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Getting the Green Light for MDM

by John Parker

August 11, 2009

Finding the funds for an SAP NetWeaver Master Data Management project can be difficult, and the benefits can be hard to explain. SAP’s Roland van Breukelen and Fred Johnsen (formerly with Capgemini) offer you proven methods for getting the go-ahead.
 

Different people perceive master data management (MDM) differently, depending on their role. For example, to a CEO or CFO, a pitch for MDM may look like another bid for an expensive IT investment at a time when the organization is struggling to integrate and cost-justify the technology it already owns. To the IT department, it may seem like another bottomless maintenance chore, or it may appear to be an opportunity to try out the latest software tool. Those who most directly own and process the data may resist apparent threats to overhaul the way they do business.

The technical definition of MDM, a way to link and unify key business data from different sources, does not evoke its potential value to an organization. MDM can be a path to competitive advantage, a technical breakthrough, or a change in organizational and process thinking; one thing it’s not is an easy sell. The potential payoffs for using MDM are many — better market analysis and more focused marketing, lower risk of faulty data, and more productive employees and business partners — but the commitment required is considerable in terms of technology budget, upfront planning, and process analysis. (To find out why you would want MDM, see the sidebar “What SAP NetWeaver MDM Is and What It Does,” SAP NetWeaver Magazine, Winter 2007.)

So how do you communicate the value of MDM and sell your project to the key decision makers? The following six best practices for making an MDM sales pitch will help you plan your approach.

1. Speak the Right Language

The initial proponent for MDM may not come from the technology side of the organization at all, according to Fred Johnsen, a former VP of Capgemini, now an independent advisor and owner of www.netwiz.eu. “What we’ve seen is heads of sales or marketing who want to sell to different customer segments and face certain difficulties on a day-to-day basis. They don’t see it as a dat a problem as such; often, for them it’s a question of fixing core business processes. For many IT managers, it would be quite typical to have the IT department try to solve this problem, but if you think of MDM as just a way to solve an integration problem, you’re missing the point.”

Even SAP people who regularly work with customers to implement SAP NetWeaver Master Data Management (SAP NetWeaver MDM) strongly advise focusing on core business issues rather than IT concepts. “The way I discuss MDM with our customers is about matching business applications with processes, about efficiency in running at the optimum speed, and about getting the most benefits from those processes,” says Roland van Breukelen, SAP NetWeaver MDM solution principal. “One of the factors that influences process efficiency greatly is the quality of the master data that a process uses, whether that data represents customer information, a product specification, or even a chart of accounts. We’re starting to get more feedback from customers saying that the big driver for MDM is to improve these process efficiencies.”

Van Breukelen suggests that a good place to start the conversation about data, process, and efficiency is with the most basic kind of customer information, namely: “Exactly how many customers do you have?” While this may seem to have an obvious answer, many organizations find the reality to be surprising and troubling. For one thing, the customer numbers that marketing uses may differ significantly from those that sales and shipping use. Unrecognized data discrepancies can impede your efforts to serve existing customers, reach new ones, or choose the right kind of product development.

Imagine, for example, that sales and market research undertaken in one part of your organization results in publishing a slick, new, online product catalog to appeal to the growing audience of online buyers. Unfortunately, the sales and market research departments never shared the product data they used to produce the Web catalog with the customer call center. So, the call-center employees are relying on antiquated printouts that don’t support the product lines advertised online. This kind of customer service can quickly turn customer enthusiasm to frustration and — eventually — lost sales.

Suppose that an inefficient and cumbersome order-entering application tempts employees to rekey the same data over and over just to complete the order process because they think no one ever uses the data they’re entering. How well can this company track sales or plan production (if it even has the ability to access cumulative order data)? If a shop-floor manager typically walks into the procurement office and orders spare parts verbally because it’s easier and faster than using the available software, at some point that company is likely to start getting the wrong parts from the wrong supplier. Worse, the company will find it difficult to realistically measure its manufacturing costs and capabilities. You can use these kinds of real-world situations and their effect on core business objectives to make a credible case for MDM.

