Finally, Master Data Management Takes Hold; Insurers Lead
Insurance Experts' Forum, February 17, 2010
Master Data Management, MDM, is one of those great ideas that everyone agrees on, like maintaining a good diet and getting exercise. But then everyone resists actually doing it. Small wonder my friend Dave Linthicum once said the biggest job in MDM was “Managing Dumb Meatheads.”
That's because to make MDM work, you need sign-on from different parts of the organization, who may still be comfortable in their own data domains. But a new survey suggests that organizations are finally starting to get their arms around MDM, intended to harmonize and manage the system of record and system of entry for business data – supplying one version of the truth for all parts of the enterprise, instead of different versions of data from all different sources. MDM can help improve the quality, timeliness, and reliability of business intelligence, and therefore, better track business performance
The survey of 130 companies, released by Baseline Consulting, used an interesting benchmark to determine the depth and scope of MDM projects. The study finds that about one-third of enterprise organizations have undertaken more than two MDM implementations, suggesting that MDM has moved beyond the pilot stage and is coming of age. (About 43% have a single MDM project underway.) One out of five respondents were from the banking and insurance sector, the largest industry category in the survey and leading group of MDM implementers.
What does it take to invest in an MDM initiative? Those organizations that have undertaken MDM implementations say they manage a median of three million master data records, have taken six months to implement, and involved an eight-person project team. Data quality is a key component of any MDM implementation, and the time and effort required to achieve data of acceptable quality is frequently severely underestimated. The median reported was 30% of the overall initial project costs.
Most MDM initiatives involve customer data, as cited by about 63% of the respondents. Another 39% work with product-specific data.
MDM first surfaced around 2005-2006, so it's good to see progress has been made. In insurance organizations, which rely heavily on multiple sources of data to manage various financial products for customers, it could pave to the way to more focused marketing and services.
Joe McKendrick is an author, consultant, blogger and frequent INN contributor specializing in information technology.
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