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MDM: Realizing the Same Benefits through Different Implementations

Initiate Systems, Master Data Management, October 2008

By Dr. Scott Schumacher

 

In a world where acronyms seemingly spring from thin air, MDM (master data management) has evolved from being just another acronym into a necessary business solution for industries such as healthcare, financial services, hospitality, public safety, retail and technology. MDM addresses problems that increasingly plague businesses as they struggle to manage ever-growing silos of customer data – problems such as data integrity, customer service issues and missed revenue opportunities.

To many businesses, data can be both a blessing and a curse. Data provides an opportunity to better understand customers and improve service and revenue opportunities, yet data is costly to integrate and difficult to manage. Nearly every business has customer data scattered across multiple databases – for members, call centers, online access, financial tracking and more. Each database often stores data in its own distinct format, which can be different from the format of the same data located in other databases.

These problems are compounded through mergers and acquisitions, as well as when new customers are added or divested. Additionally, as online accessibility has increased, so too has the ability for existing customers to create new profiles that may duplicate existing records. Companies know that there is overlapping and incomplete data, but most have been largely unable to find a solution to this problem at a cost they can afford. The result is lost revenue, missed cross-sell and up-sell opportunities, inadequate customer service and inaccurate business analytics. An incomplete customer view becomes increasingly problematic as customers grow to expect more from the companies with which they do business.

A Look Back

In the late ‘90s, complex customer relationship management (CRM) systems were developed to extract and consolidate customer data from company databases and centralize it. While well-intentioned, CRM created its own array of problems. These systems required very complex infrastructures and architectures, and featured technology that was unable to keep up with the pace of constantly shifting business processes, changing competitive pressure, and ongoing acquisitions, divestments and upgrades that continually altered customer data. The resulting CRM outcomes rarely delivered on their promised ROI.

Some of the reasons for CRM shortcomings were based on its own inflexibility in determining how customer relationships could be managed. The CRM often could not present a single view of a customer because the system determined how that information was managed – not the business.

MDM addresses this by combining a complete, accurate real-time view of customer data with flexibility not inherent in CRM systems. MDM, therefore, provides a data foundation for CRM and other customer relationship initiatives, while allowing each business to manage its customer relationships uniquely.

MDM at Work

MDM enables and integrates the processes that manage customer data, while matching and linking records across systems. An MDM solution complements and extends existing systems and processes, allowing an organization to take advantage of its customer-facing interactions. As a result, businesses can leverage previous capital expenditures on legacy systems while gaining a better and more complete view of their customers. This complete view can then help increase revenues and strengthen customer interactions.

For example, companies often interact with the same customer on the phone, in person, and via a website. For a large company that sells several different products, this often leads to cases where a customer will have three or four (or more) individual records in a system, each perhaps with different credit card numbers, privacy preferences or contact details tied to a product purchase.

In this scenario, when a customer calls for support, an MDM system matches and links all records to present a complete, integrated picture of all products purchased and the customer’s entire relationship with the company. This enables the person answering the phone to offer the appropriate support while also leveraging relevant cross-sell and up-sell opportunities. To entice customers to make future purchases, a call center representative could also offer discounts on related products or send an e-newsletter to the customer touting new versions and features. These examples represent how greater customer knowledge can tailor the relationship and result in more valuable benefits.

MDM Implementation: Flexibility in Choices

Because MDM is a technology that can be integrated into an existing architecture, customers can choose how – and how much – to integrate. There are three distinct styles of MDM, which address different organizational structures and requirements. These styles include registry, transaction and coexistence. Each is discussed in detail below, including the strengths and challenges of their approach.

Registry style
The registry style of MDM matches and links data from disparate systems to provide a single view of the pertinent data about an end user without requiring organizations to build a centralized data repository.

The registry style is often used when an organization has multiple lines of business (LOBs) using different systems to manage their data, or if an organization must abide by regulatory or business requirements that do not allow data to be centralized. Businesses that have gained new data sources through mergers and acquisitions often start their MDM experience with a registry style hub, sometimes with an eye toward moving to a transactional hub down the road. A registry hub offers organizations a way to start seeing some ROI from MDM without making a significant investment in re-engineering, and without significantly disrupting the individual lines-of-business.

