3 Keys To Successful Master Data Management - Final Presentation
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This document discusses keys to successful master data management including process, governance, and architecture. It summarizes a survey finding that while many companies see data as an asset, only around 20% have implemented master data management. Successful MDM requires alignment with business objectives, clear governance models, and comprehensive solution architectures. The document advocates establishing policies, procedures, standards, governance, and tools to create and maintain high-quality shared reference data.
3 Keys To Successful Master Data Management - Final Presentation
- 2. 3 Keys to Successful Master Data Management: Process, Governance, and Architecture James Chi GROM Associates © 2008 Wellesley Information Services. All rights reserved.
- 3. Room Survey • Please raise your hand if you work for a company whose senior executives firmly believe in the notion that data is a corporate asset. • If you raised your hand … Please keep your hand up if your company has launched or is in the process of launching a formal Master Data Management (MDM) initiative to implement the business capabilities and technologies to ensure the availability of complete, accurate, consistent, and timely master data to your enterprise. 2
- 4. If You Have Not Yet Launched Your MDM Initiative, You Are Not Alone! In a survey of over 2000 companies conducted by the Aberdeen Group in December 2006 … Informational Issues MDM Adoption ● 66% of companies surveyed use ● More than two-thirds of companies spreadsheets to manage critical surveyed believe it’s very important to business functions provide one common view of data and ● For companies that rely heavily on information to enterprise users and their supply chains: partners 88% cite inconsistency or ● In 2006, only about 20% of the outdated information in orders companies in the Aberdeen survey sent to manufacturers were engaged in using MDM 69% cite data errors caused by technology to remediate the complex manual updating which can data integration problems potentially affect purchase orders ● A more recent survey conducted in and inventory February 2008 shows the MDM 56% say business process adoption rate has only increased to changes result in interim paper 28% workarounds until IT catches up Aberdeen Group, Why Does Master Data Management (MDM) Get No Respect?, December 2006 3
- 5. Misconceptions and Challenges • Misconceptions Fix the problem by throwing more people at the issue Fix the problem by implementing “… Many companies are still technology only approaching MDM from the infrastructure / IT standpoint, MDM is just another IT project and that’s just not as sexy or Previous ERP and data warehouse alluring to the business leader who doesn’t fundamentally initiatives have addressed the problem understand how it will improve • Challenges his or her business …” No alignment to business objectives Jill Dyché, Business Consultant, No clear ownership of the problem Author of “Customer Data Integration: Reaching a Single Lack of necessary business Version of the Truth” sponsorship No clear definition of success Band-aid approach to addressing problem 4
- 6. What We’ll Cover … • Positioning the business context and benefits of MDM • Defining MDM and reviewing the MDM program roadmap • Aligning MDM with your company’s business objectives • Designing the right data governance model • Walking through a complete MDM solution architecture • Wrap-up 5
- 7. Business Context More than ever before, enterprises today rely on complete, accurate, and timely information in order to compete effectively Business Dynamics Internal Complexities ● Globalization Initiatives ● Functional organizations are Markets becoming more distributed and Operations dispersed ● Extended Business Ecosphere ● The amount of data in an organization has escalated Business Partners dramatically in recent years Contractor ● Loosely coupled IT and business ● Shared Services infrastructures ● Mergers and Acquisitions Delivering complete, accurate, and timely information to the right person, application, or service at the right time is becoming an increasingly difficult proposition … 6
- 8. Business Context (cont.) While companies will be spending billions to renovate enterprise applications through composite applications and service-oriented architectures, not many are developing the critical master data management capabilities required to produce information of high quality and consistency to make all enterprise applications work seamlessly. … And without the most complete, accurate, and up-to-date information available, these investments will not enable the best business decisions and deliver maximum business value. 7
- 9. A Mature MDM Program Can Deliver Measurable Benefits • In its “Winning Master Data Management Strategies for 2008- 2009” report, the Aberdeen Group reported: “… Among the Best-in-Class companies focused on customer data quality, 94% improved integrity, 95% improved usability, and 89% reduced the time required to make customer data ready for use ...” 8
