A ‘Benefits-driven’ approach to MDM www.wipro.com Sureshbabu Balasubramanian Table of Contents Introduction.................................................................................................................................................................................3 Current approaches and their shortcomings..............................................................................................................3 Current MDM approaches.......................................................................................................................................................3 Key shortcomings.......................................................................................................................................................................3 Defining Benefits-driven MDM (BD-MDM)..................................................................................................................4 Value of ‘Benefits-driven’ MDM..........................................................................................................................................4 Putting BD-MDM into practice..........................................................................................................................................5 Phase 1: Blueprint..................................................................................................................................................................6 Business case for MDM (Benefits identification)..............................................................................................................6 Building the roadmap (Benefits planning)...........................................................................................................................6 Phase 2: Prepare.....................................................................................................................................................................8 Create baseline (Benefit tracking).......................................................................................................................................8 Equipping the IT........................................................................................................................................................................8 Phase 3: Implement..............................................................................................................................................................8 Considerations for MDM components (Benefits realization)........................................................................................9 Phase 4: Measure (Benefits evaluation).............................................................................................................................9 Conclusion....................................................................................................................................................................................9 Enterprises today understand that master data is critical to helping them connect with their customers across channels, seamlessly collaborate with their vendors or pursue growth through acquisitions. However, there are a lot of examples of MDM programs either being abandoned due to a lack of demonstrable value or are being truncated to pilot IT initiatives that never see wider enterprise adoption. On the contrary, multiple successful MDM implementations bear testimony to the fact that MDM can be the bedrock on which enterprises transform their operations or gain powerful insights into their business. The difference primarily stems from how these MDM programs have been run – from the choice of projects, to the architectures to the kind of governance structures being adopted. We believe that putting ‘benefits’ as the centrepiece to making various decisions in the MDM program can help define an approach that not only ensures wider adoption, but also ensures demonstrable value to the enterprises. Current approaches and their shortcomings Current MDM approaches Currently most MDM implementations are: 1.Data focused – Typically there are two key areas where MDM is applied with data as focus. • Data Quality – MDM solutions are brought in with a view to improve data to be reflected in business reporting or operations. • Data Consolidation – A typical case in point being customer MDM where a single global identifier needs to be built for a customer across multiple business units/functions etc. Though the attention to data is certainly important and key to MDM success, these projects still fail to answer questions around ‘quantum of work’ e.g. “how much data needs to be cleansed” or “do I consolidate data from every customer touch point”. These challenges point to lack of clear definition of ‘benefits’. 2.Technology driven – Technology driven MDM programs address the following areas: • Synchronization – Idea is to build a system of record that can become a single source of truth for various business entities across the enterprise. • Data Registry – The need here is to build matching engines that match and assign unique identifiers to business entities across functions or BU boundaries. These projects tend to become pure tool implementations that fail to apply non-technology components of governance, change management etc., in true vigour to benefit the enterprise. These implementations fail to make the business the true owner of master data. 3.Process focused - In certain cases, MDM programs are linked to specific business process improvements. Arguably, a better approach when compared to a data or technology focused view to running the MDM projects; however, it still is likely to suffer from a narrow-sighted view of what a ‘customer’ or ‘product’ is, which in turn leads to multiple silo initiatives that try to solve the problem for different business processes. Key shortcomings The themes of failure across the above discussed approaches are consistently the same: • Lack of business sponsorship - Because of the nature of the MDM programs where business users never really see MDM in action (typically most business users don’t have a user interface to MDM), it becomes a challenge to sell MDM as a valuable investment. • Lack of demonstrable value - In few MDM projects which are tied to business process or reporting – no measures are available to quantify how MDM contributed to the project’s success. 