Some companies and industry sectors will sail through the global recession unharmed. One could be flippant and list the sin industries - smoking, alcohol and prostitution - but it is also worth looking at other industries that make their revenue and profit in a more conventional and less questionable manner.
One of these is master data management, also known as MDM. It continues to grow well ahead of the rest of the market: for instance, the MDM market grew more than 24% year-on-year from 2007 to 2008; revenue worldwide should reach $1.3 billion this year and more than double by 2012, reaching $2.8 billion, according to Gartner.
This makes MDM one of the fastest growing software segments. The question must be asked: why is MDM bucking the trend? As with any fast-growing market sector, there are many reasons for this:
* The insight that quality of customer service is a key competitive advantage in a down market. Quality service depends in part on accuracy of information, and MDM provides a standard foundation for this.
* The need to manage change, such as merger and acquisition, activity, which is rife in a down market.
* The need to reduce operational costs through support for quality, insight-filled data. Just the ability to cut postal wastage can positively impact the bottom line by several million rand a year, as around 12% of all postal items are incorrectly addressed and are returned.
* The need to get a handle on data in a strategic manner, for once and for all. It is one of management's greatest frustrations that decades into the information age, data quality cannot be subsumed. Management should not be surprised: most money spent in a tactical manner fails to return the appropriate value, whereas MDM, being strategic in its scope and execution, carries the promise of laying an enduring foundation for quality data.
* They need to cope with constantly changing regulatory compliance. Consider that a key trigger for Basel II was the data that supports risk management as defined through capital adequacy requirements. Think locally of Fais and Fica, and globally of Sarbanes-Oxley, and the wave of the new regulatory initiatives following the collapse of the American financial system, and you can see there will be many regulations to observe; and you can bet your bottom dollar that these new regulations will carry teeth.
* The need to boost efficiency and effectiveness, the one to reduce costs, the other to improve organisational competency and thereby profitability. Only companies that can juggle and fulfill these two requirements will survive and flourish during and after this downturn.
MDM allows organisations to standardise and integrate data, a key requirement for data quality. It helps organisations achieve and maintain a single view of master data across all divisions and departments.
Master data is the consistent and uniform set of identifiers and extended attributes that describe the core entities of the organisation. In almost all cases, such data is used across many business processes.
Not new
Some vendors claim to have an MDM silver bullet, but the reality is that MDM is about more than just one or two products
Mervyn Mooi is director of Knowledge Integration Dynamics.
Some observers have noted that MDM is not necessarily new, but rather a new incarnation of the concept known as a master file. That indicates that the problem of data quality has been around from the very earliest days of computers.
At its very heart, MDM seeks to resolve the anomalous situation that occurs, for instance, in banks, where a current customer is offered a product or service he already has. This is because the bank has no single view of the customer.
Some vendors claim to have an MDM silver bullet, but the reality is that MDM is about more than just one or two products. It embraces such processes as source identification, data collection, data transformation, normalisation, rule administration, error detection and correction, data consolidation, data storage, data distribution and data governance.
Tools that will help get a handle on MDM include data networks, file systems, a data warehouse, data marts, an operational data store, data mining, data analysis, data federation and data visualisation.
People to be appointed would include a data steward, who would have overall responsibility for data policies, and ultimately the issue of data would enjoy answerability in the boardroom.
Given that not many companies have laid the foundation described above, and the universal need for confidence in data, it's clear that MDM will continue to grow in popularity long after the recession is over.
* Mervyn Mooi is director of Knowledge Integration Dynamics.
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