Enterprise MDM Market Review & Forecast
SUMMARY:
Despite such significant challenges, the business goal of delivering trusted data throughout the enterprise shouldn’t be downplayed or ignored as the competition most likely has already begun
their drive to this end goal. Instead of envisioning MDM as a “game change” strategy (which it often is), the pragmatic business will acknowledge although enterprise MDM is a multi-phase,
multi-year, evolving business capability, it is an essential business strategy for keeping the enterprise sound in the increasingly competitive 21st century. The goal of the agile corporation
mandates delivery of trusted, high quality and timely customer, product, and other vital master data.
During 4Q2008, we completed a comprehensive market assessment of the MDM solutions providers and their customer bases. Additional data was obtained by our attendance at every major MDM provider’s
user group meetings/conferences during 2008, in addition to data capture at our own MDM SUMMIT series where we were connected with 2,000+ MDM professionals (Frankfurt, London, Madrid, New York
City, San Francisco, Sydney, and Toronto).
Clearly, enterprise MDM is a major IT initiative being undertaken by a large number of market-leading Global 5000 size enterprises. Both as an IT discipline and an integrated set of technology
solutions, MDM continues to evolve at a rapid pace. This research focuses on the below top five market trends for MDM and advises which actions enterprises should take to generate business value
and achieve competitive advantage. This MDM Alert summarizes certain of the key findings of this MarketPulse™ market report. A full copy of the 55-page report can be found at this link.
- Steady evolution away from data-centric hubs into application hubs
- Elemental movement towards Enterprise MDM in multiple phases
- Futile dogmatic resistance is fading against the power of multiples
- Inexorable shift to formal data governance structures
- Rapid growth of MDM market into mid-market as well as across industries and geographies
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Steady evolution away from data-centric hubs into application hubs
Enterprise MDM solutions are steadily but rapidly evolving away from data-centric hubs into full blown application stacks. In other words, MDM is becoming less of a standalone technology
infrastructure as the emphasis is increasingly on relationship between domains, user interface, and integration with other emerging and adjacent technologies such as RFID, entity analytics,
business intelligence, etc. This “application hub” focus concerns more than integration with existing CRM and ERP systems. It is recognition that MDM is the type of infrastructure solution that
will leverage all other systems – other application stacks, other CRM and ERP instances, other data feeds, etc. Finally, such hubs are increasingly integrating more than applications, etc. within
a line-of-business and are actually fundamental to integrating the actual lines-of-business. Through 2009-10, verticalization / horizontalization of MDM solutions will expand beyond corporate
financial reporting, EMPI healthcare, etc. into financial services & government especially. -
Elemental movement towards Enterprise MDM in multiple phases
Enterprise MDM is “strategic” and therefore is the appropriate focus across multiple lines of business, multiple channels, and therefore across multiple years. Such enterprise MDM becomes a
reality of multiple factors – especially when the enterprise desires to leverage one MDM product or platform across domains. Both IT and business management are increasingly focused on the longer
term, i.e., 2-5 years down the line. Therefore, these same IT strategists are looking for vendors who can provide solutions that span more than one phase. Savvy customers are starting to ask for
an integrated platform that indeed does support multiple domains across multiple phases. An example of multiple phases is where the tactical project might start with batch and very little SOA as
perhaps just a registry-architected solution. At some point in the 12-18 months horizon most organizations outgrow registry architectures and require much more of a full blown hub
architecture. -
Futile dogmatic resistance is fading against the power of multiples
MDM is increasingly concerned with the notion of “multiples” – multiple data domains, the multiple relationships among them, and the multiple usage styles. Even a tactical MDM project will
require facets of an enterprise MDM solution set, for example a financial service provider will need to master more than “customer” as it looks to master “product” in post phase one stages.