In a registry hub, data are “owned” by each contributing source system or database and maintained at the line of business level. Registry systems do not require data to be standardized to a common format, which makes installation relatively simple. The software taps into existing data flows and processes while avoiding data re-modeling disagreements and complex architectures.

 

The most critical component of a registry system is its ability to maintain synchronized data between the hub and source systems. Synchronization can be achieved by mimicking or mirroring familiar source-system processes: real-time updates, message processing, nightly batch updates, etc. A registry hub can handle hundreds of disparate source systems that have widely varying methods of data capture and architecture with no standardization required.

A registry approach is the least intrusive MDM style, since data owners remain autonomous and retain the responsibility for the maintenance of their data.

Many registry-style hubs also support a federated model. In this scenario, the data maintained in external source systems can be retrieved on demand by an enterprise user. This could be for the purposes of creating an up-to-the-minute calculation of a customer’s liability, for example, by retrieving current account balances for that customer from all sources. A registry model offers companies the flexibility to pick and choose which databases should be included and the ability to add or remove additional sources as needs change over time.

Simplified installation for the registry model provides a rapid ROI at the enterprise level, and lets users achieve their biggest, most pressing goals: gaining a better understanding of their customers and enabling an array of analytics without disrupting LOB operations. With better intelligence, businesses can re-engineer their processes for further ROI, still with minimal disruption.

Transactional style
A transactional hub sits at the other end of the spectrum from a registry model. It is often seen as the “big bang” approach or the end-goal to an MDM project. Many companies start with a registry hub to realize rapid ROI, but slowly rework their business processes with the goal of moving data into a central transactional hub.

Large organizations with homogeneous systems and processes that have a need for near real-time analytic information about customers and their activities often deploy transactional systems. They are common in manufacturing, financial services and other industries where companies typically have a large number of suppliers and customers.

Organizations seeking a unified strategy and business plan use transactional hubs to create a centralized, single view of customers and relationships, which might also include organizational hierarchies and other critical customer information. Transactional hubs allow companies to easily analyze sales information and quickly react to changes in the market.

A transactional hub is created by integrating customer data from multiple sources and storing them in one centralized hub to create a single, master version of customer information for the enterprise. As a result, the hub presents the same consolidated view of a customer to all users, with no need to reconcile different types of information from different databases. Since there is one centralized ‘source of truth’ in a transactional hub, the data management requirements of LOB systems are reduced and the availability of enterprise-wide data for analytics is assured.

There are two main phases involved in deploying a transactional hub. The first is to centralize data into a single hub, which usually requires some sort of data integration activity along with harmonizing to a common customer data model. The second is to re-architect all systems or business processes that work with customer data so that each requests customer information from the transaction hub in the same way; each system or business process interacting with a transactional hub must also model customer data in the same way, and work with that data in the same format.

There are a number of benefits to a transactional hub, including:

·         the ability to enforce standards required to maintain enterprise-wide data quality, since there is a centralized single function in place to correct and update data

·         the ability to make data available with no latency to all business users and systems throughout the enterprise

·         streamlined support for business analytics. Because all customer data is centralized, integrated and available in one location, the need to get data from source systems is eliminated.

While the benefits of a transactional hub are attractive, organizations considering this type of MDM implementation must realize that a transactional hub requires extensive re-architecting and standardization of both data and processes. This may contribute to higher costs and significantly longer implementation times than the registry style.

Co-existence or hybrid style
The third type of MDM system, a co-existence hub, is a hybrid or mid-way point between a registry and transactional style. A co-existence hub rests on a centralized database but also matches and links records from other outside sources. This combination serves to harmonize data across sources to provide a central reference.

The centralized database often contains attributes that remain the same across systems - such as customer name and address - but links to other databases to supply information about products purchased or support calls. It retains the single place to go to get centralized customer information, one of the elements that makes a transactional hub so appealing, but also enables individual LOBs to retain ownership of their data and, as necessary, make sensitive data unavailable to the central hub.

Some organizations will choose a co-existence style so that an MDM system using a centralized repository can successfully maintain customer information, yet still allow certain source systems to maintain ownership of and use their own customer data, even though they are also providing customer information updates to the centralized MDM hub. This scenario is common in organizations that ideally want a centralized transactional style, but are growing through acquisition and thus need to bring new products and customers on board while supporting seamless and efficient merger activities.

