Key Trends & Planning Assumptions - Conference Keynote for MDM SUMMIT Fall 2008 in NYC

“Milestones on the MDM Road Map for 2008-

2009”

MDM SUMMIT Fall 2008 Keynote

Aaron ZornesChief Research Officer

The MDM Institute [email protected] +1 650.743.2278

mailto:[email protected]

© 2008 The MDM Institute The-MDM-Institute.com

Agenda

Key findings from MDM Institute’s research “Enterprise MDM: Market Review & Forecast for 2008-

12” Why multi-entity MDM? Why now? What are the necessary features of a

fourth-generation hub? What is the market outlook for these

hubs?


Enterprise Master Data Management: Market Review & Forecast for 2008-12

MDM Institute MarketPulse™ report available October 2008

Executive summary Overview of enterprise

MDM Strategic planning

assumptions for Global 5000 & SMBs

Enterprise MDM market forecast for 2008-12

Leading MDM vendor profiles & field reports

Gartner “MDM for customer master will hit

~ $1B in S/W revenue by 2012” “With PIM & other domains,

it could be over $2B” Forrester

“$344M total MDM S/W market size (not including services) in 2006”

“MDM anticipated growth to over $2.2B by 2010”

MDM Institute “Overall MDM market (customer &

product hubs, plus systems implementation services) to grow to $2 billion by 2012”

Clearly, enterprise MDM is a major IT initiative being undertaken by large number

of market-leading Global 5000 size enterprises


The aggregate enterprise MDM market (customer & product hubs, plus systems implementation services) totaled US$730 million at YE2007 & will reach US$2 billion by the end of 2012.

Software sales are but one portion as MDM systems integration services reached US$510 million alone during 2007 & are projected to exceed US$1.3 billion per year by 2012.

Enterprise MDM Software Market (2008-12)

$0

$500,000,000

$1,000,000,000

$1,500,000,000

$2,000,000,000

$2,500,000,000

2008 2009 2010 2011 2012

Implementation Services

PIM Hubs

CDI Hubs

Aggregate MDM Software Market 2008-2012 (total $)


Enterprise MDM Market Price Points 2008-12

Market for enterprise MDM solutions continues to evolve (& will shortly include hosted MDM as well), largest market will consist of those deals with s/w licenses ranging between US$1-2M.

Even large # of SMBs which will take up Microsoft MDM & similar lower priced solutions, sheer number of global 5000 sized firms (yet to crystallize their enterprise MDM strategy) will provide steady pipeline of s/w licenses each in excess of US$1M during 2008-12.

$0

$50,000,000

$100,000,000

$150,000,000

$200,000,000

$250,000,000

2008 2009 2010 2011 2012

$2M+

$1-2M

$250K-$1M

$100-$250K

<$100K


Geographic Growth of MDM Market 2008-12

Multiple factors as to why MDM went global so fast. One of main catalysts was IBM’s acquisition of best-of-breed vendor DWL & in turn quick paced ramp up of IBM’s global services organization as well as its global sales & marketing teams.

Additionally reduction in price points experienced during 2006-07 plus currency fluctuations enabled second & third world countries’ large enterprises to take up this technology initiative. Additionally, markets within China, India, and the Middle East have yet to be truly explored.

Americas, $103,800,000

Americas, $127,050,000

Americas, $165,137,500

Americas, $155,000,000

Europe, Mid-East, Africa, $51,900,000




Asia-Pacific, $17,300,000


Americas, $359,400,000





$0 $50,000,000 $100,000,000 $150,000,000 $200,000,000 $250,000,000 $300,000,000 $350,000,000 $400,000,000

2008

2009

2010

2011

2012



1. Compliance & regulatory reporting

2. Economies of scale for M&A

3. Synergies for cross-sell & up-sell

4. Legacy system integration & augmentation

5. “Once & done” economies & customer satisfaction

Enterprise MDM is increasingly mandated to manage master data (customers, accounts, products, etc.) that has significant

impact on enterprises’ most important business processes

“Top Five” Business Drivers for MDM Initiatives



1. Rapid growth of MDM market into mid-market as well as across industries & geographies

2. Steady evolution away from data-centric hubs into application hubs

3. Elemental movement towards “enterprise MDM” in multiple phases

4. Futile dogmatic resistance is fading against the power of multiples

5. Inexorable shift to formal data governance structures

The market for MDM solutions is significantly & quickly expanding – across geographies, industries, & price points

