Tuesday, July 14, 2009

Which MDM approach to use: Analytical, Operational, or Enterprise?

In my last posting, Setting the stage for MDM: some definitions, I described the 3 approaches to MDM that can solve for operational, analytical or both operational and analytical aspects of Master Data. They are, respectively, Operational MDM, Analytical MDM, and Enterprise MDM.

But which one is the right one for your organization?

Before I answer that question, let's talk about the major drivers to an MDM initiative. When building a business case for MDM, several experts agree to three major benefits: risk mitigation, cost reduction, and revenue growth (please see references at the end of the posting).

Risk mitigation involves reducing the possibility of non regulatory compliance (financial reports, SOX, etc.); non legal compliance (contracts, compensation, privacy, etc.); lawsuits and litigation; audit findings and loss of certifications; audit and legal costs; and a company's reputation.

Cost reduction involves lowering costs due to inconsistent, inaccurate, and non-timely delivery of data. These costs are: returned mailing and products; shipping fines; invoicing delays; wasted direct marketing; IT (maintenance of redundant systems, data reconciliation, consulting fees, software maintenance fees, etc.); low productivity related to inefficient processes, redundancy, and rework.

Revenue growth are mostly related to strategic objectives, such as marketing campaigns; channel management; value justification; brand identity; demand creation; and merges & acquisitions.

I recommend you first decide around which one(s) of those areas you're going to write your business case. Once you make that decision, you can use the following table as a guideline to what MDM approach you should implement.

But please, read the following “warnings” regarding the ensuing table:
- Enterprise MDM is a combination of Analytical and Operational MDM's. With that said, Enterprise MDM could be used to solve for all cases. My objective is to recommend the minimum necessary to achieve what you need.
- Use this as a general guideline only. I'm sure you can tell there are some overlaps among the three business cases. One could correctly argue that by mitigating certain risks, you could lower the costs of doing business raising questions if it should be put in the cost reduction category. Also, better data could reduce cost and improve marketing and consequently grow revenue. Anyway, please use your discretion.

Please comment if you have used this type of rationale when deciding what MDM approach to use, or if you have a different suggestion.


Fisher, Tony: The Data Asset - How Smart Companies Govern Their Data For Business Success - Wiley & SAS Business Series

Butler, Maureen: Building the Business Case (parts 1, 2, and 3) - Hub Solutions Design


  1. Good common sense approach. i like it.

  2. I like your way of thinking, but like you said there could be overlaps. For e.g. what if you want to grow revenue by enabling customer facing employees with the best/single view of the customer for cross/up selling? In that case you would need operational MDM and not just analytical MDM... I'm sure there are other overlaps and more specific business cases would need to be considered in addition to the 3 broad ones you mention. But overall, it's a good approach to get the thought process started before you delve into the details...

  3. Thanks for your comments Rajeev, and I definitely agree with you about using as a starting point.

    BTW, my blog has moved. Please check: http://www.dcervo.com

  4. Thanks Dalton - I'm in the middle of implementing an Operational MDM solution for a client and also beginning to create an MDM strategy for yet another client - will keep reading your very interesting and informative blogs, and share my insights too...