Additionally, product-centric MDM tactical projects quickly move to address customer master attributes such as pricing, entitlements, etc. to be simplistic, it is important not to paint one’s
self into a corner. Typically all projects start with A, B and C but must be able to grow else they create yet another data silo. MDM architects need therefore to think broadly in terms of styles
(operational, analytical, and collaborative) as it quickly becomes evident that the business requirements will bleed into more than one data domain and deployment style – “think global, and act
local.”Increasingly, the notion of “multiples” includes not only more than a singular master domain (e.g. customer or product). Even the definitions of the domains are getting more sophisticated. For
example, only several years ago “location” was a point in space, however, now it includes which party of assets occupy that location. Moreover, the attributes of a domain/entity are becoming
more complex. Clearly, the MDM Institute analysts are increasingly seeing more RFPs where enterprises acknowledge that it is not provident to focus solely on one master data domain when clearly
both party and product master data quickly bleed into each other post-phase one. -
Inexorable shift to formal data governance structures
One of the greatest challenges is the political arena (“governance”) which necessarily accelerates or brakes the critical momentum of both tactical and enterprise MDM. While tactical MDM marts
may be successful via judicious efforts of data stewards who focus on the data quality of a singular domain, when the business utilization of master data expands across departments and lines of
business then the government’s framework is essential. Each and every consuming and producing organization has a duty or role in the governance of master data. For example once it is determined
that master data is “a corporate asset” then that data must be protected across its life cycle from creation/capture through its retirement including such critical issues as accessibility,
compliance, unfortunately most of the market did MDM solutions do not adequately address this formal requirement.In fact, most vendors will point to their data steward console as the acme of their data governance capabilities. In reality, what’s needed are formal processes, assisted by workflow software,
to enable formalized decision making, documentation, and delegation, regarding the rules rendered as part of the governance lifecycle. Another gaping hole in data governance capabilities of the
majority of MDM vendors is their inability to directly store and execute such governance-generated procedures as part of the MDM logic that controls the software which in turn should enforce the
governance. True data governance mandates the integration of people, process, and technologies via a formalized framework. These formal structures are inevitable as they are the key enablers of
data governance policy functions – much more so than paper-based methodologies and accelerator/frameworks. -
Rapid growth of MDM market into mid-market as well as across industries and geographies
The market for MDM solutions is significantly and quickly expanding – across geographies, industries, and price points. This in turn is making MDM capabilities affordable to mid-market
enterprises (small-to-medium size businesses). The steady growth of the MDM market into this mid-market further makes it economically viable to apply the solution across a broad range of
industries and geographies. Three to five years ago the typical MDM solution cost in excess of $1 million just for the software and an additional $3-4 million for the implementation services
during the first year. During 2008, price points and product packaging (we should say “repackaging”) provide more modest MDM functionality and accordingly less complexity which supported market
pricing in the sub $500K range. Overall, MDM matured from “early adopter IT project” status to become a mainstay “Global 5000 business strategy” during 2007-08 These new price points are
reflective of various types of projects and the related product capabilities, i.e., enterprise MDM initiative vs. very-specific business solution. Moreover market dynamics further drove price
differentiation as the market became more sophisticated and understood the price:value ratio of hybrid vs. registry vs. tool kit vs. full fledged MDM application.
SUMMARY
For the Global 5000 enterprise (and increasingly the small-to-medium sized business or SMBs), approaching “enterprise MDM” as an IT infrastructure development project is career-challenging, There
is very little economic rationale in building such custom middleware (with this associated high maintenance costs) when commercial off the shelf software meets the performance, reliability, and
scalability requirements of most every industry and size organization. There will be use cases that mandate the ultimate in speed and performance — such as command and control systems for military
applications or straight through processing for financial services, however these are not the norm.
Clearly, enterprise MDM is a major IT initiative being undertaken by a large number of the market-leading Global 5000 size enterprises. Most enterprises and solutions vendors are finding near-term
success with the single-faceted approach inherent with the third generation of MDM solutions. Increasingly, however, these same enterprises are determining that this myopic strategy of focusing
solely on a single data domain and usage style is detrimental to the longer term business strategy of integrating supply, demand, and information chains across both intra- and extra-enterprise
boundaries. Coming to market during 2008-09 are multi-entity MDM solutions which are characterized as the fourth generation of MDM solutions which address the requirement for multiple domains and
styles as well as the roles of the consumers.
To help IT organizations and their business partners focus on the more desirable longer term MDM strategy, vital issues that full 55 page market research report addresses include:
- What is enterprise MDM?
- Why is enterprise MDM considered “strategic” while domain-specific MDM data marts viewed as “myopic”?
- How does an organization plan for enterprise MDM deployment?
The value of enterprise MDM can be intuitively recognized in a range of business initiatives – from short-term fixes to a narrow set of problems such as capturing customer privacy preferences
across product lines to long-term enterprise-wide initiatives to delivering infrastructure agility by embracing SOA.
The full report is available without any registration requirements via this download link. “Heads up”
from the MDM front lines and see you at the next MDM SUMMIT in London.