2. Stress Data Ownership

Having made the connection between master data and business processes and pointed out the risks and missed opportunities posed by each, it’s critical to stress that data is everyone’s problem. This, unfortunately, is where many would-be MDM champions go wrong.

“The feedback we’ve had from customers is that the first thing you need to ensure the success of the project is organization,” explains van Breukelen. “That means putting structure and ownership within the organization and having people who are responsible for data, master data, and defining data governance — in other words, the rules and processes around managing master data. MDM as a solution becomes a technology enabler that makes those data-governance processes work.”

This is one reason why you should do the early MDM presentations in front of a group representing all the units that MDM would affect and why having group buy-in matters even if the CEO or CFO is ready to approve the project. As van Breukelen puts it, “If nobody owns the data, nobody is going to care about it, and nobody will fix it.”

What if organizations don’t tackle the ownership question at the outset? In that case, says van Breukelen, “If the business doesn’t recognize that it owns the data and needs to maintain it and the processes around it, then typically IT will try to help. And because IT tries to help, it will end up owning the problem, and the data will become a massive IT burden.”

Internal end users are data owners in that they create the ingredients of master data with every transaction they process. According to Johnsen and van Breukelen, these front-line troops in the MDM campaign need rules, training, and a strong message of accountability just as much as they need dependable servers, high-performance software applications, and friendly interfaces. They need to know that the quality of the data they enter affects their company’s future.

3. Set the Right Goals

Every significant new concept has to follow a learning curve to achieve acceptance and skilled use throughout an organization. MDM is not an exception. Because it is a big concept that eventually will involve the whole organization, the best advice is to “start small” to improve the odds of success and clearly demonstrate the added value. Johnsen and van Breukelen suggest the following guidelines:

  • Choose a project area where better data management will have a clear impact on business objectives. Examples might be higher quality in financial reporting, or faster order fulfillment for a particularly important product line.

  • Allow four to 12 months to complete and evaluate the project. Whether the timetable is on the short or long side of that estimate depends on how good the current data is and what it will take to keep the data clean and aligned with the rest of the business. That, in turn, depends on what kind of organizational work you need to do to start managing master data.

  • Make sure that IT is staffed and equipped to handle the project. In the project’s early stages, the IT team needs to become comfortable with the concept and implementation of MDM.

4. Enlist Allies

To make a business case for MDM and to create and sustain momentum for its implementation, you will need allies. The most likely places to find them are in the ranks of sales executives, marketing directors, and line-of-business (LOB) managers.

“These are the people on the business side who are facing these kinds of challenges on a day-to-day basis,” says Johnsen. “What they need is to understand the business processes involved and what they’re trying to fix. They also need to understand where they’re getting the data. Of course, you need to communicate why this is a benefit, why you are realigning processes, refining key business objects in terms of numbers for customers and employees — things like that. You need to offer initiatives and present to them what the future will be and what they can expect.” Once they understand the benefits clearly, notes Johnsen, these key players can articulate the need for MDM clearly and use their influence to convince others.

Such conversations may be surprisingly easy to begin. “It’s rare that I have to ask our customers if they have problems with managing master data and data quality for their business processes,” explains van Breukelen. “I think most LOB managers and most businesspeople clearly know that they have problems with master data, be it around the quality of the data, the consistency, the process, or the volume of the data across multiple systems.”

Johnsen and van Breukelen agree that, once the MDM implementation is underway, end users — at least on the business-operations side — are likely to accept the solution and use it without much difficulty. “We make sure that the interface that the business users have to use is simple and easy,” says van Breukelen. “They understand the data itself because this is their data, just presented to them in a solution. It’s not about teaching them an unnecessarily complex tool; I think it’s just the change-management aspect” that requires teaching.

5. Anticipate Resistance

No solution pleases everyone. With MDM, the most significant resistance comes from financial departments, even at the CFO level. The reasons lie partly in the sheer amount of data that financial staffs have to handle. At first, this makes MDM look like added work and added cost, rather than added value.

