3 Keys To Successful Master Data Management - Final Presentation

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3 Keys to Successful Master Data Management: Process, Governance, and Architecture

James ChiGROM Associates

2

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.

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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 …

● More than two-thirds of companies surveyed believe it’s very important to provide one common view of data and information to enterprise users and partners

● In 2006, only about 20% of the companies in the Aberdeen survey were engaged in using MDM technology to remediate the complex data integration problems

● A more recent survey conducted in February 2008 shows the MDM adoption rate has only increased to 28%

MDM Adoption

● 66% of companies surveyed use spreadsheets to manage critical business functions

● For companies that rely heavily on their supply chains:

88% cite inconsistency or outdated information in orders sent to manufacturers69% cite data errors caused by manual updating which can potentially affect purchase orders and inventory56% say business process changes result in interim paper workarounds until IT catches up

Informational Issues

Aberdeen Group, Why Does Master Data Management (MDM) Get No Respect?, December 2006

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Misconceptions and Challenges

• MisconceptionsFix the problem by throwing more people at the issueFix the problem by implementing technology only

MDM is just another IT projectPrevious ERP and data warehouse initiatives have addressed the problem

• ChallengesNo alignment to business objectivesNo clear ownership of the problemLack of necessary business sponsorshipNo clear definition of successBand-aid approach to addressing problem

“… Many companies are still approaching MDM from the infrastructure / IT standpoint, and that’s just not as sexy or alluring to the business leader who doesn’t fundamentally understand how it will improve his or her business …”

Jill Dyché, Business Consultant, Author of “Customer Data

Integration: Reaching a Single Version of the Truth”

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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

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Business Context

More than ever before, enterprises today rely on complete, accurate, and timely information in order to compete effectively

● Functional organizations are becoming more distributed and dispersed

● The amount of data in an organization has escalated dramatically in recent years

● Loosely coupled IT and business infrastructures

Internal Complexities

● Globalization InitiativesMarketsOperations

● Extended Business EcosphereBusiness PartnersContractor

● Shared Services● Mergers and Acquisitions

Business Dynamics

Delivering complete, accurate, and timely information to the right person, application, or service at the right time is

becoming an increasingly difficult proposition …

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.

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… 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.

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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 ...”

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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 ...”

MDM – Best-in-Class Capabilities and Enablers

Companies enjoying Best-in-Class performance share the following common characteristics

● Data/information federation/ integration solutions, including metadata and metadata repositories, data warehouses and marts, and tools for federating and managing them

● Data/information consistency, migration, quality, and transformation tools (ETL)

● IT and Intellectual Property (IP) access control, management, and security solutions

Key Technology Enablers

● Well-defined, documented, and enforced policies and processes governing master data management and quality

● Support by cross-functional teams of stakeholders, including senior executive management

● Well-documented, regularly reviewed, and updated operational execution plans driven and supported by key business processes

Key Business Capabilities

Aberdeen Group, Winning Master Data Management Strategies for 2008-2009, April 2008

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ETL = Extract, Transform, and Load

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12

Group Exercise

• Let’s play a word association game …

• Shout out loud any word that comes to mind when you think about MDM

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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

Governance

Policies,Procedures,& Standards

Tools

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MDM Program Roadmap

Program Maturity & Coverage

Time

ALIGN ANDSTANDARDIZE

REALIZE ANDSTABILIZE

DEPLOYPROGRAM

PilotMDM Solution

Data MigrationTool

Central DataRepository

Auto. Inbound Data Feed

Establish the RightFoundation

MiddlewareTool

Data GovernanceDefinition

Leverage Infrastructureand Scale Rapidly

Business StrategyAlignment

AutomatedWorkflow App.

MDM ProcessDesign

Program ScopeDefinition

Success MetricsDefinition

ArchitectureDesign

Auto. Outbound Data Distribution

Additional Data Objects

AdditionalGeographies

AdditionalOrganizations

AdditionalData Rules

Additional WorkflowEnhancements

AdditionalBusiness Rules

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Business Strategy Enablement

BusinessImperatives

Cus

tom

er &

Ext

erna

l Req

uire

men

ts

Cas

e fo

r Act

ion Vision and

Mission

Strategy andPlan

Goals andObjectives

Bus

ines

s C

apab

ilitie

sC

urre

nt L

imita

tions

• “One Face to the Customer” Sales• Customer Collaboration (e-Commerce, VMI,

CPFR ... )• New Product Development and Introduction• Supply Chain Integration and Optimization• Global Procurement Initiative• Shared Corporate Services• Accounting to Reporting Process

Optimization• Corporate Performance Metrics

Business Initiatives

Change Management

MDM initiatives are means to realize well defined business strategies and objectives

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Business Strategy Alignment

MDM initiatives are intended to provide a holistic approach to aligning and managing master data requirements across the enterprise

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Master DataRequirements

Portfolio Management & Governance

DEPLOYMENTDEPLOYMENT

DESIGNDESIGN

OPERATIONOPERATION

Business Initiative

Business Initiative

Business Initiative

Business Initiative

Business Initiative

Business Initiative

Process & DataStandards

RESULTSRESULTS

Aligning Program Scope with Business Objectives

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RAW FINISHED

MRPrun

PlanningMPS

PlannedOrder

PurchaseRequisition

ProductionOrder Delivery Billing Customer

Payment

PurchaseOrder

InvoiceVerification

GoodsIssue

GoodsReceipt

GoodsReceipt

GoodsIssue

ProductCosting

ProfitabilityAnalysis

SalesOrder

Contract

VendorPayment

MRO

GoodsIssue

GoodsReceipt

GeneralLedger

MRPRun

PMOrder

PurchaseRequisition

PurchaseOrder

Define MDM program scope and program success metrics based on the intended business results of your business initiatives …

Aligning Program Scope with Business Objectives (cont.)