“Top Five” Report Findings


Solidified Requirements for 3rd Generation MDM Solutions

SOA/shared services architecture with evolution to “process hubs”

Sophisticated hierarchy management

High-performance identity management

Data governance-ready framework

Persisted, registry & hybrid architecture flexibility

MASTER DATA SEARCH

MASTER DATA

MODELING

MASTERDATA

APPLICATIONS

MDMMASTER DATA

PREPAR-ATION

MASTERDATA

GOVERNANCEMASTER

DATAMOVEMENT

MDM has morphed from “early adopter IT project” to “Global 5000 business strategy”; phase 2 MDM

deployments are already fusing party & product domains


Evolving Requirements for 4th Generation MDM Solutions

Multi-entity MDM Process/policy hub

architecture Unstructured

information support Integrated data

governance Enterprise search

MASTER DATA SEARCH

MASTER DATA

MODELING

MASTERDATA

APPLICATIONS

MDMMASTER DATA

PREPAR-ATION

MASTERDATA

GOVERNANCEMASTER

DATAMOVEMENT

G5000 enterprises’ business strategies mandate long term, strategic “multi-entity MDM” – in turn enabled by policy-

driven data governance


Business Value of Multi-Entity MDM

With a 4th generation MDM platform, an enterprise will be better able to

Identify & provide differentiated service to its most valuable customers via their relationships (households, hierarchies); also cross-sell & up-sell additional products to these customers

Introduce new products & product bundles more quickly across more channels to reduce the cost of New Product Introduction (NPI)

Provide improved enterprise-wide transparency across customers, distributors, suppliers, and products to better support regulatory compliance processes Enterprises must plan now to realize economic value &

competitive differentiation via multi-entity MDM during next 2-5 years


MDM Milestoneswww.tcdii.com/mdmresearch/assumptions.html

Market maturation

Market momentum

Market consolidation

Budgets/skills

Data governance

MDM convergence

Architecture & data models

Identity resolution

Party data quality

Analytics

Policy hubs

Enterprise search

Strategic planning assumptions to assist IT organizations & vendors in coping with flux & churn

of evolving MDM vendor landscape


Market MaturationStrategic Planning Assumption

During 2008, the MDM market will continue to shift gears from “early adopter” to “mainstream” as 95%+ of financial services, communications services, high tech, & pharma/life sciences enterprises actively explore to replace homegrown MDM solutions

Through 2009-10, verticalization/horizontalization of MDM solutions will expand beyond corporate financial reporting, EMPI healthcare, etc. into financial services & government especially

By 2012, the market for enterprise MDM solutions (software & services) as both strategic initiatives & to refresh aging legacy MDM capabilities will exceed US$3B

MDM MILESTONE


Market MomentumStrategic Planning Assumption

During 2008, MDM solutions such as IBM, ORCL, SAP, & TDC will monopolize majority market share in the G5000 enterprise; while mid-market solutions arrive from MSFT, Nimaya, & ORCL plus Data Quality vendors (Pitney Bowes/G1, SAS/DataFlux, Trillium)

Through 2009-10, both mega & best-of-breed MDM vendors will aggrandize the traditional master customer DB business of Data Service Providers (e.g., ACXM, DNB, & Experian) as these vendors sprint to deliver on-premise CDI hub solutions

By 2012, every major application & database vendor will provide either native or OEMed MDM capability – including DOX, MSFT, & CRM

MDM MILESTONE


Market Consolidation & DiversificationStrategic Planning Assumption

During 2008, mega IT vendors (IBM, ORCL, SAP) will continue M&A-driven R&D gyrations in moving to an enterprise MDM-centric portfolio with ORCL & SAP challenged additionally in moving from silo’ed application architectures into SOA-based architectures (Fusion & NetWeaver)

