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Master data management to grow


Johannesburg, 13 Dec 2010
Read time 5min 30sec

Worldwide master data management (MDM) software revenue will reach $1.5 billion in 2010, a 14% increase from 2009, according to Gartner.

The research firm says MDM is being adopted to support numerous business and IT efforts that deliver revenue, service, agility and risk management improvement, cost reduction and integration simplification.

“MDM is a technology-enabled business discipline in which business and IT organisations work together to ensure the uniformity, accuracy, stewardship, semantic consistency and accountability of the organisation's official, shared master data assets,” says John Radcliffe, research vice-president at Gartner.

“Today most organisations juggle multiple sets of business and data applications across corporate, regional and local systems.”

He continues to say customers are demanding faster and more complex responses from organisations, leading to an inconsistency that hinders the organisation's ability to measure and move within the market.

“With MDM, CIOs can create a unified view of existing data, leading to greater enterprise agility, simplified integration and, ultimately, improved profitability.”

As part of its Predicts 2011 body of research, Gartner has compiled a number of key MDM predictions to help organisations plan for 2011 and beyond.

MDM market growth

From 2009 through 2014, MDM software markets will grow at a compound annual growth rate of 18%, from $1.3 billion to $2.9 billion, the firm says.

“MDM is a fast growing software market that is attracting a lot of attention, and it continued to exhibit double-digit growth, even through the worst of the global recession.”

The emerging master data domains [for example], supplier, human resource, asset and location, continue to exhibit even more rapid growth from a smaller base,” according to the firm.

MDM growth is being driven by niche providers, as well as established players, and Gartner foresees a larger, more unified MDM software market reaching nearly $3 billion by 2014.

Gartner points out that the continued growth in the established and emerging segments of the MDM market provides a major business opportunity for software and service providers that specialise in these areas, and it will continue to attract new entrants. The rapid growth of the MDM market means that skilled MDM resources are in great demand among software and service providers.

“As a result, end-user organisations will struggle to adequately resource their MDM programmes.”

Gartner advises end-user organisations to weigh the advantages of best-of-breed MDM software vendors (in terms of functionality, data domain and vertical-industry expertise) versus the greater long-term viability risk.

“Organisations should invest in MDM technologies at a time that is consistent with their technology adoption profile,” the firm says.

Implementation

By 2015, Gartner predicts 10% of packaged MDM implementations will be delivered as software-as-a-service in the public cloud.

“MDM today is typically implemented on-premises. This is partly because MDM software providers have, so far, not created specific MDM-as-a-service products that are scalable and elastic or multitenanted, and also because there is reluctance in many organisations to place such important, heavily shared data as master data outside the firewall,” says Gartner.

However, the research shows, on-premises MDM solutions are increasingly being integrated with SaaS applications, and there are examples of MDM solutions already being implemented in the public cloud.

Gartner says MDM software vendors will seek to leverage the cloud-computing value proposition and ramp up their marketing of MDM-as-a-service, in defined scenarios, and they will also put development focus on MDM solutions that conform better with the stricter definition of cloud computing (i.e., scalable, elastic and with a shared infrastructure).

“Once organisations gain more experience with the public cloud and private cloud, the early adopters will seek to gain the same benefits with a wider range of software, including packaged MDM solutions.”

Gartner advises organisations to consider implementing MDM solutions in the cloud if they don't have the skills in-house, if a subscription model is more acceptable than a capital expense, and if the planned MDM capability is restricted in scope to mainly one functional group within the organisation, or is initiative-specific and a consolidation-style implementation mainly used for analysis and reporting purposes.

Initiating MDM

Through 2015, 66% of organisations that initiate an MDM programme will struggle to demonstrate the business value of MDM, the research illustrates.

It also shows that if IT departments initiate an MDM initiative, they often struggle to get the business on board and to demonstrate the business value of MDM, particularly if there are no business-process-oriented metrics and financial quantifications to define and measure success.

“MDM needs to align with the business vision and strategy, and will require executive business sponsorship, strong involvement of business stakeholders and change management.”

“It's not just an IT project. The business needs to take responsibility and be accountable for master data governance and stewardship,” says Radcliffe.

“Unless organisations take a holistic, business-driven approach to MDM, addressing governance and metrics requirements in particular, they risk having their MDM programmes fail.”

Internal politics won't be brought under control without a governance framework, he says, and without a metrics structure, there will be no way of objectively defining what success looks like and measuring whether or not it has been achieved.

Leveraging MDM governance

Gartner's advice is to leverage 'Gartner's Seven Building Blocks of MDM' framework to ensure that the MDM programme is business-driven and holistic. Businesses should also create an MDM governance framework, an organisational structure, and a set of roles and responsibilities that fits the needs of the MDM strategy and the politics of the organisation.

“In our annual predictions for MDM, we've looked at various challenges that organisations face including the need to demonstrate MDM's business value, the lack of effective multi-domain MDM functionality in a single product, and the continued strong growth in the MDM software market,” says Andrew White, research vice-president at Gartner.

“Organisations should leverage Gartner's predictions to build their MDM business cases. They need to ensure that their MDM programmes are on a sound, business-oriented footing and to be realistic when dealing with MDM vendors that claim to do everything with a single solution.”

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