AMR Research Report: “Taking the PIM Path on the MDM Journey” - Scott Deutsch, Vice President Marketing

We have recently seen a tremendous up tick in articles and coverage around the growing need to address Master Data Management (MDM). A recent report from AMR Research provided an excellent overview of an MDM strategy and provided a tactical road map with some interesting analysis and recommendations. The report discussed the growing need to invest in MDM for Products (MDM-P).

Here are some direct quotes from the AMR Research report:

• “Think MDM. Execute PIM.”
• “Tactical PIM is the cost of doing business; broader MDM is the cost of doing business more profitably and competitively.”
• “While organizational obstacles and product matuÂrity prevent a sudden approach to Master Data Management (MDM) today, companies must pursue MDM in short-term pieces, with an understandÂing of needs across departments, between enterÂprises, and among industries. Product Information Management (PIM) is a worthwhile place to start.”
• “Companies must address short-term PIM needs with a view toward a broader MDM strategy.”
• “Companies can address PIM now, or they can play catch-up forever.”

The need for MDM-P is based on the need to provide a reliable foundation of data for many systems and initiatives, and therefore, it must be accessible to many constituencies throughÂout the enterprise. As AMR points out in the report, MDM’s goal is to provide a single view of the truth, no matter where it lies. MDM goes beyond product information into several domains:

• Suppliers
• Products
• Assets
• Customers
• Employees

While a product information strategy should be in accord with efforts in the other domains, it’s also important to recognize and account for the significant distinctions between data types. For instance, customer, supplier, and product information usually requires different models—often because of the static or dynamic nature of the entities. In the broader context of MDM, companies define data domains and loosely couple data structures to accommodate such differences.

Andrew White, of Gartner, also recently provided some excellent incite into the issue of multiple MDM domains. Gartner discusses the subject in the context of “Enterprise Information Management”. The following graphic does an excellent job at depicting the “data enterprise”.

But broader PIM—which AMR calls MDM for Products (MDM-P)—is a foundation of authoritative product information working across all systems and business processes. MDM-P has its place not as a distinct business process on its own, but as an informaÂtion service employed across business processes. It’s used in procurement and sourcing systems, in data synch, catalog publishing, merchandising functions, and in the various internal and external aspects of Product Lifecycle Management (PLM).

The following graph shows how PIM helps transform from integration to system of record for internal data synchronization to become your trusted source of product information.

As AMR stated, “At the core, MDM is data, with broad implications and requirements, entailing a range of structured information as well as documents and rich content. Also, the hackneyed but valid “garbage in, garbage out” maxim applies. Product records accumulate more attributes as they progress through a comprehensive lifecycle, so unclean or inconsisÂtent core data can lead to magnified disaster.”

They continue, “The best MDM strategies will accept the MDM vision as a journey, and will move forward by recognizing and exploiting the best opportunities to transform business. Tackling an enterprise-wide MDM strategy seems risky owing to the fluctuations in technology, standards, and business goals, but handling PIM as a step toward the goal leads to significant benefits.

AMR’s Take on Finding ROI in PIM

Return on Investment (ROI) in complying with customer mandates is scarce, except for the ability to maintain business with customers or partners. But significant posiÂtive benefit comes first through consolidating systems and resources, and then from improving process efficiency inside and outside of the enterprise.

Tangible near-term benefits offer glimpses of further return:

• Lower delivery costs—Companies significantly reduced catalog generation and syndication costs when using multi-channel publishing techniques. In the course of addressing customer mandates to syndicate product data, one manufacturer also reduced material costs by automatically producing more content through traditional channels, saving 20% on printing and shipping costs.
• Accelerate time to market—Companies introduced products to market faster by providing product information through automated means—that is, automatically publishing, syndicating, or allowing customers and partners access to catalogs. Retailers are finding they can reduce the time to set up a new product for sales by 80% or more. One manufacturer moved from a biannual introduction of new prodÂucts, based on its ability to produce new print catalogs, to introducing and supportÂing new products continuously through multiple media and partner channels.
• Increase sales—By managing products centrally, companies have taken advantage of new selling channels with little additional cost. Retailers of complex products report that providing better information through guided selling terminals has brought an increase of 30% versus comparable aisles.
• Reduce the cost of error—Companies avoid revenue loss associated with bad orders and resulting returns, which are often due to errors and inconsistencies in product data. Retailers report that more accurate information at POS has brought a decrease in returns in the 10% to 20% range.
• Do more with fewer resources—First-phase implementations typically reduce manual aggregation, transformation, and the error-prone reentry of data. Most companies cite an ability to handle more data and more channels with far fewer IT or business headcount. One chemical product manufacturer operating in over 100 countries eliminated five Full-Time Equivalents (FTEs) devoted to manually perÂforming product information localizations in spreadsheets.

Over time, PIM rollouts will produce more agile, streamlined enterprises that can quickly syndicate richer product information to a higher volume of customers and channels.

Broader MDM need not be a leap of ROI faith. Rather, it must be a progression of tactical destinations, prioritized with considerations for tangible return, customer or regulatory mandates, and opportunities, risks, and rewards along the way, always with the longer term goal of a single foundation for product data in the enterprise.