By 2009-10, IBM (ASCL/CRSW/DMC/DWL/LAS/Princeton Softech/ SRD/Trigo/Unicorn) & ORCL (HYSL/iFlex/JDE/PSFT/RETK/SEBL/ Sunposis) will begin to overcome most architectural/ BPM/ metadata/platform issues that confounded SAP earlier (A2i/BOBJ/Callixa)

Through 2009-10, mega IT vendors (IBM, ORCL, SAP, & TDC) will dominate the MDM market with niche/best-of-breed vendors (DNB/Purisma, i2, Initiate Systems, Kalido, Siperian) thriving in specific industries & horizontal/corporate applications

MDM MILESTONE


Budgets & SkillsStrategic Planning Assumption

During 2008, G5000 size enterprises will spend US$1M for MDM software, with add’l US$3-4M for SI services; Global Service Providers will operate under this price floor by applying highly-customized, labor intensive frameworks & related accelerators

Throughout 2009-10, skill shortages will greatly inflame project costs as demand for data stewards, enterprise data architects, & individuals with data governance experience outstrip market supply; concurrently, SIs will fill void in classic style by baiting & switching veterans for rookies

By 2012, market will stabilize as enterprises react by training & protecting their own MDM staff with specific product & project expertise; until then, enterprises will struggle with re-skilling same resources multiple times as emerging/evolving data management technologies mature (e.g., Fusion, Netweaver, …) MDM MILESTONE


Career TracksStrategic Planning Assumption

Scarcity of “hands on” MDM experience exists

During 2007-08, 1,500+ product-specific consultants albeit with little “real world” experience with mainstay MDM solutions were trained up

Current shortage lends itself to same scenario 5-10 years ago with SAP’s ABAP 4GL – i.e., inflated prices & resumes with many junior SI staff spinning up to speed at client’s expense (a.k.a. “Androids”)

Market for expertise will create major demand for corporate MDM positions during next 3-5 years

Data Steward,Enterprise

Data Architect,Enterprise Data

Modeler, Ctrs of Excellence,

MDM Programmers

Product-Neutral

Product-Specific Off-Shore

On-Site


Data GovernanceStrategic Planning Assumption

During 2008, most enterprises will struggle with cross-enterprise data governance scope as they initially focus on customer, vendor, & product; enterprise-level data governance that includes entire master data lifecycle (creation, promotion, archiving, …) will be mandated as a core deliverable of large-scale MDM projects

Through 2009-10, major SIs & MDM boutiques will focus on productizing data governance frameworks while MDM software providers struggle to link governance process with process hub technologies & enterprises struggle to realize enterprise data governance in cost-effective way

By 2011-12, both corporate & LOB data stewards will be a common position as Global 5000 enterprises formalize this function amidst increasing de facto & de jeure recognition of information as a corporate asset

MDM MILESTONE


MDM ConvergenceStrategic Planning Assumption

During 2008, party & product data interdependencies will quickly broaden MDM requirements – i.e., from “customer” to “product” to “vendor”; concurrently, vendor dogma will promote nouveau approaches such as collaborative MDM to assuage multi-entity conundrum

Through 2009-10, select best-of-breed vendors (DNB/Purisma, Kalido, Initiate Systems, Siperian) will provide multi-hub (entity, architecture & brand) connectivity via hierarchy management extensions

By 2012, enterprises without an overall, long-term MDM strategy run the ironic risk of building “MDM silos”

MDM MILESTONE


PARTY:PRODUCT Conundrum

Different master entity types may require different MDM brands or architectures

Product data shared across supply chain

Employee data captive within HR apps Customer data never leaves home

(outside the firewalls) Customer policy/ process hubs

ultimately require pricing masters, product masters, supplier masters, & so on …

PricingAuthorized Products

BundlesCross-Reference

HierarchiesGeographical

VariantsRegional Variants

PARTY

PRODUCT

SOA mandates “Party” + “Product” MDM – however, “customer” cannot simply be added as object to PIM products


Architecture & Data ModelsStrategic Planning Assumption

During 2008, vendors will expose MDM capabilities as “always on” services in loosely-coupled architectures; enterprises will begin establishing a central, business-side led data mgmt team with embedded data quality & external data update services in flow of core business processes

