Conference keynote aaron zornes (san francisco 2010) v1 print

MDM 2.0 Scenario: The Convergence of

MDM & Data Governance

5th Annual

MDM SUMMIT San Francisco 2010 Chairman’s Keynote

Aaron ZornesChief Research Officer

The MDM Institute [email protected] +1 650.743.2278

© 2010 The MDM Institute The-MDM-Institute.com

“Thank You” to Our Sponsors


Enterprise Master Data Management1

Market Review & Forecast

Forrester “MDM anticipated growth to

over US$2.2B by 2010” Gartner

“MDM for customer master will hit ~ US$1B in S/W revenue by 2012”

“With PIM & other domains, it could be over US$2B”

IDC “Market for w/w MDM

Software & Services to US$7.9 billion in 2009, with CAG of 16.6% over 2006-2011 forecast period”

MDM Institute “Overall MDM market

(customer & product hubs, plus systems implementation services) to grow to US$2 billion by 2012”

Clearly, enterprise MDM is a major IT initiative being undertaken by large number

of market-leading Global 5000 size enterprises


Recent Uptake of MDM Solutions

Global 5000 Shanghai GM Savings Bank

(Sperbank) Shoppers Drug

Mart State Bank of

India State of Illinois TDK Telecom Egypt Telstra VISA Volkswagen Walgreens Wendy’s Yellow Book United Airlines

800-FLOWERS Bank Central Asia Bank Negara

Indonesia Bank of Commerce Bank Tenaga Negara Barclays Belgacom BONY Mellon Cadbury Carrefour Clear Channel Cummins Daimler DHL Dubai World FedEx Fidelity

Ford Motor Co. Genworth HBOS/LLTSB JC Penney Johnson Controls Marriott MD Anderson

Cancer Center Millennium

Pharmaceuticals Mt. Sinai Hospital National Bank of

Canada Network Rail Norway Post Pepsi Americas SaskTel


Key MDM Issues for 2010-11

• Provisioning substantive amount of “master data governance”

• Partnering with a faithful service provider

• Betting on odds-on favorite MDM solution (brand/architecture/platform)

MDM 2.0 scenario: convergence of MDM & data governance


MDM Milestones

Market maturation

Market momentum

Market consolidation

Budgets/skills

Data governance

MDM convergence

Architecture & data models

Identity resolution

Party data quality

Enterprise search/semantics

Strategic planning assumptions to assist IT organizations & vendors in coping with flux & churn of emerging MDM vendor landscape



Provisioning substantive “master data governance”

Partnering with a faithful service provider Betting on odds-on favorite MDM solution

(brand/architecture/platform)


Master Data Governance Challenges

Break down functional & organizational stovepipes

Integrate processes across the enterprise – including corporate technology, all LOBs, functional areas & geographic regions

Engage all levels of management & adjudicate between centralized vs. decentralized data stewardship

Evolve key stakeholders from “data ownership” to “data stewardship”

Overcome lack of process integration in current “DG for MDM” offeringsBased on recognition of issues at hand, an improving

economy, & increasing regulatory requirements, businesses are now recognizing oppty to take more strategic view of

enterprise data governance


Data GovernanceStrategic Planning Assumption

During 2010, most enterprises will struggle with cross-enterprise DG scope as they initially focus on customer, vendor, or product; enterprise-level DG that includes entire master data lifecycle will be mandated as core phase 0/1 deliverable of large-scale MDM projects

Through 2011, major SIs & MDM boutiques will focus on productizing DG frameworks while MDM software providers struggle to link governance process with process hub technologies; concurrently G5000 enterprises struggle to evolve enterprise DG in cost-effective & practical way from “passive” to “active” DG modes

By 2012-13, vendor MDM solutions will finally move from “passive-aggressive DG” mode to “active DG”

MDM MILESTONE

Data governance will remain problematic during 2010-11


“Master Data Governance” Market – Chaos or Confusion?

Data governance (DG) is vital to success of MDM projects – both initially & ongoing

During 2010-11, Global 5000 enterprises will increasingly mandate that 'no MDM program be funded without pre-requisite DG framework’

Moreover, in late 2010 market-leading vendors will launch own active DG frameworks to take back lucrative DG business currently defaulting to SIs

Corollary is few MDM vendors will be able to market their solutions without integrated active DG capability – one that embeds a workflow engine with metadata support for both structured & unstructured info

Where will that leave the SIs – as partners, competitors or both?