3 • Function / Department focused efforts – Though it is a good idea to start small, function focused MDM efforts (e.g. SCM-MDM or Sales & Marketing – MDM) are rarely able to break beyond the confines of these departments due to a lack of clear articulation of the ‘enterprise vision’ upfront. • IT owned – Lastly, the often sighted problem of MDM being perceived as being owned by IT (when the goal is to make business own master data) only makes it more difficult to pursue the “if you build they will come” philosophy. is nearly impossible to arrive at, resulting in either ‘boil the ocean’ or ‘skim the surface’ approach. Through the rest of the paper, we will provide specific instances of how a ‘Benefits-driven’ approach will help us guide the implementation while keeping a firm grip on the results to be demonstrated to the business. This in return will ensure that MDM programs can be successfully adopted across the enterprise. Value of ‘Benefits-driven’ MDM Defining Benefits-driven MDM (BD-MDM) The guiding principle behind BD-MDM is to use the Benefits implementation process to guide MDM implementations. As is evident from the diagram below, the MDM implementation lifecycle closely mirrors the process of Benefits implementation. During the course of an MDM implementation, various decisions around technology, architecture, process and organization (governance/operations etc.) are required to be made. These decisions, many a time, are made without a view on the benefits to be delivered resulting in solutions that do not deliver ‘demonstrable’ results as per business expectations. Assess Solution Prepare Identify Evaluate Benefits BD-MDM relies on building three key pillars of support that will ensure a successful MDM implementation. These three pillars are described as follows: • Business buy-in – It might seem obvious but many projects fail precisely due to the lack of support from ‘users’ of master data – functions/departments, line of business users (outside IT) who actually use the master data for performing business operations or making business decisions. With BD-MDM every MDM implementation (or iteration) is tied to a set of specific business problems, this means it is easy to identify sponsors who are ready to support the initiative. Also, there is emphasis on building baseline metrics with which to demonstrate value at the end of each implementation, which makes it easier to sustain the support of business either in funding of projects or allocation of resources for data governance. Measure Implement ‘Benefits-driven’ MDM (BD-MDM) helps organizations to clearly align MDM capabilities to organizational priorities. It ensures that there is a clear balance between the short-term imperatives and the longer term goals of the organization. Envision Blueprint Plan Benefits-driven MDM Realize For example, decisions on the amount of effort/cost to be expended for improving data quality is a function of the results to be achieved. Without the end benefits in mind a ‘fit for purpose’ definition of data quality standard • MDM roadmap tied to business case – With the BD-MDM approach, the roadmap definition requires a balance of benefits against MDM capability development – i.e. the expected benefit at each phase is weighed against expected cost of implementing MDM. Though it may not always be possible to provide quantifiable ROI, the approach emphasizes the need to define benefits that are agreed upon with the beneficiaries. Further in the paper, we provide pointers to building quantifiable ROI for MDM projects. Small steps but with a vision – Because MDM projects are perceived more as ‘infrastructure investments’, there is a need to arrange the MDM implementations as a series of cumulative ‘capability build-outs’ that deliver benefits at each iteration. However, these iterations need to be aligned to an overall long term vision that ties to business priorities. For example, a ‘spend analytics’ focused vendor and material MDM is considered a good first step on the MDM journey – here the focus might be purely on reactive data quality. However, the vendor and material MDM capability built as part of this ‘spend analytics’ focus needs to be fit into the next step of support for fine tuning ‘procurement process’ – here the focus might be more on proactive data quality, governance and process enablement. 4 • IT as an enabler – Lastly it is important that IT plays the role of an enabler that brings in best practices, platforms (as in data quality or technology platforms) and learning that enable smooth execution of the MDM roadmap. Putting in place a repeatable process for data quality improvement, bringing in shared resources with expertise in MDM tools and technologies, playing the advisory role for enabling data governance could be some of the support roles that IT should play. Putting BD-MDM into practice Though the MDM journey is likely to be different across enterprises and varies widely in scale and complexity, for the purpose of this paper, we club the MDM journey into 4 main phases of Blueprint (including assess and envision), Prepare, Implement and Measure. Assess Envision Blueprint Prepare Implement Measure • Identify Master Data Issues • IT Landscape & Master Data Spread • Identify Possible Business Benefits • Build a Business Case • Identify Champions & Sponsors • Measurable Business Case • Build Buy-In & Sponsor Benefits identification Benefits planning • Creating a Conceptual Solution • Establishing a Rollout Plan • Evaluating Tool Options • Prioritize Benefits to build Roadmap • Build Solution Vision aligned to benefits • Aligning Organization for Governance • Building Consensus on Master Data • Migrating Existing Data • Define Benefits Measurement Metrics • Build Baseline of Metrics • Build Support for Global & Local Data • Account for Availability and Access • Build Solution aligned to Benefits • Measure Success of Program • Measure Benefit Metrics • Identify New Benefit Areas MDM lifecycle Benefits realization