- 10. A Mature MDM Program Can Deliver Measurable Benefits (cont.) • In its “Winning Master Data Management Strategies for 2008- 2009” report, the Aberdeen Group reported: (cont.) “And … among the Best-in-Class companies focused on data migration, 94% improved on-time project completion, 88% improved on-budget project completion, and 68% improved data usability ...” 9
- 11. MDM – Best-in-Class Capabilities and Enablers Companies enjoying Best-in-Class performance share the following common characteristics Key Business Capabilities Key Technology Enablers ● Well-defined, documented, and ● Data/information federation/ enforced policies and processes integration solutions, including governing master data management metadata and metadata repositories, and quality data warehouses and marts, and tools ● Support by cross-functional teams of for federating and managing them stakeholders, including senior ● Data/information consistency, executive management migration, quality, and transformation ● Well-documented, regularly reviewed, tools (ETL) and updated operational execution ● IT and Intellectual Property (IP) plans driven and supported by key access control, management, and business processes security solutions ETL = Extract, Transform, and Load Aberdeen Group, Winning Master Data Management Strategies for 2008-2009, April 2008 10
- 12. What We’ll Cover … • Positioning the business context and benefits of MDM • Defining MDM and reviewing the MDM program roadmap • Aligning MDM with your company’s business objectives • Designing the right data governance model • Walking through a complete MDM solution architecture • Wrap-up 11
- 13. Group Exercise • Let’s play a word association game … • Shout out loud any word that comes to mind when you think about MDM 12
- 14. MDM Definition Master Data Management is the application of policies, procedures, standards, governance, and tools needed to create, maintain, and share high-quality reference or master data throughout an enterprise Policies, Procedures, & Standards Governance Tools 13
- 15. MDM Program Roadmap Program Maturity & Coverage Leverage Infrastructure DEPLOY and Scale Rapidly PROGRAM Additional Additional Additional Data Objects Organizations Geographies Additional Additional Additional Workflow Data Rules Business Rules Enhancements Pilot REALIZE AND MDM Solution STABILIZE Data Migration Automated Middleware Tool Workflow App. Tool Auto. Inbound Central Data Auto. Outbound Data Feed Repository Data Distribution ALIGN AND Establish the Right STANDARDIZE Foundation Data Governance MDM Process Architecture Definition Design Design Business Strategy Program Scope Success Metrics Alignment Definition Definition Time 14
- 16. What We’ll Cover … • Positioning the business context and benefits of MDM • Defining MDM and reviewing the MDM program roadmap • Aligning MDM with your company’s business objectives • Designing the right data governance model • Walking through a complete MDM solution architecture • Wrap-up 15
- 17. Business Strategy Enablement Business Business Initiatives Customer & External Requirements Imperatives • “One Face to the Customer” Sales Business Capabilities Current Limitations • Customer Collaboration (e-Commerce, VMI, Vision and CPFR ... ) Case for Action Mission • New Product Development and Introduction • Supply Chain Integration and Optimization • Global Procurement Initiative Strategy and • Shared Corporate Services Plan • Accounting to Reporting Process Optimization Goals and • Corporate Performance Metrics Objectives Change Management MDM initiatives are means to realize well defined business strategies and objectives 16
- 18. Business Strategy Alignment Bu sin ess DESIGN In itia Bus tiv ines e s Ini tiativ e Busine ss Initiativ e DEPLOYMENT Business Initiative Initiative Business tive ss I nitia RESULTS Busine OPERATION Master Data Process & Data Portfolio Management Requirements Standards & Governance MDM initiatives are intended to provide a holistic approach to aligning and managing master data requirements across the enterprise 17
- 19. Aligning Program Scope with Business Objectives Product Profitability Costing Analysis Planning MPS General Ledger Sales MRP Planned Production Customer Delivery Billing Order run Order Order Payment Contract Goods Goods Goods Goods PM MRP Issue Receipt Issue Issue Order Run RAW FINISHED MRO Purchase Requisition Purchase Goods Requisition Receipt Goods Receipt Purchase Order Purchase Invoice Vendor Order Verification Payment Define MDM program scope and program success metrics based on the intended business results of your business initiatives … 18
- 20. Aligning Program Scope with Business Objectives (cont.) Portal and integration layer for visibility, Portal and integration layer for VMI, and schedule coordination with visibility, VMI, and schedule Plan coordination with suppliers customers and distributors Plan Plan Source Make Deliver Source Make Deliver Source Make Deliver Supplier Customer Enterprise-wide Network of Production Facilities … For both internal and extended end-to-end business processes 19
