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Analysis

Supplier Master Data - An Emerging Market?
Andy Hayler By: Andy Hayler, CEO, The Information Difference
Published: 12th May 2009
Copyright The Information Difference © 2009
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Master data management solutions have mostly evolved from the need of large organisations to better manage either customer data or product data, both of which tend to be in a poor state in most companies (a 2008 Information Difference study found that large companies had a median of six applications generating customer data, and nine applications generating product data; some companies had more than 100 competing systems). However master data goes beyond product and customer, including information such as location, organisation, financial information etc. One specific area that has emerged recently is companies specialising in dealing with supplier (or "vendor") data in particular. Now of course many generic MDM technologies are perfectly capable of handling supplier data; they may treat a supplier as a "party" and can treat it in a similar way to customer.

However, there are aspects of supplier data that mean that some more specific attention is required. Companies do not just want to know that they have a supplier, they may have an elaborate process to "on-board" a new supplier, including at least running a credit check, but perhaps also determining a deeper analysis of supplier risk, including geo-political risk. A spate of problems in the USA in the last year with product quality issues resulting from production being out-sourced to Asia means that supplier risk takes on an additional dimension. There are other specifics; in the USA there are certain regulations about dealing with "minority" owned businesses (such as Native Americans) e.g. a certain proportion of government business in some contracts maybe required to be given to such businesses.

One company specialising in this area of supplier data management in CVM Solutions, who have grown a base of over 350 large corporate customers by providing not just the technology to help deal with supplier data, but also data itself on suppliers, such as their level of risk or, put another, way, the trust level they have, based on how much spend they have with other large companies. CVM tracks 50 million suppliers and (like the giant D&B) its systems keep track of supplier spend and other relevant data. They sell the data itself, not just software, which gives them an advantage in situations where they may be competing with a more general purpose provider. Companies such as AT&T have used them to help with their supplier on-boarding process.

There are a few other companies appearing in this area also, such as Aravo, as well as offerings from more traditional portal vendors like Ariba, suggesting that a genuine market may be starting to appear. Just as Experian sell consumer credit data but also have a data quality software subsidiary (QAS), this combination of data + technology may be an appealing one to companies wanting to reduce risk by improving the quality of their supplier information.

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