During 2009-10, mega vendors (IBM, ORCL, SAP, TDC) will focus significant resources on “industry content” of data models which will force specialist vendors to stay “data model lite” via specialization in B2B/B2B2C hierarchy management & distributed MDM

Not until 2011-12, will mega MDM vendors rewire foundational software to fully support strategic application infrastructure (Fusion, NetWeaver, …) & have completed transitioning from client/server to SOA; concurrently, G5000 business requirements will drive vendors into 4th gen full spectrum hubs that support structured & unstructured info

MDM MILESTONE


Most Common MDM Topologies

Composite/Hybrid is majority architectural preference; Registry/Virtual 2nd choice

IMPLEMENTATION STYLE DESCRIPTION

External (Service Provider) • Database marketing providers• Data service providers • Service bureaus

Persistent (Database) • Master customer information file/database• Operational data store/active data warehouse• Relational DBMS + Extract-Transform-Load

(ETL) + Data Quality (DQ)

Registry (Virtual) • Metadata layer + distributed query (enterprise information integration or EII)

• Enterprise application integration (EAI)• Portal

Composite (Hybrid) • Ability to fine-tune performance & availability by altering amount of master data persisted

• XML, web services, service-oriented architecture (SOA)

“Chernobyl” • Encapsulate legacy applications


Identity Resolution Strategic Planning Assumption

During 2008, independent DQ vendors (AddressDoctor, G1, HI, Trillium) will focus on name & address cleansing as they struggle against better funded match/merge & data profiling capabilities increasingly integrated with mega vendor MDM; ongoing challenge will be aggregation of customer data balanced against privacy dictates

During 2008-09, MDM capabilities for classifying, discovering & archiving party relationships while maintaining privacy will become major requirement; concurrently, users will be challenged to discern price/performance/scalability & accuracy of matching algorithms

By 2009-10, use of cross platform/cross brand customer keys will become core to enabling seamless loyalty programs & online services; sophisticated MDM hierarchy management capabilities will include “global IDs” as mainstay feature to link both legacy & newly-built hubs with DSP’s enrichment data

MDM MILESTONE


Party Data Quality Strategic Planning Assumption

During 2008-09, enterprises will focus more on degree to which “party data quality” (consumer, subscriber, owner, member, vendor, establishment, contact, …) is sufficient to meet requirements of diffuse business entities

By 2009, ”quality” metrics will increasingly be defined specific to purpose of particular business function (product development, mktg, sales, order admin, service, compliance, analytics, …) & in turn be driven by enterprise-wide data governance initiatives

Through 2010-11, wide deployment of loosely-coupled SOA architectures will catalyze consumption of highly-optimized data quality functions as made available via both mega DSP & enterprise application vendors

MDM MILESTONE


Policy Hubs Strategic Planning Assumption

During 2008, MDM vendors will lag their BPM counterparts in providing workflow orchestration to synchronize the trusted sources that comprise a federated master data store

Through 2009-10, the mega CDI-MDM vendors (IBM, ORCL, SAP) will struggle to provide BPEL-compatible workflows while specialist MDM solutions rush distributed Collaborative MDM capabilities to market

By 2012, without such flexible workflows, organizations will merely rebuild the same master data files they evolved the past 15-20 years with their ERP & CRM infrastructures

MDM MILESTONE


Enterprise SearchStrategic Planning Assumption

Through 2008, the unique properties & behavior of master reference data will spawn a series of vertical applications & specialized features within MDM solutions

During 2009-10, semantically-enabled metadata will enable “search” for both structured & unstructured info across a variety of applications such as catalog management & deep web search, & enterprise search

By 2012, enterprise semantics & SOA-enabled data services will provide the technology foundation for policy hubs; concurrently, the 4th generation of hubs will innately support Analytical, Operational, & Collaborative & MDM business services

MDM MILESTONE


Solidifying Requirements for 3rd Generation MDM Solutions

SOA/shared services architecture evolving to “process hubs”

Sophisticated hierarchy management

High availability identity management

Data governance-ready framework

Registry, persisted, & hybrid architecture flexibility

MASTER DATA SEARCH

MASTER DATA

MODELING

MASTERDATA

APPLICATIONS

3GMDM

MASTER DATA

PREPAR-ATION

MASTERDATA

GOVERNANCEMASTER

DATAMOVEMENT

Future direction is to also grow all reference masters into operational masters, e.g., pricing & location style masters into transactional support roles via operational, analytical,

& collaborative MDM linkages

Aaron Zornes

Need to blend MODELING and GOVERNANCE


What are the Necessary Features of 4th Generation MDM Solutions?