But when resistance from this quarter is strong, says Johnsen, “it’s essentially because the people presenting the idea haven’t done their job properly: justifying the benefits, making sure they have the business buy-in, clarifying what the potential upside could be.” It’s often a case of using live examples that are close to home, such as the current cost of not getting accurate, timely, financial data from a foreign subsidiary, or of meeting compliance-related reporting goals with greater accuracy in less time. If you can position MDM as a solution to these problems, states Johnsen, “suddenly, you’ll have all the buy-in you need.”

From his experience, says van Breukelen, it’s also wise to anticipate a different kind of resistance coming from IT. “What we often see is IT saying: ‘Oh, we’ll build a database for that, or we’ll buy this cleansing tool and just fix the data magically.’ What we’ve failed to do is address the process of where and how to create the data, who will manage it, and who owns it.

“Ultimately, data is a business asset that needs processes around it to take advantage of it. What we typically see is IT repeatedly investing in different tools to try to improve this. But because they are IT projects using IT budgets without involving the business to a strong degree, these projects must be repeated over and over, which increases the cost of IT.”

6. Collect the Right Information

Long before you start scheduling conference space for your MDM presentation, collect the strongest possible information with which to make the business case compelling for all the business units and operational departments affected. Johnsen and van Breukelen suggest five specific areas to research:

  • What the proven MDM benefits are at other companies in your industry. Currently, mature MDM case studies are few and far between, but it’s likely that trade shows, press reports, and conversations with business partners and vendors will yield at least a few success stories. If you’re in the chemical industry, for example, how has a competitor exploited its master data to better deal with environmental issues, such as waste disposal?

  • How different parts of your organization currently slice the data to fulfill their respective needs. It may be instructive to see how the sales department, for example, views customer data in a way different from the finance department. Sales is looking for personal contact information it can use to make a sale, while finance just wants to know the payment method and history. Who has data that someone else could use and doesn’t know it?

  • What’s already wrong with your business processes as the result of lost or mismanaged master data. What were the missed opportunities for up-selling or cross-selling? Did redundant data impede delivery and service to existing customers?

  • How MDM might improve regulatory compliance. Regulatory requirements such as Sarbanes-Oxley are moving targets and sources of anxiety and frustration for many corporations. What is your company’s current rate of compliance? What are the risks of non-compliance? For example, can your company reliably certify what is in each cargo container bringing manufacturing parts and supplies into U.S. ports? If not, you could have serious trouble ahead.

  • How MDM might strengthen loyalty among customers and partners. This is the bottom line for making the business case. “I would say that MDM will strengthen loyalty because it provides insight that makes a difference,” reveals Johnsen. “Hopefully, with the click of a button, you will be able to provide information across organizational boundaries. If you can provide correct, complete, and consistent information, your customers will recognize that as well.”

Unlock the Data’s Value

In many industries, market consolidation creates an urgent competitive need to reach the same population of customers in different ways. A notable example is telecommunications, where competition for marketshare in broadband and mobile services continues to heat up. Somewhere, locked in the mountains of electronically recorded sales orders, production records, and financial statements, is the data that can make a difference for your company.

“When we talk about MDM’s business objectives, we’re talking about maximizing the value you get from customers,” says van Breukelen. “MDM projects tend to help you identify who your customers are and to whom you can up-sell. Ultimately, this should reduce the cost of marketing because you can target better: You know who has what and who wants what.”

MDM is primarily a business problem, not a technical one. IT may be the vehicle for a solution, but simply buying, installing, and configuring hardware and software won’t unlock your data’s full potential. The objective, even when preparing to “sell” MDM to top management, is to align the data with your business processes. If you accomplish that goal, your chances of a project go-ahead and a successful implementation are good.

John Parker is an independent editor, writer, and research analyst on IT issues, in particular business-process management, workflow, and application development. He has been an editor and writer for a number of industry publications (Datamation, VAR Business, PC Week, Electronic Business), and a senior analyst for consultants Aberdeen Group and Kinetic Information. He currently works with the book-editing team at SAP PRESS. You can reach him at editor@netweavermagazine.com.

 

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