Over the years, we’ve seen a number of patterns evolve from our customers as they embark on their master data management (MDM) initiative. When we examine these approaches, it becomes clear that there are some common best practices that our most successful ones follow. One of those is turning the focus from the “how” to the “why” when looking to create a customer 360 view. This is important because businesses often think that their major problems center around needing a clearer view of their customer data and having it reside in a single place. In reality, that’s not a business problem. The customer 360 view is an enabler, and is how you address a business challenge, but it’s not the problem itself.
After all, faster MDM capabilities are not just centered on data. They are also about managing the business processes that rely on well managed master data and the processes that create,
update, and retire that information. Take the following business case as an example: An organization wishes to leverage a customer 360 view to increase the effectiveness of its marketing efforts by delivering more leads per dollar spent. It’s possible that the challenge stems from needing a more accurate view of the customer because they are investing a lot of money in purchasing lists, or they’re not communicating well to their customers because they don’t understand their relationship with them. Only by attributing a measurable value to the business problems can they then work on solving them. That’s why it’s important to not market the business problem as the need for a customer 360 view.
Rather, the business should gain an understanding from stakeholders to really understand what their challenges are. To accomplish this, start by asking these questions:
• How can we drive more revenue and value?
• How can we reduce costs?
• How can we reduce a risk or compliance issue?
Understanding the stakeholders’ daily challenges in detail leaves you in a better position to truly help the business. Again, the solution may be that you need a better customer 360 view, but it’s not the challenge.
The Key to MDM Success: A Holistic Perspective
There are often different problems for each business segment; therefore, it’s important not to treat these issues the same way as each other. Marketing might be having trouble cross-selling between different organizations, where sales may need a better understanding of the corporate hierarchy so they can move up the chain and talk to larger areas.
To make certain your MDM effort can meet the objectives of the business, it’s better to start by recognizing the problems that need to be addressed and the segmentation required before going about trying to solve anything.
To ensure you are focusing on the correct business problem, be sure you can:
• Identify the actual, underlying business challenge or opportunity. Use the business analyst approach, which is to ask “why” five times. Get into the weeds with what they are really struggling with. If it’s a cross-sell opportunity, then that could have been driven because of past mergers and acquisitions. If you know you’re going to do more of that moving forward, talk about the specifics.
• Make understanding the challenge a priority. Believe it or not, one of the challenges most businesses have is simply making time to focus on a problem. Connecting with the business is critical to developing the right strategy and to ensuring long-term success. When organizations commit resources to a project, they’re more likely to see it all the way through. However, if it’s shifted to the pile on corner of a desk, it’s not likely to be as successful because it’s not a priority.
Instead of approaching the project with the seemingly overwhelming task of creating a customer 360 view, it’s more effective for organizations to start by identify three quick wins that can be accomplished. Whether its cross-selling or managing customer addresses, focus in on the important data elements and leave tasks like data household management for a later stage.
Five Ways to Align MDM Capabilities with Business Processes
Like customer 360 programs, master data management capabilities are not just centered on data. Rather, they are about managing the business processes that rely on well-established master data and the processes that create, update, and retire it. By applying these five steps, an organization will be setting the course for a successful and fruitful MDM capability:
1. Create a Glossary that Establishes Business Rules: We all know the problem; an organization uses the same term but it means two different things. Or it uses two different terms but they mean the same thing. Within master data management, this is a huge challenge. The first step in cracking that nut is to build a business glossary. This is important because many business terms in use around master data are often in conflict with one another as they contain different meanings. As a result, the business glossary must explain what a customer role means in the enterprise, what a vendor type is, what defines a product variant and so on. The business glossary will optimally be a part of a wider metadata management framework encompassing the technical aspects of master data as well.
The next step is to apply the business rules to these terms. Here we have:
• External business rules, which are rules based on laws, regulations within industries and other rules imposed from outside the organization.
• Internal business rules, which are rules made up within the organization which allow it to be more competitive and efficient.
