Master Data Management a Hit with Enterprise

by CXOtoday Staff    Nov 18, 2008

Worldwide master data management (MDM) software revenue is on pace to total $1.3 billion in 2008 making the market for MDM one of the fastest-growing software segments, according to Gartner.

The market will experience steady growth through 2012 when revenue will total $2.8 billion.

Despite the current economic crisis, ongoing requirements for businesses to increase effectiveness, reduce costs and meet compliance requirements are driving the adoption of MDM technologies, according to analysts at Gartner.

“MDM technology can help organizations achieve and maintain a single view of master data across an entire enterprise, enabling business and IT initiatives to perform in better unison, allowing for opportunities to increase revenue, reduce costs, achieve effective compliance, reduce risk and improve business agility,” said Chad Eschinger, research director at Gartner.

“The technology continues to mature and has great potential for enabling more-efficient and effective business processes in the future.”

Master data is the consistent and uniform set of identifiers and extended attributes that describe the core entities of the enterprise and are used across multiple business processes. Some examples of core entities are parties (customers, prospects, people, citizens, employees, vendors, suppliers or trading partners), places (locations, offices, regional alignments or geographies) and things (accounts, assets, policies, products or services). Groupings of master data include organizational hierarchies, sales territories, product roll-ups, pricing lists, customer segmentations and preferred suppliers.

MDM is a process that may be workflow-driven or transactional in nature, in which business units and IT departments collaborate, cleanse, publish and protect common information assets that must be shared across the enterprise. MDM ensures the consistency, accuracy, stewardship and accountability for the core information of the enterprise.

Gartner’s latest forecast for MDM software comes at a time when the full impact of the financial “meltdown” is unknown and therefore hinges on the ability and resolve of businesses to maintain some discretionary budgets.

Eschinger said that the many vendors and technologies that make up the MDM market make it both confusing and dynamic and explained that while MDM is a discipline enabled by technology, there is no single technology that meets all MDM user requirements. Products marketed for MDM initiatives vary by technology, industry, data domain and use case, and many span multiple domains.

North America and Western Europe held 85.7 percent of MDM software spending in 2007. Asia/Pacific, with 6 percent of the addressable market today, is expected to have the highest growth, reaching 9 percent share by 2012.

With regard to industry, the largest markets for MDM in 2007 were manufacturing, retail and financial services, which combined accounted for 53 percent of the market. Gartner expects that these industries will remain dominant throughout the forecast period as current adopters continue to expand their MDM initiatives and because of a vast addressable market that has underinvested in MDM technologies. Industries that are forecast to offer greater-than-average growth rates include communications, government, healthcare and utilities.

However, despite the optimistic outlook, several challenges still exist for MDM software vendors, according to Gartner. A stall may occur as businesses wait until MDM’s value is widely proved and as they wait to purchase technology to support most MDM data domains from a single vendor, as has occurred in other markets, freezing and limiting opportunity. In 2008, an increasing number of organizations faced challenges in their MDM programs because they have been too IT-led or because of inadequate technology, as per Gartner.