Master data management (MDM) is a key discipline to help companies engaged in the financial services market to grow their business. Where it was a vital part of survival in a tight economy, such as consumers have been through, it becomes foundational when a growth phase returns.
This is according to Johann van der Walt, MDM consultant, Knowledge Integration Dynamics (KID).
The past three years have been about cutting costs, and MDM had a key role to play there, as it helped organisations reduce duplication and redundancy. But, as always, the wheel turns, and it is now time to focus on revenue generation and business growth.
Revenue generation is often driven by the ability to sell more and higher value goods to existing customers – the process known as cross-selling and upselling.
This increases share of wallet rather than share of market – and it is always more cost-effective to grow revenues this way. It ties into the notion that it is four times easier and more cost-effective to sell to sell to an existing customer than attract a new one.
The MDM market is booming: it reached $1,5-billion last year in value, up 14% from the previous year, and will surge to $3-billion by 2014, according to research house Gartner.
Gartner has an elegant definition of MDM: “It is a technology-enabled business discipline in which business and IT organisations work together to ensure the uniformity, accuracy, stewardship, semantic consistency and accountability of the organisation's official, shared master data assets.”
MDM is more than just another attempt to plug the quality and consistency view at the heart of every organisation of substance. It is an elegant, lifelong journey which results in reduced costs and enhanced revenue, today, tomorrow and for good.
Gartner has made the following observations:
* MDM has enjoyed double-digit growth, even at the height of the global recession.
* Emerging MDM domains (supplier, human resource, asset and location) show more rapid growth from a smaller base.
* MDM growth is being driven by niche providers along with established players.
* Growth in the MDM market provides a major business opportunity for software and service providers that specialise in these areas, and it will continue to attract new entrants.
* Growth is removing skilled MDM resources from the market. End-user organisations will struggle to resource their MDM programmes.
* Organisations must weigh the advantages of best-of-breed MDM software vendors (functionality, data domain and vertical-industry expertise) relative to long-term viability risk.
* By 2015, 10% of packaged MDM implementations will be delivered as software as a service (SaaS) in the public cloud.
Many financial services companies may be concerned about the cost of MDM, but done correctly it is a self-liquidating exercise. It ensures that marketing and sales are done correctly, consistently and logically. It is an essential exercise, and companies which do it ahead of their competitors will gain a significant boost in revenue generation.