Seven Ways to Reduce IT Costs Using Master Data Management

MDM Cost Reduction Benefit No. 4:  Reduces outsourced "cleansing" costs.

An MDM system can provide significant cost savings by eliminating expensive outsourced manual cleansing.  Some companies outsource the deduplication of their data to an outside data cleansing services provider. This is usually done for either marketing or compliance reasons. 

A marketing department may outsource the deduplication of its direct marketing lists, whereas under the pressure to meet regulatory compliance deadlines, the legal department may outsource the manual cleanup of their compliance data. 

However, in both these cases, the cleansed data is never stored in a central place for future access, and it requires repetitive cleansing. Over a period of time, these costs can mount to substantial dollars across the organization.  Further, the history of how the data has changed over a period of time is not stored -- a prime requirement for compliance audit. 

An MDM system eliminates the need for outsourced manual cleansing by automatically cleansing, enriching and deduplicating data on an ongoing basis, centrally storing it for future use, tracking the changes to the data, and then making the cleansed, enriched data available to marketing and compliance applications. 

MDM Cost Reduction Benefit No. 5: Reduces license, support and hardware costs of redundant systems.

By centralizing data for the enterprise, MDM makes it possible to reduce the amount of, or even eliminate, redundant data stores and systems.  Instances that hold duplicate data can be retired, resulting in significant cost savings. 

Consider this scenario: A multinational organization operating in more than 100 countries held its employee records in 70 different human-resource application instances. With this scattershot approach, company HR executives had no way to tell the exact count of employees; it would take over two weeks to tally the employee count, by which time a number of employees would have joined, quit or been terminated. 

By centralizing the employee information in an MDM system and retiring the redundant HR instances, this company can now not only gain the accurate employee count at any point in time, but also save on costs of maintaining the additional instances, thereby realizing costs saving in a variety of ways.

MDM Cost Reduction Benefit No. 6:  Reduces custom solution development and maintenance costs.

By replacing old custom masters, companies can save on costs spent developing and maintaining them.  Some companies have developed their own proprietary custom masters such as a Customer Information File (CIF) or Operational Data Store (ODS) by stitching together various tools. 

These masters were originally developed to solve a specific business problem, but over time they have become inflexible to meet the growing demands of the department, and are much less capable of addressing other business needs in different parts of the organization. 

By replacing these antiquated custom masters with a configurable off-the-shelf MDM platform, organizations can not only save significant development and maintenance costs associated with band-aiding the custom solution, but also help refocus IT to support business operations with timely data.

MDM Cost Reduction Benefit No. 7:  Reduces the cost of information delivery.

IT can reduce costs by delivering the right information at the right time.  Compliance and management reporting are two of the major functions supported by IT.  Errors in the reports delivered to regulatory agencies can results in fines, and errors in reports delivered to management can result in misinformed and poor strategic decisions. 

When auditors or management doubt the authenticity of the data in the reports, it will often result in calls to IT to help prove the veracity of the data.  This can undermine management trust in IT department performance.  It can also result in critical IT resources having to be diverted to mine the data for historical changes, which can be an expensive operation. 

MDM can help eliminate this situation by a) managing a single version of the truth along with a history of all changes, and b) delivering this information to any reporting, business intelligence or data warehouse.  Hence the compliance and management reports created from these systems always have the most authentic information. 

Should the veracity of the information need to be verified, it can be easily achieved with an MDM system since it stores all the changes to the data.
Hence the MDM system helps reduce IT costs by delivering reliable information.

Editor's note: The bulk of this article was provided by Ravi Shankar, Senior Director of Product Marketing at Siperian, maker of a "flexible" master data management platform. It was edited for presentation on eWEEK.com by Senior Writer Chris Preimesberger.