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… For both internal and extended end-to-end business processes

Supplier Customer

DeliverMakeDeliverMakeSource Source

Plan

Source DeliverMake

Plan Plan

Portal and integration layer for visibility, VMI, and schedule coordination with suppliers

Portal and integration layer for visibility, VMI, and schedule coordination with

customers and distributors

Enterprise-wide Network of Production Facilities

Defining a Business Case for MDM

The business case of MDM has to be inextricably linked to the full realization of benefits associated with your

business initiatives20

BusinessImperatives

Cus

tom

er &

Ext

erna

l Req

uire

men

ts

Cas

e fo

r Act

ion Vision and

Mission

Strategy andPlan

Goals andObjectives

Bus

ines

s C

apab

ilitie

sC

urre

nt L

imita

tions

Change Management

IT S

trat

egy

Impl

emen

tatio

nR

oadm

ap

Solu

tion

Arc

hite

ctur

e

Proj

ect D

efin

ition

Port

folio

Mgt

. A

nd G

over

nanc

e

Dat

a St

rate

gy

Dat

a St

anda

rds

Dat

aG

over

nanc

e

Dat

aA

rchi

tect

ure

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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:

OperationsOpportunity to streamline day-to-day operationsOpportunity to reduce costsOpportunity to increase revenue

Better and faster decision making Through better visibility to business situations and events

ComplianceAbility to better meet increasingly stringent regulationsOpportunity to reduce costs of compliance

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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

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Be Sure to Leverage the Applicable Industry StandardsIn 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)

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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

Mas

ter

Dat

aO

bjec

t

Business Function

Customer Master

Vendor Master

Bill of Materials

…

Product Master

Ord

erEn

try

Ord

erFu

lfillm

ent

Proc

urem

ent

Man

ufac

turin

g

Fina

nce

…

Legal Entity A

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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 B Legal Entity C

Legal Entity D

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Data Governance Model — Decentralized

MDM

ERP

PLM

Business Users

• No dedicated master data management organization

• Business users are responsible for maintaining master data based on established data standards and procedures

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Data Governance Model — Centralized

Business Users

MDM

ERP

PLM

CentralMaster Data

COE

COE = Center of Excellence

• All master data management activities are performed by a central organization

• Business users place master data create and change requests

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Data Governance Model — Federated

Business Users Business Users Business Users

Master DataCOE

Master DataCOE

Master DataCOE

Master DataCOE

Regional orRegional orBus. Unit orBus. Unit orFunctionalFunctional

LevelLevel

GlobalGlobalLevelLevel

• Central MDM coordination with admin. responsibilities being distributed to several local authorities

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

AP

SAP SCM

SAP ERP

SAP BW

Application EMEA

Supply Chain

Procurement

SAP NetWeaver® BISAPCRMOrder-To-CashSAP PLMProduct Dev.

AmerInitiativeRegion

Centralize when it makes sense and decentralize when it makes sense!!

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The Anatomy of a Complete SAP NetWeaver MDM Solution

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Best Practice: Follow a Rigorous ETL Process

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Import all rows and all

columns!

Perform all data filtering, translation, and

formatting in one place

E.g., A Manufactured Finished Good Material

Why Are Data Governance Tools So Important?

• Illustration: SAP Material Master Creation – How many screens?

34

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Why Are Data Governance Tools So Important? (cont.)

• Illustration: SAP Material Master Creation – How many participants?

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Basic Environment Plants Warehouse

Sales Forecast Finance Quality

Regulatory ReviewManufacturing 11


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• SAP Material Master Creation – Without Data Governance Tools


• SAP Material Master Creation – With Data Governance Tools

• “Active” data governance tools are designed to:Shield the complexity of the underlying applicationProvide a more applicable role and task frameworkAutomate key process tasks and overall workflowDeliver predictable and repeatable results

Advances in Data Governance Solutions

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“Passive” Data Governance Tools

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Business Users

MDM

ERP

PLM

Master DataCOE

DataDialysisSMTactical Reports& Metrics

Business Scenario• Current, live instance of

SAP

• Data quality problems from either migration or new inputs

• Business interruption related to incomplete, missing, or erroneous data

Solutions:

• Alert published directly to Business Data Owners

• Visibility to Master Data Quality Metrics

• No change to normal user processes

Source: BackOffice Associates

“Active” Data Governance Tools

Business Users

MDM

ERP

PLM

COE

COE Workflow & Control

Collaborative Master Data Governance

Business-Ready

Master Data Firewall

Business Scenario• Current, live instance of SAP

• Data quality problems from new inputs

• Business interruption related to incomplete, missing, or erroneous data

• Sarbanes-Oxley compliance problems with segregation of duties

Solutions:

• Automated processing of business rules

• Collaborative data authorship that is easily audited

• Accelerated time-to-value for new object introduction

Source: BackOffice Associates

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The GROM/BackOffice Partnership

Aligned ApproachMethodologyRoles & ResponsibilitiesGovernanceArchitecture

Projects Shared By GROM & BOA Personnel

2000 - 2003Corporate ERP Implementation

Data Migration and Quality

2005 - 2006Global ERP Implementation


2007Global ERP Implementation


Active Data Governance

Purdue Pharma, LP Merck & Co., Inc Johnson & Johnson

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Resources

• www.sdn.sap.com/irj/sdn/nw-mdmSAP 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 solutionsData migration and data governance white papers

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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

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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

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Your Turn!

How to contact me:James Chi

[email protected]

DisclaimerSAP, 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.

3 Keys To Successful Master Data Management - Final Presentation

Documents

functional

long term

aligning program

mature mdm

aberdeen group

class companies

data governance

data governance