Given lack of DG solutions from MDM platform vendors, SIs have had market largely to themselves; 2010 operative word

= “coop-etition”



MDM Institute’s Data Governance Maturity Model

“Anarchy” (basic) – Application-centric approach; meets business needs only on project-specific basis

“Feudalism” (foundational) – IT policy-driven standardization on technology & methods; common usage of tools & procedures across projects

“Monarchy” (advanced) – business-driven, rationalized data with data & metadata actively shared in production across sources

“Federalism” (distinctive) – SOA (modular components), integrated view of compliance requirements, formalized organization with defined roles & responsibilities, clearly defined metrics, iterative learning cycle

0%

10%

20%

30%

40%

50%

Basic Foundational Advanced Distinctive

FSP

Non-FSP

Source: MDM Institute survey of 100+ Global 5000 IT organizations

Fin Svc providers are leading the way – in spend & discipline; technology can only achieve so much as organization must be

prepared to continually adapt & treat data as enterprise asset above project level; data needs to be an asset not a

liability.


Rosetta Stone of DG Maturity Models

Stage Name

I Anarchy

II Feudalism

III Monarchy

IV Federalism

The MDM Institute

Common inquiry is “How do I get from Level 2 to Level 4 or 5?”

IBM Data Governance Council

DataFlux/SAS Gartner Research

Stage Name

I Initial

II Managed

III Defined

IV Quantitatively Managed

V Optimizing

Stage Name

1 Undisciplined

2 Reactive

3 Proactive

4 Governed

Stage Name

0 Unaware

1 Aware

2 Reactive

3 Proactive

4 Managed

5 Effective


Master Data Governance “Top 10” Evaluation Criteria

1. Methodology2. Data exploration/profiling3. Model management4. Rules management5. Decision rights

management6. MDM hub integration7. Enterprise application

integration8. E2E data lifecycle support 9. Integrated metrics10. Vendor integrity/viability

“Master Data Governance” fracas will escalate as MDM vendors rush to usurp SIs; during 2010-11, MDM vendors

increasingly unable to sell MDM w/out integrated DG


Overall Critique of Existing DG Capabilities

Mismatch of applying project-oriented methodology rather than asset-focused methodology

Methodologies missing the asset aspect of data … cost, decaying value, ROI for cleansing data, etc.

Frameworks not addressing “community” aspect of shared asset development – e.g. wikis for global corporate business vocabulary, etc.

Current DG solutions do not provide systemic rigor nor E2E lifecycle support

“(Integrated) Master Data Governance” market is a vacuum … nature hates a vacuum


Master Data GovernanceBottom Line

Don’t settle for “passive” / downstream data governance

Demand “active” / upstream enterprise data governance

Don’t expect “data governance maturity assessments” to provide road map out of anarchy

Realize that “data steward consoles” are more than demo-ware for headless apps … but substantially less than enterprise data governance

Acknowledge that vendor viability matters Prepare to spend US$250-500K for initial DG

solution Enterprise data governance & MDM are

codependent/interdependent … invest upfront in data governance for sustainability & ROI of MDM programs …

“go early, go governance”



Provisioning substantive “master data governance”

Partnering with a faithful service provider

Betting on odds-on favorite MDM solution (brand/architecture/platform)


Budgets & SkillsStrategic Planning Assumption

During 2010, G5000 size enterprises will spend US$1M for MDM software, with addt’l US$3-4M for SI services; Global Service Providers will operate under this price floor by applying highly-customized, labor intensive frameworks & related accelerators

Throughout 2011, skill shortages will greatly inflame project costs as demand for data stewards, enterprise data architects, & individuals with data governance experience outstrip market supply; concurrently, SIs will fill void in classic style by baiting & switching veterans for rookies

By 2012-13, market will stabilize as enterprises react by training & protecting their own MDM staff with specific product & project expertise; until then, enterprises will struggle with re-skilling same resources multiple times as emerging/evolving data management technologies mature (e.g., Fusion, NetWeaver, …) MDM MILESTONE


Understanding SI Phases of MDM Lifecycle

Phase 0 Scoping of Phase 1 Limited proof-of-

concept (POC) Requirements capture ROI projection Vendor & product

evaluation Phase 1

Limited deployment within single business division or department for single entity, e.g. customer or product

Phase 2 Going enterprise-wide with

single master entity, e.g. customer, product, supplier, etc.

Phase 2+ Going enterprise-wide with

>1 master entity, e.g. customer, product, &/or supplier, etc.

Phase 3 Extending master data

extra-enterprise-wide with >1 master entity, e.g. customer, product, &/or business partners, e.g. strategic sourcing supply chain, outsourced call centers, etc.

