The Second Coming of MDM: How It Became a Business Matter
- By Winston Thomas
- January 01, 2024
You can sum up the trouble with master data management (MDM) in one word: technology. Yes, it involves technology. But because of this, many companies saw it as an IT project. Senior executives seldom saw it as a strategic initiative impacting long-term business viability.
This perception is changing, especially in Asia. “In the past, it was often an IT-centric undertaking focused primarily on technical use cases such as customer matching, merging, and creating golden records.
Today, companies see it as a more strategic technology that will support their organization’s long-term business and digitization strategy,” said Joseph Sullivan, director for solutions sales in Informatica.
“With this change, the focus has shifted to empowering business outcomes, and therefore, it has become important to link the use of MDM to these business and digital metrics, e.g., improvement in customer satisfaction, reduction in customer churn, increased cross and up-sell, reduction in time to market for new product, % coverage of product on digital channel, increase in data completeness, etc.,” Sullivan added.
Analyzing the shift
Why the change? It’s the focus of the CX and MDM Thought Leadership Project for Informatica, a commissioned study conducted by Forrester Consulting on behalf of Informatica in September 2022. The analyst firm also interviewed another five professionals to grasp the qualitative reasons that numbers often mask.
The study found that Asia Pacific companies are no strangers to taking a more automated, agile and intelligent approach to data management.
Data security, as expected, remained top of mind, but companies deployed more CDPs.
A more telling find is where the funding for MDM projects came from. According to the study, it no longer comes from IT budgets; a major funding source was business unit budgets.
“Companies in Asia have matured in how they view and adopt MDM,” said Sullivan.
Customer in focus
The importance of customer centricity is a critical factor that drives many of the regional MDM projects and the shift in perception. The study noted that MDM objectives are becoming customer-centric; companies no longer pay lip service to put the customer at the center of their initiatives.
“Customer experience has been a big focus for most organizations over the last five years, with a huge amount of investment in CX-related technologies and solutions,” said Sullivan.
The study further highlighted regional companies are beginning to realize that it’s essential to build a set of consistent, unified, and standardized master data across different departments.
“Often this investment has been in what I would call ‘last mile’ solutions, those tools that are directly interacted with by customer and business users such as new websites, mobile apps, CRM and marketing solutions,” said Sullivan.
For decades, companies dreamed of customer 360 views. Over the past decade, countless projects have tried to link the various data sets. In the Forrester study, 62% of companies rely on data analytics to gain customer insights.
The problem was that many times, such efforts failed. “A lot of organizations have found that these investments didn’t provide the CX ROI they expected, and this is due to the lack of an underlying data strategy,” said Sullivan, citing the study.
Fragmented, inaccurate, incomplete and unconnected information in these solutions was a key reason. It impacted customer experience and added unnecessary friction into processes, making them onerous.
Now, companies realize that they always had the answer in MDM.
“This is where MDM is coming into the equation to ensure there is a single consistent source of customer information, their preferences and permissions, previous purchases, preferred channels, as well as other data types that contribute to CX such as rich, complete product information, location information and accurate supply chain details,” said Sullivan.
He explained that by adding complete and consistent data to “last mile” solutions, companies can deliver “exponentially better” CX outcomes.
“This can be seen from a Gartner report from a few years ago where they found organizations deploying CRM without MDM, under achieve the business ROI by 25%,” said Sullivan.
Today, companies are looking to create accessible, connected, consistent, and standardized master data, which is critical, especially when encouraging self-service. In the Forrester study, 56% leveraged MDM to drive their CX data strategies.
As the Forrester study noted, MDM users need to break down data silos, improve findability and ensure data quality.
Companies like Informatica are upgrading their tools and offering companies more straightforward approaches to MDM and address these concerns more efficiently. But no tool can overcome the most significant challenge: mindset.
“Lack of business buy-in is still one of the major reasons MDM initiatives do not get off the ground,” said Sullivan.
“Too many IT organizations identify the need for MDM and better data management but are unable to link the benefits to addressing short-term business challenges and supporting long term strategic outcomes,” he added.
Sullivan advised companies to adopt a less “techno-centric” path that puts less emphasis on feature and function requirements and more on identifying business use cases and working with the business.
It is also getting more urgent to get the right mindset. With generative AI rewriting the CX playbook, overcoming MDM challenges is not just essential but business critical.
This article is part of an eGuide. To download the full report, click here.
Image credit: iStockphoto/gorodenkoff