A co-existence hub is often a transition point within a business’ MDM evolution. If an organization starts with a registry style hub and begins to see significant ROI, a co-existence hub allows for an easier migration to a transactional hub. To succeed with a co-existence model, businesses usually re-engineer some processes and then examine additional processes and data flows separately to make the necessary adjustments on their own timeline. A co- existence style also allows source systems to be added to the central hub as they are ready, rather than adding them all at once, which is the requirement of a pure transactional hub implementation.

Core capabilities essential to MDM success
As businesses create more data about customers and potential customers, they move farther from a single, complete view. Data silos traditionally prevented information about a customer in one database to be linked to information about the same customer in a second database. Master data management solves this problem by matching and linking records across databases to provide a single, complete view of a customer or prospect.

Although one business may opt to test ROI with a registry style implementation while another moves to a transactional hub approach from the beginning, the end results will be the same. Regardless of the style used, there are certain universal benefits that an MDM solution provides.

When choosing an MDM solution, make sure it provides the ability to:

  • Recognize the right customer. This is the core focus of an MDM implementation and is imperative to the project’s success. An MDM solution must be able to identify and accurately render all of the customer’s data, despite incorrect or incomplete data, in order to improve customer intelligence and analytics.
  • Deliver customer data, throughout the enterprise, in real time. An MDM solution that allows latency in data updates will fail to report a customer’s most recent transactions. To deliver the service that customers expect, real-time recognition is a must. MDM solutions must also allow for batch updates from certain legacy systems, such as a nightly update of newly invoiced customers.
  • Provide the flexibility to support all customer source systems, attributes and use cases. An MDM solution may support all systems currently in use, but may not be capable of supporting future systems. As needs evolve, different source systems will likely be added or upgraded and new data attributes may be required by legislation or best practice. An MDM system must have the flexibility to accommodate businesses as they grow and evolve, without excessive customization or painful data migrations, which can increase costs and implementation time.

The three styles of MDM each offer their own capabilities and advantages. When deciding which is best for your organization, consider your overall timeline and goals. If you want to test the MDM waters and prove ROI before going deeper, the registry style can provide you with a minimally disruptive way to improve your business intelligence and make valuable process changes. From there, a co-existence style hub can bridge the evolution towards a transactional hub that will provide a true customer master. In any case, an MDM solution vendor should have the experience and expertise to help your business provide a complete, real-time view of your customer or prospect on demand, enabling a wide variety of benefits that can help your business grow and thrive. The different approaches to MDM allow you to manage this evolution at your own pace, on a timeline that meshes with your strategic goals.

 

About the Author

Dr. Scott Schumacher serves as chief scientist at Initiate Systems where he is responsible for R&D of Initiate Systems’ matching algorithms. Initiate Systems, Inc. is the leading provider of MDM and enterprise master person index (EMPI) software for companies and government agencies that want to create the most complete, real-time views of people, households and organizations from data dispersed across multiple application systems and databases. For more information about Initiate Systems, please visit www.initiatesystems.com.

 

Technical Overview: Initiate Master Data Service™ Platform

 

Executive Summary:

Truly knowing – and trusting - your data empowers you to achieve an array of initiatives. Initiate Master Data Service enables enterprise-wide master data management (MDM) with several strengths, including:

·         High volume matching and linking via high performance data processing and scalable infrastructures

·         Integration through leading-edge middleware technologies

·         Tools that enable data stewardship, enterprise search, configuration and performance monitoring

 

White Paper: Laying the Foundation for Customer Data Integration

 

            Executive Summary:

Accurate and complete customer data helps increase revenues, improve profitability and optimize business processes. Customer data integration (CDI) emerged to meet these goals by delivering accurate customer views. Learn:

·         The evolution of CDI as an answer to CRM’s limitations

·         Three styles of CDI - transactional, registry and co-existence - and their strengths and uses

·         How to lay the foundation for a successful CDI implementation

 

Podcast: “Where to Start in Master Data Management”

 

Marty Moseley, Initiate Systems’ chief technology officer, encourages you to go after something that matters to your enterprise. In this segment, you’ll learn about some common questions you might ask while choosing an area for your first MDM deployment:

·         Identifying Outside Constraints such as Regulatory, Customer, or Supply Chain pressures

·         Identifying Areas of Cost or Risk that Impact your Business

·         Identifying Opportunities for doing something that shows value to a broad segment of your enterprise

 

 

admin @ December 7, 2008

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