Multi-entity MDM Multiple “use

case” styles Process/policy

hub architecture Integrated data

governance Enterprise search

& support for unstructured info

Identify & provide differentiated service to most valuable customers

4GMDM

Introduce new products &

product bundles more quickly across more channels

Provide improved enterprise-widetransparency

Enterprises must plan now to realize economic value & competitive differentiation via multi-entity MDM

during next 2-5 years


Bottom Line Planning Assumptions

Acknowledge no single vendor does it all “well” Party vs. product B2B vs. B2C vs. B2B2C Batch vs. real-time

Recognize that industry expertise matters

Test drive matching & consulting expertise

Invest in data governance & MDM architecture for long-term sustainability & ROI

MDM is critical to proactively & consistently manage customer data to untangle quagmire of complex systems – e.g.,

streamline processes, enhance QoS, & govern compliance


MDM ConvergenceStrategic Planning Assumption

During 2008, party & product data interdependencies will quickly broaden MDM requirements – i.e., from “customer” to “product” to “vendor”; concurrently, vendor dogma will promote nouveau approaches such as collaborative MDM to assuage multi-entity conundrum

Through 2009-10, G5000 enterprises will broaden their MDM business initiatives from single use case, single entity to multi-style, multi-entity

By 2012, enterprises without long-term multi-entity MDM strategy run ironic risk of building “MDM silos”

SOA-based multi-entity MDM manages master data domains (customers, accounts, products, etc.)

with significant impact on most important business processes


PARTY:PRODUCT Conundrum

Different master entity types & usage styles may require different MDM brands or architectures

Product data shared across supply chain

Employee data captive within HR apps

Customer data never leaves home (outside the firewalls)

Customer data hubs ultimately require pricing masters, product masters, supplier masters, …

PricingAuthorized Products

BundlesCross-Reference

HierarchiesGeographical

VariantsRegional Variants

PARTY

PRODUCT

MDM is increasingly about “multiples” – data domains, relationships among them, & usage styles


Why “Multi-Entity MDM”? Why Now?

Future direction is to grow all reference masters into operational masters

Future MDM landscape Multiple data domains Multiple relationships Multiple usage styles –

analytical, operational & collaborative

Linkage between operational data domains using collaborative or analytical MDM

Enterprise MDM = multi-entity MDM – such epiphany enables the enterprise to avoid “random acts of MDM”

Pricing Policy HubPricing Reference Master

CDI HubLocation Master

Customer RegistryPIM Data Hub

Evolutionary Multi-Entity MDM

Entity-SpecificMDM Data Marts

Myopic

Strategic


Market Update for Product Master Data

Adoption of MDM for product is increasingly widespread across all industries

Like party master data, product master data spans multiple use cases & implementation styles

Diverse range of vendors is targeting the PIM market – enterprise application suite vendors, best-of-breed PIM vendors, best-of-breed procurement vendors, industry-specific product masters, analytical MDM vendors, … even CDI hub vendors

No vendor dominates Enterprise application suite vendors will redouble

R&D & marketing efforts during 2009-10

Broader & deeper PIM requirements are pushing vendors to develop more comprehensive solutions; the PIM hub market

will continue to grow quickly & attract new entrants


Findings

The value of “enterprise MDM” can be intuitively recognized in a range of

business initiatives – from short-term fixes to a narrow set of problems such as capturing customer privacy preferences

across product lines to long-term enterprise-wide initiatives delivering

infrastructure agility by embracing SOA.MDM Institute Advisory Council ConsensusJuly 2008 internal round table

