Customer Data Integration: Where is the Next Generation of Master Data Management Headed?

Article published in the August 2005 issue of the DM Review magazine. Key highlights include:

The customer data integration (CDI) market is in a state of considerable flux as a multitude of diverse technologies compete for large-scale, mission-critical projects. Analyzing data from a 150+ project database containing the vital signs of Global 2000 CDI projects, the CDI Institute is able to project future trends in mind share as well as current market share. During 2005, the average CDI software investment was $1.2 million with the typical large scale CDI project requiring systems integration (SI) fees ranging four to six times the amount spent on the CDI software. This demonstrates the increasing importance of application integration via master data management (MDM) as a catalyst for realizing ROI in large enterprises' multimillion-dollar customer relationship management (CRM) installations. Moreover, CDI is clearly one of the few remaining growth areas for both software vendors and systems integrators.

What is CDI?

The CDI market is comprised of process and technology solutions for recognizing a customer at any touchpoint - while aggregating accurate, up-to-date knowledge about that customer and delivering it in an actionable form "just in time" to touchpoints. Both IT vendors and executive IT management at Global 2000 enterprises need guidance in this fast paced, high stakes market that is the convergence of multiple overlapping middleware markets - e.g., customer recognition, data quality, real-time analytics, data warehouseing, business process management, enterprise application integration (EAI), etc.

While most enterprises have infrastructure initiatives based on the technology platforms of strategic IT partners such as Oracle/PeopleSoft, SAP and Siebel, more than 75 percent of the IT professionals surveyed by the CDI Institute are actively considering purchases "outside the family" to facilitate connectivity between customer-facing applications and processes. CDI strategies systematize a panoramic or 360-degree view of the customer by aggregating and analyzing multiple sources of master customer information into a master "system of record." Such "master data hubs" represent the holy grail of CRM products from Microsoft, Oracle, Siebel and SAP as they enable a single version of the truth across the enterprise's customer-facing processes. It is now a realizable goal for IT organizations to buy rather than build such infrastructure, with more than 95 percent of financial services and life sciences enterprises actively looking to replace homegrown CDI solutions. Additionally, the spate of mergers and acquisitions occurring in the communications service provider industries (telco, cable, satellite) is further creating a need to integrate customer-facing databases and processes as the newly minted mega telcos look to gain operational efficiencies and competitive marketing advantage via mergers. Lastly, many IT professionals are clearly looking to such long-term and large-scale IT initiatives as "career longevity insurance," given that such enterprise-scale infrastructure is not amenable to offshore outsourcing, etc.

Contemporary CDI solutions will vary by industry, for example, in terms of tactical approaches taken:

• Pharmaceutical/life sciences adopt semi-batch, database-centric approaches to deploy master physician data to sales forces.
• Financial services providers and online retailers require near real-time, business- and process-centric solutions to compete in the fast-paced B2C online world.
• Governmental organizations are often restricted in the ways they are permitted to merge and analyze data on their citizens, thus skewing these architectures toward anonymous entity resolution.

For planning purposes, it is often important to know where you came from as well as where you are going. This holds true for an enterprise CDI strategy per the marketing mantra often recited by CRM vendors: CRM is a journey - an ongoing process - not a product or a way station. In that spirit, we outline the basic road map of CDI solution evolution:

• First-Generation CDI. These solutions are most often standalone databases or files managed by monolithic applications such as IBM's Transaction Processing Facility (used by airlines), CSC's Hogan banking system or even early generation Siebel Systems' sales force automation installations.
• Second-Generation CDI. These solutions are "uni-modal" in that they are specialized for either batch or online updates and are database-centric master customer files. Frequently participating in bidirectional updates, these are either "data-centric" in using ETL (extract, transform and load) solutions or "process-centric" in depending heavily upon workflow.
• Third-Generation CDI. These approaches offer "multi-modality" and are flexible enough to support batch and online performance, loosely and tightly coupled application models, etc. Specifically, this variation supports a service oriented architecture (SOA) model in terms of Web services for a "business services" approach. This approach also increasingly provides support for the federation model whereby individual business units retain some autonomy in managing their "master" data assets yet participate in a "union" or "confederation." Additionally, a third-generation solution must support the tremendous scalability requirements, as well as reliability and availability, associated with mission-critical infrastructure.
• Fourth-Generation CDI. These systems provide extreme scalability because they are of the architecture required to support massive numbers of users such as business-to-consumer e-commerce or self-directed service centers. The systems also are designed to support unstructured content such as free-form text, video and audio in addition to structured database records.

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http://www.dmreview.com/article_sub.cfm?articleId=1033571