Is master data management CRM’s secret sauce?

Experts are predicting big things for master data management (MDM) in the immediate future. While far from being a new kid on the block, its potential benefits at a time when organisations are drowning in data mean that it is in the right place at the right time.

As a result of this aligning of the stars, Gartner recently forecast that by 2014, 66% of Fortune 1000 organisations will have deployed two or more MDM solutions to support enterprise MDM strategies.

"MDM is not ‘nice to have’," explains John Radcliffe, research vice president at Gartner. "If tackled in the right way it can provide near term business value that plays into an organisation's new focus on cost efficiencies, risk management and regulatory compliance, while supporting growth and future transformative strategies."

The analyst estimates that within two years MDM could be significantly reducing data redundancy in organisations such that firms could be saving up to 80% of the costs associated with managing this data. But there’s more, because MDM could also have huge implications for CRM – and particularly so in light of its new iteration social CRM and the application of new sources of data that this heralds. And if recent history has taught us anything, it is that anything that can support social CRM is likely to catch the attention.

At this point, however, it is probably worth providing a quick recap because, as Radcliffe freely admits, MDM is not hugely familiar to the majority of people. In fact, if it is to reach the heady heights forecast by some, it will have to overcome the obstacle of awareness or, as Radcliffe puts it, "the curse of the three letter acronym".

"In some ways there is a lot of attention on MDM and there has been for the last five years – although not at the top of the three like Cloud or virtualisation," he explains. "But the term ‘MDM’ does have a problem when it comes to the business. If you went to a head of marketing or head of sales and mentioned MDM they would say ‘MD what?’ But if you asked them if they want a single view of the customer or want to drive more sales and do cross-marketing and cross-selling and improve customer retention and customer experience – all the classic CRM business drivers – they would say that is exactly what they want to do. So in a way, let’s not call it ‘MDM’ – let’s call it the customer experience improvement programme, or customer onboarding process improvement programme. But underneath it you have this MDM capability being put in."

The key, suggests Radcliffe, is to understand that MDM is very much business-oriented, rather than just about "bits, bytes and data models". To demonstrate this, he points to the way that CRM systems interact with other systems in the organisation in the operational side of the house.

"People are increasingly interested in end-to-end processes, or end-to-end customer experience in the case of CRM, and you try to connect all these different systems together, buying some wonderful tools for BPM or having a fantastic SOA vision. But you reach a point where you find out it doesn’t connect together in the way you’d hope because the data underneath is just so totally inconsistent and fragmented. You need to sort out the data problem and that is where MDM comes in."

In many businesses, a single perfect enterprise data warehouse does not exist, with the organisation instead home to a multitude of data marts which are inconsistent. MDM seeks to provide an accurate and consistent core of data, whether that is customer data, product data, supplier data or financial information.

"It is useful to have a single view of the customer if you are doing a variety of regulatory things in financial services. It could also increase efficiency, optimising costs – so for instance with customer data, if you are a telco doing customer onboarding, you sell something and that would go through an onboarding process and a provisioning process to ensure that you have your line and you’re connected and then you are billed for it; if you can ensure that is a clean end-to-end process then you take cost out of the process. And then of course MDM capability also enables growth with many of the CRM things like cross-sell, up-sell and provision of a better customer experience."

The emergence of the social channel as a plentiful resource of data is also likely to further establish MDM as a foundation for CRM, as businesses grapple with the complexity and volume of this new source. While businesses may be keen to start bringing social data from the likes of Facebook into the single view of the customer, identifying someone by their Twitter handle, for instance, might not be easy. Similarly, people may have multiple personas.

"If you have a hub and spoke architecture in your organisation with an MDM hub in the middle and a variety of systems – CRM, ERP, core banking – as your spokes, the hub is making sense out of all of it, with a matching engine at the heart of it that says ‘J Radcliffe’ and ‘John Radcliffe’ have the same address and date of birth so are the same person. You can then merge it together. So to create this much-vaunted single view of the customer, the first thing you have to do is identify who that person or company is so you can start putting that data together."

He adds: "Increasingly, in order to do social CRM, you will need to bring that together with the existing internal data sources and the thing about MDM is that firstly it has that matching technology that can help identify and then it also provides the consistent place where you can link all this together. So MDM will continue to be the foundation – including for social CRM – for how that integrates with the other data in the organisation."

But just as with CRM, organisations will need to approach MDM as more than merely technology – in order to succeed with MDM, businesses need to consider the people and processes before they start investing in the IT.

"One thing we’re very clear on is that MDM is a discipline and not just a technology," emphasises Radcliffe. "A lot of the challenges are nothing to do with technology and integration, a lot of the biggest challenges are to do with internal company politics – like having conflict over who owns the data - and overcoming that with things like governance. In the same way we say CRM is a business strategy enabled by technology, MDM is a discipline for ensuring the quality of your core data, customer data included, and it could also be product data and supplier data or asset data."

For this reason, just as Gartner created the eight building blocks of CRM some 10 years ago (which Radcliffe himself was involved with), so the research house also created the seven building blocks of MDM to aid organisations with their MDM projects.

"The reason for the eight building blocks of CRM was that we found people were just trying to implement technology and failing miserably because they weren’t bringing the business along and they weren’t thinking about the processes and they didn’t have the metrics right and all those kinds of things. So it was an attempt to stop people thinking about it just in terms of technology. And the seven building blocks of MDM is similar.

"The seventh block is technology but before that you’ve got to sort out the vision and strategy and that needs to be enabling the business strategy and it is not just about having a wonderful architecture strategy, it is about enabling business things. You have got to have metrics of some sort, you have to have a business case that is measurable and connected to real things that the business people are interested in and you have to have things like governance frameworks and roles and responsibilities for people like data stewards as well as processes for managing the data around its lifecycle and so on. So you have to think about all those things. We enable it with technology but don’t just rush out and evaluate vendors and then choose one and start implementing it if you haven’t sorted out these other things as you will fail."