External imposed business rules are most often different from country to country (or group of countries like the EU). Internal business rules may vary too, but tend to be rules that apply worldwide within an organization. The business rules for this purpose should ultimately be expressed in the way they affect an organization’s master data. Examples include: 1.) to open a business account, you must supply a valid Legal Entity Identifier such as a Company Registration Number, VAT number or whatever applies to the business and geography in question 2.) a delivery address must be verified against an address directory valid for the geography in question 3.) to bring a product into business there is a minimum requirement for completeness of product information.
2. Get a Grip on Business Process Mapping: Understanding the role of master data in business processes is a foundation for optimizing and ultimately transforming the business in the digital era. In that quest, it’s important to look at the different roles played by master data. For instance, there are business processes that purely consume master data such as executing a direct marketing campaign.
Doing this in an effective way is heavily dependent on clean and updated master data. A key capability is the ability to separate which targeted real world entities belong to the so called “new market” and which are existing customers, prospects, or churned customers. When working with known customers, the ability to intelligently relate to previously purchased products and their categories of interest is paramount. Often knowing about the right relationship between targeted parties (both within and external to your business) and locations is valuable as well.
When implementing MDM and performing ongoing refinement, the insight on how master data is used and creates value in business processes is the starting point. Then, there are business processes that potentially change master data such as the order-to-cash process. In this example, the customer master data may be especially affected. A key question is whether the order is placed by a new customer or a known customer. If it truly is a new customer, then effective collection of accurate and timely master data determines the successful outcome of receiving the cash based on correct credit check, shipping information, and more. If it is a known customer, there is a chance to validate and eventually update customer master data. While customer master data is often changed through business processes having another main purpose, this is usually not the case with product master data.
Finally, there are business processes with the sole purpose of maintaining master data. An example here involves manufacturing, distribution, and retail, where the business process is all about enriching product master data. With the rise of customer self-service through e-commerce, the data quality requirements for completeness and other data quality dimensions have increased substantially. This makes the orchestration of complex business processes for enriching product master data a whole new flavor of business process management where master data itself is the outcome.
3. Embrace Event Management: Mapping business process will reveal a lot of events that trigger the involvement of master data. Orchestrating these events will be an important part of an MDM implementation. The master data events may be from internal processing as well as triggered by external circumstances. External events around party master data include when someone changes name, moves to a new address, to another line of business, or when a legal entity dissolves. External events around product data involve when a supplier introduces a new product, a new available data element/digital asset, or when a merchant requires a new data element or digital asset.
4. Decide how Master Data Will be Created, Read, Updated and Deleted: Based on the business rules found in the business glossary, the business process mapping and the identified events happening around master data, organizations can create a picture of where master data plays a role – both within the organization and between trading partners. Increasingly, self-service scenarios must also be addressed to include things like customer registration, supplier registration and suppliers providing product information by automated services.
5. Deploy Master Data-fueled Workflows: No matter if master data comes from outside or originates inside the organization, the flow of master data must be governed. First, the approval process (whether automated, “manual” or both) must be supported by workflows where existing master data is presented to the approver and the before/after state of the master data is seamlessly reflected in the master data repository. Second, there will be a range of master data and data quality functionality that should be operationalized by being built into master data workflows. This includes on the fly matching of party master data between internal and external sources and address verification.
Master data management and its alignment to critical business processes must go hand in hand when doing an MDM implementation. The starting point is a clear business glossary which, once created, will be used to help identify relevant business rules, map business processes, understand master data events and support a lifecycle of onboarding, change requests and end-of-life handling, while applying the required master data workflows. More importantly, it will ensure that the MDM lifecycle ties people, process, and technology together so the business can focus on what it does best – growing the business and improving relationships.
And remember, it’s not the “how” that’s important for setting a successful foundation, but rather it’s the “why.” By starting small and aligning with business processes, organizations can easily map out the entire project and simply repeat successes throughout the larger scope of the project. Be sure to measure the program’s success and articulate where stakeholders were before the effort and where they are now. Doing so will help set the pace for additional projects, ensure they get properly funded, and justify the project once it’s complete.
After all, the “how” is ultimately about what the technology is delivering, not the reason behind it. By shifting the question, enterprises will prioritize discovering challenges within the business and set it on a trajectory for long-term success.