Valuable Information on Valuable Information
One of the most difficult aspects of a Master Data Management (MDM) Project is, surprisingly, not part of the implementation! One of the most challenging activities that I have run into in my career is developing the business case for the solution and effectively portraying it to the project stakeholders. This is not only important to get the project going, but also to maintain momentum throughout its life. 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 involve a large number of stakeholders across the whole enterprise and require a broad set of sponsors. Some, or all, the lessons learned from the development of an MDM business case may well be applicable to other projects, so it’s worth exploring some of these lessons. In particular, large cross organizational projects and/or technology modernization projects face some of the same challenges.
Why are MDM business cases so complex, you ask? 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, data governance, and the appropriate flow of this data across the systems landscape. The data types involved typically 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 most business functions – ergo a large number of stakeholders are often required.
Further complicating things is the fact that developing business benefits related to higher data quality, the key outcome of an MDM implementation, is difficult. Data, in and of itself, is not very interesting or exciting to most executives. However, its value becomes clear when you take into consideration the impact poorly managed data has on an organization. What is the cost of having incomplete or inaccurate data? What is the value of having better data? What is the value of this better data as it flows into different systems across the enterprise and is utilized by different people internally and externally? What are the types of costs and value that should be considered? In order to garner executive support and sponsorship, focus should be placed on the business outcomes rather than the data itself.
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. It is also much easier to rally support and sponsorship when the business case is based on why something should be done rather than only focusing on what will be done and how it will be done.
To this end, MDM journeys should be evaluated on more than the initial return on investment directly associated with a data repository which 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 enterprise data to users, customers, partners, and other individuals inside or outside of the organization who can make smarter and better 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.
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 for 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 any investment required to generate all 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.
MDM implementation costs to consider include:
- MDM Technology-Related Costs
- Integration with Source Systems
- Data Clean-up
- Business Rule Development
- Data Governance Framework
In the end, once the MDM solution is implemented, the actual 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 still while the MDM is implemented.
Creating an MDM business case can be challenging, but by sharing a clear value proposition, focusing on the real 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! As part of Kenway’s MDM service, we can help you develop a business case for your project or provide a current state assessment of your MDM environment. Give us a call… we will be happy to help you out.
Kenway Consulting can be reached via phone at (888) 9-KENWAY (888-953-6929) or via email at firstname.lastname@example.org.