Typically more than one SI partner is used for the E2E lifecycle of an MDM program … not just as primes & subs but

also due to change out mid-phase due to failure to deliver


“Top 5” Technical Evaluation Criteria for MDM Services Provider

#1 – Extensible data governance methodology & accelerators

#2 – Industry-specific data model experience & ETL mappings

#3 – SOA architecture experience & accelerators

#4 – MDM product experience

#5 – MDM project experience (industry, geo, ego)

Partner's capabilities *must* include their data governance depth & available expertise


MDM “Value Add” of SIs

SIs are often necessary to sell C-level execs

Without C-level support, BUs will find it difficult to contribute funding & resources necessary to launch an MDM initiative – resulting in status quo with each business unit continuing to address issue at division-level (if at all)

SIs are needed to coordinate IT & Business

Readiness & maturity Plan for IT organizational change

mgmt to support MDM efforts Work with business leadership to

design & refine the “future state” business processes associated with new MDM commitments

SIs are needed to help transform IT organizations

To a greater degree than traditional app dev initiatives, organizational readiness & acceptance has huge impact on both success & sustainability of MDM initiative

After initial MDM program development, SIs can help IT & Business by facilitating

Ongoing participation in development of business rules & resolution of master data match/merge issues

Ongoing commitment to update both apps & business processes to leverage core data stored in MDM hub

Multiple potential DG areas to leverage SI assistance


MDM & DG Readiness Assessment of SisSummary Findings

For MDM life cycle during previous 18 months, average of 2.8 consultancy firms were engaged; for DG life cycle an average of 1.2 consultancies; this shows frequency which enterprises need to “change out” SIs when program falters due to lack of experience, leadership, etc. on part of consultancies

95% of IT execs strongly believe “Systems integrators are essential to success of majority of MDM projects" & 72% strongly agree that “Systems integrators are often necessary to sell C-level executives”


“Top 5” Areas Enterprises Look to SIs for Assistance

83%

69%

69%

67%

64%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Total cost of ownership &return on investment

Program governance(policies & processes)

Common enterprisedefinition of customer or

defined by LOB

Data Qualitymeasurements for

transparency & trust

Multi-organizationaladoption to a common

MDM solution/framework

75 Global 5000 Size Enterprises (Oct-Nov 2009)


BOTTOM LINE:Service Providers

Acknowledge that SIs are essential to success of majority of DG-driven MDM programs

Recognize that incumbent SIs are no longer so

Identify which SIs are market leaders in your industry & your chosen software technologies

Proactively manage key IT positions

Leverage SIs for their “value add”Given substantial investment businesses undertake with SI partners, this area must be given scrutiny –

not only to contain costs, but to insure success of this vital infrastructure investment



Provisioning substantive “master data governance” Partnering with a faithful service provider

Betting on odds-on favorite MDM solution (brand/architecture/platform)

Deciding between “tactical/registry short term ROI” vs. “strategic/operational MDM long term ROI”

Opting for PIM-flavored MDM or MDM-flavored PIM Rationalizing between 3rd gen MDM hub investments vs.

more advanced, in-the-works semantic/MDM hybrid infrastructure


MDM ConvergenceStrategic Planning Assumption

During 2010, party & product data interdependencies will quickly broaden MDM requirements – i.e., from “customer” to “product” to “vendor”; concurrently, vendor dogma will promote nouveau approaches such as collaborative MDM to assuage multi-entity conundrum

Through 2011, G5000 enterprises will broaden their MDM business initiatives from single use case, single entity to multi-style, multi-entity

By 2012-13, enterprises without long-term multi-entity MDM strategy run ironic risk of building “MDM silos”

SOA-based multi-entity MDM manages master data domains (customers, accounts, products, etc.)

with significant impact on most important business processes


Why “Multi-Entity MDM”? Why Now?

Future direction is to grow all reference masters into operational masters

Future MDM landscape Multiple data domains Multiple relationships Multiple usage styles –

analytical, operational & collaborative

Linkage between operational data domains using collaborative or analytical MDM

Enterprise MDM = multi-entity MDM – such epiphany enables the enterprise to avoid “random acts of MDM”

Pricing Policy HubPricing Reference Master

CDI HubLocation Master

Customer RegistryPIM Data Hub

Evolutionary Multi-Entity MDM

Entity-SpecificMDM Data Marts

Myopic

Strategic


Enterprise Master Data Management: Market Review & Forecast for 2009-12

1. Rapid growth of MDM market into mid-market as well as across industries & geographies

2. Steady evolution away from data-centric hubs into application hubs

3. Elemental movement towards “enterprise MDM” in multiple phases

4. Futile dogmatic resistance is fading against the power of multiples

5. Inexorable shift to formal data governance structures

The market for MDM solutions is significantly & quickly expanding – across geographies, industries, & price points

“Top Five” Report Findings by the MDM Institute


Solidified Requirements for 3rd Generation MDM Solutions

SOA/shared services architecture with evolution to “process hubs”