Benefits-driven MDM Benefits evaluation Benefits cycle BD-MDM steps 5 This section takes you through the different aspects to consider, useful techniques to employ during different phases of the program for adopting the BD-MDM. Phase 1: Blueprint Two things characterize the blueprint phase of a program – lack of clarity on how big is the master data problem, or as a corollary what is the scale of benefits that MDM can deliver to the enterprise (Benefits identification). Second – what is most importantly the first step and what needs to be the roadmap ahead i.e. planning (Benefits planning). In the following sections, we elaborate on these main characteristics of the Blueprint Phase of the MDM journey. Business case for MDM (Benefits identification) 1.Unearthing the benefits An assessment of the current data management practices is the first step in BD-MDM process. There are two related approaches that can be taken to uncover the MDM benefits. • Mapping the business processes – is a good way to understand how the master data is being used within the enterprise. As part of this exercise, analysts can poll the impact of its poor quality on the business processes and build a potential list of ‘benefits areas’. • Analyzing/profiling the data – is the bottoms-up approach to establish that lack of quality master data is impacting business operations and decision making. The key benefit areas identified previously can be substantiated and in some instances new areas identified using profiling. 2.Cracking the numbers Established statistical and financial measures like IRR, NPV etc. are in existence to quantify the value of a new project. This paper doesn’t endeavour to cover them; instead it shall look at what are the areas of interest to investigate for building benefits. Typically, you can look at three main heads for demonstrating business value of MDM: • Status-quo cost savings – These are typically around reducing existing efforts for performing a business process or preparing a business report – e.g. can you show saving in effort required to ‘consolidate customer sales’ each reporting cycle for doing ‘sales reporting’. The other one could be to demonstrate reduction in integration & system maintenance costs due to implementation of a ‘hub-spoke’ model – systems that could be sunset, integrations that could be discontinued etc. Typically, vendor and material data fall into head for demonstrating business value. • Opportunity costs – This is arguably a difficult one to build. One of the ways is to demonstrate master data as ‘hygiene factor’. That is, look at these not as ‘how master data contributes to a positive result’, but rather ‘what is the negative impact of not having the correct master data’. For instance, what is lost profit due to inefficient business processes – e.g. what does it mean to have new production introduction cycle time 30% less efficient or lost opportunities in spend optimization due to a lack of cross-BU vendor visibility. New business capabilities enabled by MDM definitely need creative efforts and possibly a lot of review with business stakeholders. e.g. potential up-lift from cross-sell, up-sell opportunities requires considerable inputs from sales teams. • Cost of non-compliance – Given the various regulations around customer data privacy, black listed vendor and environmental/safety regarding materials etc, there is an opportunity to demonstrate cost associated with risk of non-compliance by way of fines and penalties. This might be most relevant if your company is in financial services (acts like BASEL II, KYC etc. are relevant) or manufacturing (OHS, GHS etc.) Ability to build a convincing business case based on the above will vary by enterprise, but you can keep a few things in mind to smoothen the process. Look for metrics/business KPIs currently used and trusted within the organization. Tying your business case to these is much more effective and generally more acceptable. Lastly, verify your numbers with business users and gain their consent before floating it out to a broader audience. 3.Knowing your potential sponsors The term ‘sponsors’ is loosely used here to include the ‘key stakeholders’. If you have been able to make an assessment of current master data landscape and identify the opportunity areas for MDM, you have probably identified the biggest beneficiaries of MDM i.e., the functions, business units or regions that stand to gain the most. These beneficiaries are the ones who you need a firm buy-in from, to ensure they contribute their resources to the success of the program – either as sponsors or as key stakeholders. Building the roadmap (Benefits planning) 1.Mapping the benefits One of the tools that is useful for mapping benefits to the required IT projects (in this case MDM) is Cranfield University School of Management’s “Benefits Dependency Network”. A complete discussion of the “Benefits Dependency Network” (BDN) is beyond this paper, however, we use an example here to highlight how BDN can help establish linkage of the projects to the business drivers and the set of changes required in business/IT to attain MDM related benefits. The BDN is a good tool to understand the linkage of the IT projects to underlying business-drivers; it also establishes the required ‘organizational changes’ outside the IT environment to enable a realization of the benefits. In the context of MDM, BDN shows the required changes in data ownership, data management processes and skills enablement. 