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M AY 3 1 , 2 0 2 3 / B Y K E V I N P E T R I E D E C O D I N G D ATA S O F T W A R E
Curated Research On Data
Driving ROI with Master Data Management, Analytics Topics

Part 1: Build Your Business Case 1. Self-Service Analytics

2. Data Governance

3. Modern Data Architecture

4. DataOps

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Secrets of Data & Analytics Leaders · Driving ROI with Master Data Management, Part 1: Build Your Business Case - Audio Blog Need a Modern Data
ABSTRACT: MDM creates business value in three ways: it streamlines Strategy?
infrastructure, streamlines processes, and reduces risk.
Our veteran
If you break your glasses, life gets awkward. You see double, reach for things in the consultants can help
wrong place, and trip over your feet.
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Along similar lines, business gets awkward if you have multiple versions of data. You see
fragmented, conflicting views of the business. You choose the wrong view, make a bad
decision, and take the wrong action. This results in project delays, unproductive Eckerson Consulting
employees, and angry customers—all of which impede business growth and damage the
top or bottom line.

Master data management (MDM) makes business a little more graceful. MDM is a set of
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practices and tools that build a single source of truth with consistent, trusted records for
key business entities. MDM tools match and merge data from various source systems to 1. Master Data Management and
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Cases
and partners. These “golden records” strengthen data governance programs by helping
reduce duplicates and resolve discrepancies. They enable enterprises to make smarter
2. Podcast with Dave Wilkinson: Enterprise
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Master data management (MDM) is a set of practices and tools that build a single 3. Keyrus: How to Craft Effective Data
Quality and MDM Strategies
source of truth with consistent, trusted records for key business entities.

4. National Student Clearinghouse on Data

But as with other aspects of data management, the value in MDM proves hard to Governance and MDM Best Practices
measure. This blog, the first in a series on the return on investment (ROI) of MDM, helps
data leaders assess the business case for an MDM initiative. The rest of the series 5. Managing Metadata for AI vs BI
breaks out as follows.

The second blog will describe how to drive ROI with your first project.

The third and final blog will describe how to iterate based on measured results and
tackle new projects.

This topic matters because executives need evidence that investing in MDM will create
near-term value in an uncertain economy. Lacking that evidence, they might defer their
MDM investment and create bigger problems down the road.

MDM creates business value in three ways: it streamlines infrastructure, streamlines

processes, and reduces risk. Let’s explore each of these value drivers and how data
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teams can build evidence for them, working from the bottom up in the following diagram.
insight?
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Streamline infrastructure
Data teams can implement MDM in a few ways. They might index their master data in a
central registry, have business users create and publish golden records to others, or
maintain all their master data in a central hub. To varying degrees, each of these
approaches can reduce the number of data copies. This in turn streamlines supporting
infrastructure such as on-premises servers or cloud-based compute and services.

Data engineers should consult ITOps and CloudOps engineers as well as their finance
manager to predict this direct cost benefit. The key question: how would an MDM
initiative affect data volumes and outlays for IT infrastructure to support them? By
answering this question with evidence-based forecasts, these stakeholders can help
budget owners understand the upside of implementing MDM.

The key question: how will master data management affect

data volumes and outlays for IT infrastructure?

Streamline process
MDM streamlines data-related processes by removing friction from team transactions
and communication. It enables different functions to use the same names, attributes,
and terminology to describe entities to one another. When a sales rep closes a deal in
the customer relationship management (CRM) system, master data ensures the finance
manager knows who the customer is and how to count that revenue. When a logistics
partner opens a new warehouse, the supply chain manager can easily find and adjust
that partner’s forecasts to assist production planning. In these and other ways, cross-
functional teams collaborate with fewer errors and less confusion, accelerating
operations.

Enterprises should estimate these indirect benefits of implementing MDM. The subject
matter expert for a given process—perhaps the finance manager or supply chain
manager in our examples above—should quantify the time currently lost to errors and
confusion. In terms of cost, how would productivity and project execution time improve if
they fixed these problems with MDM? In terms of revenue, how much capacity would
they free up to support new projects? By building this business case with conservative
estimates, data teams can give budget owners a more clear picture of MDM’s upside.

By quantifying the time currently lost to errors and confusion,

data teams can assess the upside of master data management

Reduce risk
Business forecasts have a best-case and worst-case scenario. In between lies the risk
that things go wrong. MDM improves the worst-case scenario because it reduces the
risk that things go wrong in the form of bad business decisions. With master data in
hand, managers have more accurate business views that increase the likelihood they’ll
make the right decision and take the right action. Service representatives have more
accurate records of customer interactions, so are more likely to appease an angry
customer. More accurate financial records, meanwhile, make it less likely that
compliance managers will run afoul of regulations.

It’s not easy to measure the dollar value of risk mitigation in situations like these. But
finance and business managers can compile qualitative evidence of “averted disasters,”
for example by examining notable bad data-driven decisions of the past. This evidence
can give them the confidence to move that worst-case forecast just a little higher—
another benefit of having a single version of the truth.

Resting your case

The Native American leader Chief Joseph observed in the 19th Century that “it does not
require many words to speak the truth.” His observation holds true in our modern digital
age, and in fact, summarizes the business case for master data. MDM streamlines both
systems and processes and reduces the risk that businesses will misinterpret the truth.
By building evidence of MDM’s business value in these areas, data and business leaders
can make a clear-eyed “go-no go” decision about an MDM initiative in today’s economic
climate. Our next blog will examine ways for data teams to ensure their first MDM project
delivers the expected value.

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Kevin Petrie

Kevin is the VP of Research at Eckerson Group, where he manages the research agenda and writes about
topics such as data integration, data observability, machine learning, and cloud data...

More About Kevin Petrie

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