- 21. Defining a Business Case for MDM Project Definition And Governance Business Implementation Customer & External Requirements Portfolio Mgt. Architecture IT Strategy Imperatives Roadmap Solution Business Capabilities Current Limitations Vision and Case for Action Mission Strategy and Data Strategy Architecture Governance Standards Plan Data Data Data Goals and Objectives Change Management The business case of MDM has to be inextricably linked to the full realization of benefits associated with your business initiatives 20
- 22. Defining a Business Case for MDM (cont.) • In addition to linking the business case for MDM to your strategic initiatives, you can also indentify specific benefits MDM can contribute in the following areas: Operations Opportunity to streamline day-to-day operations Opportunity to reduce costs Opportunity to increase revenue Better and faster decision making Through better visibility to business situations and events Compliance Ability to better meet increasingly stringent regulations Opportunity to reduce costs of compliance 21
- 23. Other MDM Program Definition Recommendations • Clearly and completely define your source systems • Conduct a data quality assessment early! • Design a solution that will meet your long term strategic needs; but implement a tactical MDM pilot intended to fix or improve a specific critical process • Ensure your MDM initiative is executed by a cross-functional team representing all impacted business and IT stakeholders • Ensure your MDM initiative is actively sponsored by senior executive management 22
- 24. Be Sure to Leverage the Applicable Industry Standards In Your Design • ISA • GS1 US BarCodes and eCom • RosettaNet • SCOR Supply Chain Council • GS1 EPCglobal North America • United Nations Standard Products and Services Code (UNSPSC) 23
- 25. What We’ll Cover … • Positioning the business context and benefits of MDM • Defining MDM and reviewing the MDM program roadmap • Aligning MDM with your company’s business objectives • Designing the right data governance model • Walking through a complete MDM solution architecture • Wrap-up 24
- 26. Data Governance – Why Is This Such a Key Issue? • Prior to the advent of enterprise application consolidation and data warehousing projects, accountability and ownership of master data was pretty clearly defined Legal Entity A Product Master Customer Master Master Object Data Vendor Master Bill of Materials … Manufacturing Procurement Fulfillment Finance Order Order Entry … Business Function 25
- 27. Data Governance – Why Is This Such a Key Issue? (cont.) • With the propagation of enterprise applications such as SAP ERP, SAP CRM, and SAP SCM, composite applications, and service- oriented architectures, companies need to establish data governance teams charged with resolving data conflicts that cross organizational boundaries Legal Entity A Legal Entity D Legal Entity B Legal Entity C 26
- 28. Data Governance Model — Decentralized Business Users • No dedicated master MDM data management organization • Business users are ERP responsible for maintaining master data based on established data PLM standards and procedures 27
- 29. Data Governance Model — Centralized Business Users Central Master Data COE MDM • All master data management activities are performed by a ERP central organization • Business users PLM place master data create and change requests COE = Center of Excellence 28
- 30. Data Governance Model — Federated • Central MDM coordination Master Data COE with admin. responsibilities Global being distributed to several Level local authorities Master Data Master Data Master Data COE COE COE Regional or Bus. Unit or Functional Level Business Users Business Users Business Users 29
- 31. Data Governance Model: How to Decide What’s Right for You • One model does not fit all master data objects • You have to align the data governance model to your business objectives Region Initiative Application Amer EMEA AP SAP NetWeaver® BI SAP BW Order-To-Cash SAPCRM Product Dev. SAP PLM Supply Chain SAP SCM Procurement SAP ERP Centralize when it makes sense and decentralize when it makes sense!! 30
- 32. What We’ll Cover … • Positioning the business context and benefits of MDM • Defining MDM and reviewing the MDM program roadmap • Aligning MDM with your company’s business objectives • Designing the right data governance model • Walking through a complete MDM solution architecture • Wrap-up 31
- 33. The Anatomy of a Complete SAP NetWeaver MDM Solution 32
- 34. Best Practice: Follow a Rigorous ETL Process Perform all data filtering, translation, and formatting in one place Import all rows and all columns! 33
- 35. Why Are Data Governance Tools So Important? • Illustration: SAP Material Master Creation – How many screens? 50 E.g., A Manufactured Finished Good Material 34
