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Analysis

Growing Adoption of Master Data Management by Business?
Dave Waddington By: Dr Dave Waddington, Senior VP and Head of Research, The Information Difference
Published: 23rd June 2008
Copyright The Information Difference © 2008
Logo for The Information Difference

Master Data is data that is shared between computer systems, such as customer, product, asset, location or contract. The management of this data is known as master data management (MDM). The mounting pressure on businesses to increase fiscal data compliance, accountability and transparency has driven a growing number of organizations to put a tentative toe into the waters of MDM. This has in part been fuelled by the explosion of publications in this area aimed at convincing businesses that the route to consistent business information lies in effective management of their master data. There is, however, scant concrete information relating to the motivation and adoption of MDM by business. Against this background, The Information Difference has conducted a survey in April 2008 into the take-up and adoption of master data management (MDM) software. Data was collected for the survey from 112 participants with 65% representing businesses with revenues in excess of USD 1 billion. Some 56% were from North America and 24% from Europe. The purpose of the study was to gain understanding of amongst other factors the level of take up, the business motivation and the preferred approach to implementation.

What is the Take-up of MDM?

In terms of adoption we found that 29% of respondents have an MDM project in progress. 19% of companies responding to the survey have no active MDM project at present. 25% have completed an MDM project, and half of those now have MDM as an established, ongoing activity. 8% had tried an MDM project but abandoned it. 17% have MDM projects planned within the next two years and 2% have no plans.

Is There a Business Case?
Costs Diagram
There is clearly a strong business case for master data. The cost of incorrect master data is large, with only 14% of companies reporting that costs directly attributable to poor master data are less than USD 1 million per year. 21% of companies believe it costs them USD 10 – USD 100 million per year, with 6% participants reckoning that annual costs were over USD 50 million. The root cause of these costs can be seen since just 1% of companies had a unified source for their master data. The median number of systems holding customer data was six and for product data was nine, but 13% of companies have over 100 systems storing customer data, and 11% have over 100 systems storing product data.

What is the Preferred Approach to Implementation?

Of those planning to implement an MDM system, 47% intend to buy a package, 18% will build in-house and the rest are not sure. However 59% would prefer a unified platform that can deal with all types of master data ("cross domain") compared to just 14% who preferred hubs that specialize in specific data types such as customer and product.

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