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The issue of disconnected business applications and departmental silos has always been a persistent problem for companies to deal with. This is largely due to the fact that companies naturally evolve in different ways such as growing organically or through mergers & acquisitions.
The growth of an organization usually means adding more departments, moving into new markets, and engaging with new trading partners. This leads to a proliferation of business applications that need to be introduced into the IT ecosystem to support critical business processes such as new product introduction, omni-channel commerce, customer relationship management, supply chain management and regulatory compliance. Organizations ultimately cannot avoid the introduction of departmental or business application silos. However, they need to have a strategy to cope with this proliferation quickly, reliably and cost-effectively to scale and be agile in their business. This is where effective Master Data Management and data governance can deliver significant business value.
The Cost Challenge
One of the biggest challenges of Master Data Management (MDM) has always been cost that is organizational and IT. The organizational cost is related to building the necessary alignment across multiple business divisions with each trying to optimize their own siloed processes, but ultimately at a significant cost to the broader organization. This reality forces organizations to bring Master Data Management projects at the executive level for cross-division alignment, sponsorship and funding which in itself can be a significant challenge. Even when organizations get executive level buy-in, a common hurdle has traditionally been high IT costs associated with master data management. These costs include software licenses, professional services, support and maintenance and internal IT resources. It raises the question should Master Data Management always come at significant cost before it can deliver value?
The simple answer to that question is no. However, it does raise the issue on how organizations need to rethink how they can take advantage of an effective Master Data Management strategy without breaking the bank. One of the key steps to get there is to phase out an MDM implementation over time with defined milestones and success criteria. This strategy has two significant advantages for organizations. The first is that the budget and funding can come from a specific business division that has the greater need to tackle their Master Data Management issues. This can be in relation to supply chain, sales and marketing, or compliance. The second advantage falls in the way that organizations can quickly prove tangible ROI for a specific business problem to justify any further investment in MDM. It is much easier to tell a success story internally to other business divisions compared to citing external stories that are harder to validate.
Where MDM Cost is Headed Next
MDM software and implementation costs are nowhere close to what they used to be five or ten years ago. There are a number of factors for this. One factor is as the MDM category matures, commoditisation and democratisation has driven down the selling price. The second factor is that SaaS and hosted deployments have turned MDM software into an operating expense as opposed to a capital expense and have eliminated the need for organizations to pay for infrastructure, support and maintenance while giving them the flexibility to pay in smaller instalments. The last factor is that there are new and growing players in the MDM market that offer robust MDM capabilities not just for a single domain but for multiple domains in a single application at a lower cost than before.
Technology and markets are constantly shifting which means costs will change as the market does. It is a smart strategy to re-evaluate and even abandon pre-conceptions when no longer applicable to an organizations strategy. Where the market is today highlights a strong indication for organizations to re-assess their Master Data Management strategies on how it can help transform their businesses at a low cost.
As organizations look to find the MDM solution that’s right for them, the faster time to value aspect of the technology is essentially another way of saving dollars upfront and in the long-term. Solutions should have the ability to be installed, configured, integrated and upgraded at a low cost with minimal support from vendors or their implementation partners. MDM vendors are already heading in this direction and customers should be looking for a vendor that delivers on this promise to make a lasting positive impact on their business processes at a lower cost than ever before.