6 For instance, the below BDN example shows how the Customer and Product MDM projects might relate to a retailer’s business drivers. It also shows the required changes needed in data management – new classifications systems to be adopted, changes to data ownerships and realignment of data management processes for product and customer. While the ‘enabling changes’ are changes that might be necessary to be delivered as part of the MDM project, the ‘business changes’ might be part of a broader ‘organizational change management’ track of MDM. While the blocks on the right help in clarifying the business case for MDM, the blocks on the left can be used in the process of developing a solution roadmap. Program roadmap IT enablers Enabling changes Redefine customer segments Customer master hub Simplified a/c mgmt processes Business case Business changes Product master hub Ensure clear ownership of data elements Standardized product classification Business drivers Create targeted campaigns Offer services that span channels-order online, service in store Offer differentiated customer support Release time for data mgmt from cleansing/ standardization Benefits Increased customer satisfaction/ brand loyalty Improved campaign effectiveness Increase online presence Growth in new geos/business models Standardize new product Introduction Develop channel specific vs cross channel products Improved product (line) profitability/ reduced spend Consolidation/ cost reduction across BUs Reduce category spread Benefits Dependency Network 7 2.Prioritization of projects/benefits Building of a solid roadmap relies on balancing of the business benefits with the feasibility of MDM solutions. Ideally, the MDM solution is built-up gradually in terms of complexity (consolidation to harmonization styles), while delivering benefits at each stage. Some of the key criteria to consider, outside ROI/benefits are: • Scope of benefits – Benefits that have broader enterprise coverage deserve better representation. • Measurability of benefits – For purposes of demonstrating value addition of the MDM program, projects that have more measurable benefits should be favoured. • Magnitude of change (organizational) – Projects that are more disruptive should be given a lower priority. • Cost of re-work – In certain cases it might be worth the effort to implement a more complex MDM solution upfront rather than retro-fit the solution at a later stage. e.g. if the cost of cleaning data downstream in MDM is too high, as compared to cleansing at source, it might be worthwhile to invest in building data quality web-services to be used by target systems in early phases. Case in point might be customer self-registration scenarios in retail industries. • Complexity of implementation – The ‘size of the data model’, ‘number of integrations’, ‘type of integrations’, ‘transactional vs. analytical styles’ all contribute to determining the complexity of an implementation. Let us consider a prioritization case where we start with consolidation of product and customer data while demonstrating improvement in spend analysis and customer profitability reporting. Of course, this does require that accompanying ‘enabling changes’ are put in place – in the current example, new classification of products and new segmentation rules for customer etc. 3.Tying it to the solution vision (Conceptual Solution) An important part of the blueprinting phase of the MDM project is to develop a solution vision that demonstrates the end-state architecture expected from the program. The roadmap ties into the solution vision to detail out the interim steps through which end-state architecture is to be achieved. This step-wise development of the end-state solution ensures that the program can be developed iteratively while continuing to deliver short term benefits. Taking the BDN example - if building a centralized product master and a harmonized customer master were to be the end-state, you would also indicate what the initial steps of the architecture would be. It could be ‘consolidation architecture’ for customer, while a harmonization architecture for product. Similarly, the extent of downstream integration would vary. The important thing to consider here of course is the fact that the suggested architectures would map to the prioritized benefits to be delivered at each stage of the program. applications. In the BDN example, if changes to existing reporting applications were not done in sync with MDM timelines, you pass an important milestone in your MDM journey with no benefits to show. This is both an exercise in managing stakeholder expectations and influencing stakeholder decision making! Phase 2: Prepare It is recommended practise to have a prepare phase precede every implementation cycle, to align organizational resources and building a baseline. In this section, we talk about what needs to be done from a benefits perspective. Create baseline (Benefits tracking) An important first step for BD-MDM to succeed is to create a baseline. This baseline obviously needs to be established against a set of measurable metrics. Definition of business KPIs might be accomplished as part of the business case development; however, additional metrics around data quality, process quality etc. might be required to capture different aspects of impact. e.g. for the case of centralization of customer data management apart from business KPIs dealing with ‘cross-sell/up-sell’, you might want to capture ‘completeness of customer data’, ‘accuracy of customer data’, ‘cycle time for on-boarding of new customer’ etc. These measures, if taken thoroughly, will feed directly into data governance KPIs and become a method/technique to ensure on-going effectiveness of MDM. Equipping the IT We suggest IT use the prepare phase to assess the kind of resources the business would need to bring, whether it is for data cleansing or for participation in defining governance and technical solutions. A clear ‘engagement model’ should be available at this stage to help business stakeholders understand their roles. This would also be the phase to staff IT resources that would support the MDM rollout. Preparations for initial data load in terms of validation of data quality tools at hand and estimation of the manual cleansing effort are also key considerations at this point. Phase 3: Implement The implementation phase of the program is about creating technical, process and organizational solutions that help realize the defined benefits during the blueprint phase of the program. Rather than focus on the SDLC cycle of a MDM project, we focus here on the different aspects (or streams of work) relevant to MDM projects and what considerations are necessary from a “Benefits-driven MDM” perspective. One of the challenges typically encountered in MDM programs is that the program timelines are in many instances misaligned with downstream 8 Considerations for MDM components (Benefits realization) Phase 