- 36. Why Are Data Governance Tools So Important? (cont.) • Illustration: SAP Material Master Creation – How many participants? Basic Environment Plants Warehouse Sales Forecast Finance Quality Regulatory Manufacturing Review 11 35
- 37. Why Are Data Governance Tools So Important? (cont.) • SAP Material Master Creation – Without Data Governance Tools 36
- 38. Why Are Data Governance Tools So Important? (cont.) • SAP Material Master Creation – With Data Governance Tools • “Active” data governance tools are designed to: Shield the complexity of the underlying application Provide a more applicable role and task framework Automate key process tasks and overall workflow Deliver predictable and repeatable results
- 39. Advances in Data Governance Solutions 38
- 40. “Passive” Data Governance Tools Business Users Business Scenario • Current, live instance of SAP MDM • Data quality problems from either migration or new inputs Master Data • Business interruption COE ERP related to incomplete, missing, or erroneous data Solutions: PLM • Alert published directly to Business Data Owners • Visibility to Master Data Quality Metrics • No change to normal user Tactical Reports & Metrics DataDialysis SM processes Source: BackOffice Associates 39
- 41. “Active” Data Governance Tools Business Scenario Business Users Collaborative COE Master Data • Current, live instance of SAP Governance • Data quality problems from MDM new inputs COE Workflow & Control • Business interruption related to incomplete, missing, or erroneous data Business- Ready ERP • Sarbanes-Oxley compliance Master Data problems with segregation of Firewall duties Solutions: PLM • Automated processing of business rules • Collaborative data authorship that is easily audited • Accelerated time-to-value for new object introduction Source: BackOffice Associates
- 42. What We’ll Cover … • Positioning the business context and benefits of MDM • Defining MDM and reviewing the MDM program roadmap • Aligning MDM with your company’s business objectives • Designing the right data governance model • Walking through a complete MDM solution architecture • Wrap-up 41
- 43. The GROM/BackOffice Partnership Aligned Approach Methodology Roles & Responsibilities Governance Architecture Projects Shared By GROM & BOA Personnel Purdue Pharma, LP Merck & Co., Inc Johnson & Johnson 2000 - 2003 2005 - 2006 2007 Corporate ERP Implementation Global ERP Implementation Global ERP Implementation Data Migration and Quality Data Migration and Quality Data Migration and Quality Active Data Governance 42
- 44. Resources • www.sdn.sap.com/irj/sdn/nw-mdm SAP Developer Network (SDN) informational resources for SAP NetWeaver® Master Data Management • www.uc-council.org/ GS1 US Inc. is a not-for-profit organization dedicated to the adoption and implementation of standards-based, global supply chain solutions • www.aberdeen.com/ AberdeenGroup is a leading provider of fact-based research focused on the global technology-driven value chain • www.datagarage.net/ Official website of BackOffice Associates, LLC, leader in SAP® data quality, data migration and data governance solutions Data migration and data governance white papers 43
- 45. 7 Key Points to Take Home • Master Data Management (MDM) is an essential prerequisite to realizing the full benefits of other enterprise business and IT initiatives MDM establishes the capabilities required to produce information of high quality and consistency to make all enterprise applications work seamlessly thus enabling the best business decisions and delivering maximum business value • MDM is not just about technology; MDM should be thought about as a holistic solution comprised of information standards, standard processes, formal governance, and system tools • An MDM program needs to be defined in alignment with business strategies and objectives The primary business case for MDM should be linked to the business initiatives it enables 44
- 46. 7 Key Points to Take Home (cont.) • Design a solution that will meet your long term strategic needs; but implement a tactical MDM pilot intended to fix or improve a specific critical process • Ensure your MDM initiative is executed by a cross-functional team representing all impacted business and IT stakeholders and that is actively sponsored by senior executive management • Define your data governance model in alignment with business strategies and objectives Centralize when it makes sense and decentralize when it makes sense! • A complete MDM solution needs to include a data migration (ETL) tool as well as active/passive data governance tools 45
- 47. Your Turn! How to contact me: James Chi jchi@grom.com 46
- 48. Disclaimer SAP, R/3, mySAP, mySAP.com, xApps, xApp, SAP NetWeaver®, Duet™, PartnerEdge, and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and in several other countries all over the world. All other product and service names mentioned are the trademarks of their respective companies. Wellesley Information Services is neither owned nor controlled by SAP.