM) Project is, surprisingly, not part of the implementation! Over the years of helping Clients to create insights from their data, one of the most challenging activities that I have run into in my career is developing the business case for the solution and getting buy-in from project stakeholders. This is not only important to secure funding for the project, but also to maintain momentum and support for the program. Part of the complexity for developing a business case for an MDM solution stems from the fact that, unlike your more typical technology projects, MDM implementations sit at the intersection of business, operations, compliance, and technology and require a large number of stakeholders to participate as well as a broad set of sponsors. As usual, we can extract wisdom from this type of project to apply to other projects, in particular, large cross organizational projects and digital transformation projects.
Key Decisions in MDM Implementation
By their very nature, Master Data Management implementations require key decisions on enterprise data that span multiple regions and departments. These key decisions include, but are not limited to, data ownership, business rules, data quality standards, and the appropriate flow of this data across the systems landscape. Many businesses lack the robust Data Governance required to make these decisions well. The data types involved include core enterprise data in one or more of the following domains: product or services data, customer data, employee data, vendor data, and location data. All of these data types are touched by critical business functions – ergo a large number of stakeholders are required.
Further complicating things is that articulating business benefits related to higher data quality, the key outcome of an MDM implementation, is difficult. Data, in and of itself, has no value. However, its value emerges when you evaluate the cost of status quo – the impact poorly managed data has on an organization.
- What is the opportunity cost of incomplete or inaccurate data?
- What is the value of having improved data?
- What is the value of this better data as it flows into different systems across the enterprise and is utilized internally and externally?
- What are the types of costs and value that should be considered?
In order to gain executive support and sponsorship, focus should be placed on the business outcomes rather than the data itself.
Developing a Strategic MDM Value Proposition
It is imperative that a clear value proposition be defined as one embarks on an MDM Journey – and, yes, it will be a journey. To best articulate the value, one should start with why the company should solve the problems that an MDM solution is intended to solve. This “why” should have enduring quality beyond the current time period. Regulatory compliance, long-term strategic success, accomplishing a challenging social issue are all the caliber of candidates we’re seeking. It is much easier to rally support and sponsorship when the business case is based on why something should be done rather than the details of execution.
To this end, MDM journey success should be evaluated on more than the initial return on investment directly associated with a data repository as that will tend to be low given the high implementation costs. In fact, the real value of MDM is to provide increased responsiveness to business priorities. This is achieved by delivering foundational enterprise data to users, customers, partners, and other individuals inside or outside of the organization who can make improved decisions because of it. This requires investment in data interfaces as well as the required enhancements to legacy systems to build the capabilities which will enable them to consume the new, high-quality data and to deliver on the promised value. When building the business case for an MDM solution, care should be taken to clearly differentiate between the benefits that result from the MDM implementation proper, and those that are enabled by the enhanced capabilities and improved data in downstream systems and/or processes.
Evaluating MDM Success
In terms of Return on Investment (ROI), when determining the financial value likely to be delivered by an MDM solution, four broad categories ought to be considered:
- Revenue Generation
- Productivity Improvements
- Risk Mitigation
- Cost Avoidance
In many cases, there are competing projects pursuing the same benefits – ensure the appropriate sponsors are identified and agree to apportion benefits to the MDM implementation project accordingly.
In terms of the costs for the MDM implementation, care should be taken to include the costs of all investments required to generate the defined benefits. The MDM implementation itself, could represent as much as half or more of the overall cost of the project, but a significantly lower percentage of the benefits. While phased implementation approaches are the recommended way to proceed, care should be taken to ensure that costs and benefits of each phase are clearly understood. Early phases will be quite expensive and won’t deliver as much value; however, later phases will be less expensive and deliver much greater value. Rigor in gathering this financial information during the planning and delivery will ensure future projects will be given careful consideration based on track record.
MDM implementation costs to consider include:
- MDM Technology-Related Costs
- Integration with Source Systems
- Third party data sources
- Data Clean-up
- Business Rule Development
- Operational processes related to probable and possible match queues
- Data Governance Framework
Connect with Kenway for Business Case Development and MDM Assessment
In the end, once the MDM solution is implemented, the demonstrated benefits realized by the project rarely exactly tie to those outlined at the outset. It is important that benefits be reassessed and communicated throughout the project as the business will not stand idle while MDM is implemented.
Creating an MDM business case can be challenging, but by sharing a clear and compelling value proposition, focusing on real business value, and comparing those to the full breadth of costs, you can showcase the benefit that an MDM implementation can bring to your organization today, and into the future!
If you need help developing a business case for your needs or providing a current state assessment of your MDM environment, connect with one of our consultants to learn more.