Even tactical MDM projects require facets of the “enterprise MDM” solution set; enterprises must plan now to realize economic value & competitive differentiation

via 4th generation MDM during next 2-5 years


Summary

• Enterprise MDM is major IT initiative underway at large # of market-leading Global 5000 enterprises

• Most enterprises & solutions vendors are finding near-term success with single-faceted approach inherent with 3rd generation MDM solutions

• Myopically focusing solely on single data domain & usage style is detrimental to longer term business strategy of integrating supply, demand, & info chains across both intra- & extra-enterprise boundaries

• Coming to market during 2008-09 are 4th generation multi-entity MDM solutions which address requirement for multiple domains & styles as well as roles of consumersLearn from MDM early adopters & prepare now

for “Enterprise MDM” to increase business value & lower costs


Bottom Line

Promote MDM as essential business strategy with IT deliverables to leverage high-value info used repeatedly across many business processes

Position MDM as enabler of key business activities such as improving customer communication & reporting – rather than an important infrastructure upgrade

Begin MDM projects focused on either customer-centricity or product/service optimization

Plan for multi-entity MDM juggernaut evolving from “early adopter” & into “competitive business strategy”

Insist on Enterprise MDM software capable of evolving to multiple usage styles & data domainsPlan now to realize economic value & competitive differentiation via

multi-entity MDM during next 2-5 years


MDM SUMMIT™ Conference Series

MDM SUMMIT Canada 2008 Toronto Holiday Inn on King Street | February 4 – 5, 2008

MDM SUMMIT – Spring 2008 Hilton San Francisco | March 30 – April 1, 2008

MDM SUMMIT - Europe 2008 London Royal Garden Hotel | April 21 – 23, 2008

MDM SUMMIT Asia-Pacific 2008 Sydney Sofitel Wentworth Hotel | April 28 – 30, 2008

MDM SUMMIT - Fall 2008 New York Hilton | October 19 – 21, 2008

MDM SUMMIT Iberia 2008 Madrid Mirrasierra Resort | November 4 – 5, 2008 MDM & Data Governance Deutschland 2008 Frankfurt Steigenberger Hotel | October 6 – 7, 2008

MDM SUMMIT - Europe 2009 London Royal Garden Hotel | April 20 – 22, 2008

MDM SUMMIT Asia-Pacific 2009 Sydney Sofitel Wentworth Hotel | April 28 – 30, 2009


Authoritative

Relevant

Independent

Aaron ZornesFounder & Chief Research

OfficerThe MDM Institute

The-MDM-Institute.com a.k.a. www.tcdii.com


About the MDM Institute Founded in 2004 to focus on

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“Independent, Authoritative, & Relevant”

About Aaron Zornes Most quoted industry analyst authority on topics of MDM & CDI

Founder & Chief Research Officer of the MDM Institute Conference chairman for DM Review’s MDM SUMMIT conference series

Founded & ran META Group’s largest research practice for 14 years M.S. in Management Information Systems from University of Arizona


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consultants with advice & insight regarding the use of MDM software & related business processes at Advisor’s convenience

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Optionally, Advisor may respond to the bi-monthly survey request via email or Internet-based survey fulfillment

Results of such MDM market research surveys shall be aggregated by the Institute & made available to all Advisory Council members

In no case, shall any Advisor-specific survey information be made available to other parties unless Advisor has specifically agreed to the release of such information in writing

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• 3M• Bell Canada• Caterpillar• Cisco Systems• Citizens Communications• COUNTRY Financials• Educational Testing Services• GE Healthcare• Honeywell• Information Handling Services• Intuit• MCI• McKesson• Medtronic• Microsoft• Motorola• National Australia Bank• Nationwide Insurance• Norwegian Cruise Lines• Novartis• Roche Labs • Rogers Communications• Scholastic• SunTrust• Sutter Health• Westpac• Weyerhaeuser

Key Trends & Planning Assumptions - Conference Keynote for MDM SUMMIT Fall 2008 in NYC

Technology

Transcript of Key Trends & Planning Assumptions - Conference Keynote for MDM SUMMIT Fall 2008 in NYC