Monday, July 26, 2010

The role of Master Data Management and Business Intelligence in the Business Transformation

The value of a transformation initiative is not in the transformation itself, but on how the transformation will enable the organization to get ahead of the competition in a changing market place. A transformation initiative connects organizational silos and empowers them to collaborate and share information, resulting in a better and more holistic appreciation of the market challenges and the establishment of an integrated platform which facilitates a faster response than the competition. Many of the transformations initiatives that we are seeing in the market today come as a result of mergers and acquisitions; these companies are starting to realize that in order to capitalize in the synergies that mergers and acquisitions can provide the firms involved have to be integrated in soul and body (culture and systems). In order to achieve this integration new processes have to be established, which are usually enabled by the implementation of new tools. The introduction of new tools and process requires the organization to experience change, change that in order to be successful needs to be driven by a vision; a vision of what the new organization wants to achieve. This vision will set the direction of the transformation and help align everyone’s effort to achieve the goals; goals that will be achieved incrementally over time through release waves. Each release wave will help the organization to manage its assets better; perhaps the most important of these assets being the data, which becomes the blood of the transformation, helping connect the legacy systems with the new set of tools.

II. Master Data Management

The data will be shared across all locations, business areas and corporate entities bringing them together as part of the value chain. However, as with humans having different blood types (A+-, AB+-, O+-, etc), organizations also have different ways of creating, interpreting and analyzing the data. In the legacy world, it did not matter that two organizations used fields with similar names like Customer differently (e.g. one business area would use this field for the customer name, while another one would use it for customer ID), as most systems worked independently and if information sharing was required, workarounds were built to allow these two independent systems to exchange limited information. However, as part of the transformation initiative, these two organizations are expected to use the field the same way, consistently from beginning to end. A new process is established clearly specifying what information should be in this field. Imagine the surprise of the transformation architects, when they discover the field is being used inconsistently across the board and worse, when this field is being fed to the downstream applications which are constantly failing because of the bad quality of the data. Because their application modules are not working properly, there is a need to revert back to their old legacy systems which creates the need for additional data interfaces and synchronization which in turn creates even more data quality problems in the new system. What is the root cause? Is it the new tools, the process or perhaps training? The answer is all and none, what this transformation needs is a Master Data Management strategy that defines the critical fields up-front and establishes the right practices to populate this information, including the use of checkpoints, data profiling, and most importantly work-flow tools that allow for an audit log on the data changes (Who, when and from where). Having a centralized governance group that is empowered to designate single owners of the data across the organization will quickly address the compliance issues as people will have a better understanding on how their actions will directly impact downstream application modules and more importantly will provide a channel for them to suggest alternate solutions and possible improvements to the process. Master Data Management becomes a key transformation enabler that goes beyond implementing a technical solution to establish a holistic approach on how data is seen in the organization, effectively changing the data/blood Type to O- allowing for universal compatibility.

III. Business Intelligence

Once blood/data is flowing again properly through the body/organization, the transformation initiative can continue. A transformation is not complete, until it enables the company to deliver additional value to its customers and to itself. While having all the entities, business areas and locations using the same systems and sharing the same definitions of the data provides some operational efficiency, the true value of the transformation is in how the organization will convert the data into insights that turn into competitive advantages in the market. Business Intelligence will become an integral part of the transformation by providing the know-how on how to make that data actionable. Business Intelligence will enable the organization to analyze the data to form a holistic view of the market and indentify opportunities for new products, better promotions, better allocation and distribution, and perhaps bundles of items that provide value added to its customers. The proper Business Intelligence strategy will enable the organization to more close align with the business model of its business partners, creating win/win scenarios where the company can solidify or consolidate their leadership for the segments and brands they compete with. Business Intelligence provides the capabilities to understand the motivations and drivers of the consumers and can point out how to make internal changes that will drive consumption and thus additional revenue: such as localized or improved packaging. Having the right Business Intelligence strategy is thus key for success of any transformation initiative as companies deploy it to free the power of data.

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