4: Measure (Benefits evaluation) 1.Scope of the Master Data model and quality One of the central questions from an MDM standpoint is what is ‘Master Data’? Though this can be answered rather simplistically by saying anything that is used across functions or geographies, it avoids answering the implicit question of ‘scope’. To explain – since master data is something that is common across functions/geographies, question becomes what functions/geographies have you looked to define ‘common global’? The measure/sustenance phase of MDM is typically characterized by the need to identify the areas of improvement in existing implementations and identifying new areas of benefit for existing MDM solutions. Unfortunately, this phase of the project is most neglected in the MDM journey. For an organization that has just started on MDM this phase could be critical, to prove that you have indeed delivered on your promise. As MDM doesn’t end with a single implementation, this demonstration could mean the difference between continued sponsorship versus a one-off project. The general principle to apply in these cases is ‘design for future, implement for present’ – this implies the logical model for Master Data should be designed as broadly as possible, but implementation – i.e. data cleansing, standardization and loading should be done for the most immediate needs only. The important activity with regard to demonstration of value is measurement of benefits, and more importantly convincing stakeholders of the need to measure the benefits. The measures obviously fall back to the metrics that were captured as part of the creation of the ‘baseline’ – both business KPIs and the data related metrics. 2.Data governance (processes, KPIs and organization) The measurement of these benefits could result in either improvement of an existing MDM implementation or adoption of the said solution on a broader level within the enterprise. Establishing data governance structure and processes require changes in existing organizational data management practices and hence requires careful consideration of ‘Organizational Change Management’ (OCM). More radical the change (e.g. move from a decentralized creation of items to a centralized model), more likely the resistance to change within the enterprise. This implies that data governance changes need to tie closely with the benefits to demonstrate the necessity of changes to data stewards, data owners and process owners. Use of BDN as a tool helps clarify this dependency. Taking the previous BDN example – centralization of product data management (as against a federated or de-centralized model), it clearly emerges as an ‘enabling change’ demonstrating it as a pre-requisite for attaining ‘enterprise view of product’. 3.MDM architecture While in most cases picking consolidation architecture (as against harmonization or centralization) might be the natural first step in building an MDM solution, bringing in the view of the benefits might force a different choice. Example: For the case of centralization of product data management, it is apparent that end-state is ‘centralization’; however, questions around what approach/architecture needs to be adopted to build the ‘consolidated initial load’ needs to be answered. Conclusion Given the tough economic climate in which most enterprises find themselves today, it is important that MDM program owners be able to articulate the value of MDM to the enterprise. More significantly, implement projects that deliver value aligned to business drivers of the enterprise. A Benefits-driven approach to MDM (BD-MDM) can ensure that you have a sound case to begin the MDM journey, and an equally robust roadmap that delivers consistent benefits. The BD-MDM can also serve as the guiding force for numerous decisions ranging from data model, governance to technology and architecture. A conscious and consistent view on benefits throughout the different phases of MDM can ensure success of the program. Similarly, questions around ‘real-time vs. batch mode’ integration for syndicating Master Data or providing data quality services can be conclusively answered only if you know the benefits you are chasing. In the case of customer master data driven to ‘customer reporting’ – it might make more sense to adopt batch modes when compared to ‘real-time’. On the other hand, ‘real time’ becomes a pre-requisite if the near term need is ‘real time de-dup’ on a ‘self-serve customer portal’. 9 References • “Managing the Realization of Business Benefits from IT Investments” - http://www.som.cranfield.ac.uk/som/dinamic-content/research/documents/peppardwarddaniel07.pdf • “Project management: business cases and gateways”- http://www.accaglobal.com/content/dam/acca/global/pdf/sa_apr11_p3_projectmgt.pdf • Doherty, N. F. et al. “Towards an Integrated Approach to Benefits Realisation Management – Reflections from the Development of a Clinical Trials Support System.” • “Benefits management and benefits realization” - http://www.bereal.salford.ac.uk/N/pdf/Literature-BenefitsRealisation.pdf 10 About the Author Suresh is a senior consultant at the Wipro MDM Centre of Excellence with over 10 years of MDM experience. He works with Wipro clients across industry verticals in the areas of MDM business case, strategy and architecture. Prior to Wipro, Suresh was at TIBCO where he was an architect working on the TIBCO Collaborative Information Manager. About Wipro Council for Industry Research The Wipro Council for Industry Research, comprised of domain and technology experts from the organization, aims to address the needs of customers by specifically looking at innovative strategies that will help them gain competitive advantage in the market. The Council, in collaboration with leading academic institutions and industry bodies, studies market trends to equip organizations with insights that facilitate their IT and business strategies. For more information please visit www.wipro.com/insights/business-research/ About Wipro Ltd. Wipro Ltd. (NYSE:WIT) is a leading Information Technology, Consulting and Outsourcing company that delivers solutions to enable its clients do business better. 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