Sophisticated hierarchy management

High-performance identity management

Data governance-ready framework

Persisted, registry & hybrid architecture flexibility

MASTER DATA SEARCH

MASTER DATA

MODELING

MASTERDATA

APPLICATIONS

MDMMASTER DATA

PREPAR-ATION

MASTERDATA

GOVERNANCEMASTER

DATAMOVEMENT

MDM has morphed from “early adopter IT project” to “Global 5000 business strategy”; phase 2 MDM

deployments are already fusing party & product domains


Evolving Requirements for 4th Generation MDM Solutions

Multi-entity MDM Multiple master versions

of customer – legal/geo boundaries effect

Process/policy hub architecture

Unstructured information support

Integrated data governance

Enterprise search

MASTER DATA SEARCH

MASTER DATA

MODELING

MASTERDATA

APPLICATIONS

MDMMASTER DATA

PREPAR-ATION

MASTERDATA

GOVERNANCEMASTER

DATAMOVEMENT

G5000 enterprises’ business strategies mandate long term, strategic “multi-entity MDM” – in turn enabled by policy-

driven data governance


Business Value of Multi-Entity MDM

With 4th generation MDM platform, an enterprise will be better able to

Identify & provide differentiated service to its most valuable customers via their relationships (households, hierarchies); also cross-sell & up-sell additional products to these customers

Introduce new products & product bundles more quickly across more channels to reduce the cost of New Product Introduction (NPI)

Provide improved enterprise-wide transparency across customers, distributors, suppliers, and products to better support regulatory compliance processes

Enterprises must plan now to realize economic value & competitive differentiation

via multi-entity MDM during next 2-5 years


MDM Solution (brand/architecture/platform)Bottom Line

Promote MDM as essential business strategy with IT deliverables to leverage high-value info used repeatedly across many business processes

Position MDM as enabler of key business activities such as improving customer communication & reporting – rather than an important infrastructure upgrade

Begin MDM projects focused on either customer-centricity or product/service optimization

Plan for multi-entity MDM juggernaut evolving from “early adopter” into “competitive business strategy”

Insist on Enterprise MDM software capable of evolving to multiple usage styles & data domainsPlan now to realize economic value & competitive

differentiation via multi-entity MDM during next 2-5 years


MDM 2.0 BOTTOM LINE

Invest in DG for long-term sustainability & ROI of MDM

Acknowledge currently “master data governance” does not exist as integrated solution

Primarily processes with custom workflow One-way export to MDM hub (if any) Minimal support for “enterprise” decision rights

Plan for most MDM vendors to deliver DG workflow engine during next 6-12 months with metadata engine for both structured & unstructured

Recognize mega vendors (IBM, Oracle) focused to deliver capability in 2H2010 – with resultant SI partner chaos

Manage SI partner to integration roadmap with MDM platform of choice & to avoid “brain drain”


MDM SUMMIT™ Conference Series

MDM SUMMIT San Francisco 2010 San Francisco Hyatt Regency | June 2-3

MDM SUMMIT Canada 2010 Hyatt Regency Toronto | June 13-14, 2010

MDM SUMMIT Americas 2010 Crowne Plaza Times Square | October 3-5, 2010

MDM SUMMIT Singapore2010 Stamford Resort | October 14-15, 2010

MDM SUMMIT Iberia 2010 Madrid| October 2010

MDM SUMMIT Europe 2011 London | March 21-23, 2011

MDM SUMMIT Asia-Pacific 2011Sydney | March 28-30, 2011

MDM SUMMIT Tokyo 2011Tokyo| May 2011


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About Aaron Zornes Most quoted industry analyst authority on topics of MDM & CDI

Founder & Chief Research Officer of the MDM Institute Conference chairman for DM Review’s MDM SUMMIT conference

series Founded & ran META Group’s largest research practice for 14

years M.S. in Management Information Systems from University of

Arizona


MDM Institute Advisory Council

100 organizations who receive unlimited MDM advice to key individuals, e.g. CTOs, CIOs, & MDM project leads

Representative Members

3M Autotrader Bell Canada Caterpillar Cisco Systems Citizens Communications COUNTRY Financials Educational Testing Svcs EMC GE Healthcare Honeywell Information Handling

Services Intuit Loblaw McKesson Medtronic

Microsoft Motorola National Australia Bank Nationwide Insurance Norwegian Cruise Lines Novartis Polycom Roche Labs Rogers Communications Scholastic Stryker SunTrust Sutter Health Westpac Weyerhaeuser Woolworths


Authoritative

Relevant

Independent

Aaron ZornesFounder & Chief Research

OfficerThe MDM Institute

The-MDM-Institute.com a.k.a. www.tcdii.com

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Conference keynote aaron zornes (san francisco 2010) v1 print