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Deploying SAP MDM Managing Master Data to Maximize Value of ERP, SCM and CRM Systems

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Page 1: Deploying SAP MDM - ITtoolboxhosteddocs.ittoolbox.com/RD021507b.pdfDeploying SAP MDM Managing Master Data ... An Overview of SAP’s MDM 4. ... By making use of SAP Enterprise Portal

Deploying SAP MDM

Managing Master Data to Maximize Value of ERP, SCM and CRM Systems

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Executive Summary

To run faster, leaner, more efficiently and profitably, companies have invested heavily over the past decade in enterprise applications such as Enterprise Resource Planning (ERP), Supply Chain Management (SCM) and Customer Relationship Management (CRM). Because these systems support specialized functionality, they must each store their own reference data about core business entities, which often leads to data inconsistencies, duplications and errors. Siloed data also makes accurate, real-time, enterprise-wide reporting virtually impossible. The ability to quickly transform business processes and for these changes to be easily reflected in the supporting enterprise applications is essential for an organization to compete in today’s dynamic, fast-paced environment. The challenge, however, is maintaining a single, accurate view of products, customers, locations, and financial accounts across all core enterprise systems.

SAP Master Data Management (SAP® MDM) – a building block of SAP® NetWeaverTM –enables companies to store, augment, and consolidate master data, while ensuring consistent distribution to all applications and systems within the IT landscape. Working across heterogeneous systems at multiple locations, SAP MDM leverages existing IT investments in business-critical data, delivering centralized data management capabilities and enabling organizations to realize maximum value from their core enterprise applications.

This white paper examines the business drivers for MDM, provides an overview of the SAP MDM solution, outlines how SAP MDM can maximize value from installed ERP, SCM and CRM systems, and reviews the organizational impact of implementing SAP MDM.

Contents:

1. MDM Defined2. Why MDM Now?3. An Overview of SAP’s MDM4. The Business Case: Maximizing the Value of ERP, SCM & CRM Systems5. Implementing MDM: The Organizational Impact

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1. MDM DEFINED

Master data is data that describes an organization’s key business entities, such as customers, products, vendors and employees. A master data management (MDM) program combines data expertise, focused business processes and specialized technology to en-sure consistency and accuracy of data across organ-izational and business process lines. Once in place, an MDM program greatly simplifies application, pro-cess and data integration, enables competitive agility and responsiveness, and facilitates analytical accuracyand real-time reporting

The technical component of MDM consists of middle-ware that sits between an organization’s various busi-ness systems to provide all systems with a single source of master data. MDM software tools provide a centralized master data repository as well as advanced functionality for data consolidation, distribution and management.

Far from a single-shot, silver-bullet fix, MDM is best though of as an ongoing specialized discipline requiring a dedicated team focused on continual improvement. Strict data governance to identify and repair flawed business processes that contribute to the problem of faulty data is essential. Establishing data stewardship, building consensus, managing change, and affirming the corporate commitment to viewing and treating data as a valuable asset is vital to a successful MDM program

2. WHY MDM NOW? Awash In Data

Data is a company’s lifeblood, flowing through all vital systems marketing, sales, manufacturing, HR, finance and all points in between. Enthusiasm for master data management (MDM) is on the rise, which should come as no surprise as the big, expensive ERP, SCM and CRM systems implemented over the past decade deliver value only when fueled by good, accurate, consistent data. These systems generate and/or use exorbitant amounts of data. In just 12 to 18 months, many large businesses double the amount of data generated and maintained, making it increasingly critical and difficult for companies to improve data

quality and management and extract its maximum value.

Master data describes key areas of your business ...

Customers (Names, addresses, phone numbers, ...)

Products (Product attributes, list prices, ...)

Suppliers (parent entities, addresses, parts offered, ...)

Employees (id, name, title, address, org unit, ...)

Master data is typically stored in multiple, disconnected systems & databases.

Unmanaged master data is notoriously inaccurate, incomplete, full of discrepancies, and leads to poor business decisions.

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Database Debacles

Bad data is poison, clogging operations, in-creasing costs, prompting poor decisions and, in the worst-case scenario, leading to jail time for executives. Gartner estimates that more than 25% of critical data within large businesses is somehow inaccurate or incomplete. Of 750 IT professionals and business executives surveyed by the Data Warehouse Institute in 2005, 53%claim their companies have suffered losses or in-creased costs because of poor data, up from 41% in 2001.

Data Disconnect

Enterprises have long struggled with creating, maintaining, integrating, and leveraging enterprise master data. Today, poor master data management gets in the way of successfully completing ERP, SCM, and CRM projects or results in an inability to achieve promised returns on investment (ROIs) from these costly and complex systems.

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Regulatory Compliance

Escalating regulatory compliance pressure is also a powerful driver for MDM. Sarbanes-Oxley, HIPAA, Basel II and Safe Harbor, to name but a few legislative mandates, necessitate consistent, accurate reporting capabilities across an enterprise. Executives need look no further than recent headlines to learn of the dire personal and professional consequences that can result from poor data management and reporting.

MDM on the Rise

Accordingly, MDM initiatives are growing in both number and importance. Research firm IDC expects the master data management market to reach $10.4 billion by 2009 with a compound annual growth rate over the next five years of 13.8%.1 According to Forrester Research, the typical Global 2000-size enterprise will budget/spend $1.2 million for CDI/MDM software solutions in the next 12 to 18 months, with an additional $4 million for systems integration services.2

3. SAP MDM

Overview

SAP MDM demonstrates the benefits of a solution that combines SAP's business process expertise with its leading tech- nology platform for unprecedented levels of data synchronization. Using SAP MDM to maintain data and SAP Exchange Infra-structure (XI) to distribute the data to other systems, the SAP MDM platform is ca-pable of delivering clean, accurate, consol-idated and synchronized data to all users throughout the entire enterprise, and to out-side trading partners. By freeing critical bus-iness processes from the confines of individ-ual applications, the SAP MDM platform enables the creation and execution of enterprise-wide processes smoothly and consistently across system boundaries.

SAP MDM can be deployed on an evolutionary basis to minimize disruptions to the daily flow of business; can be quickly implemented without altering the existing system landscape; and is flexible to adapt to established business processes and organizational structures.

1 IDC, “Master Data Management: Worldwide Software and Services Forecast, 2005 -2009,” October 6, 20052 Forrester, “Trends 2006: Master Data Management,” March 6, 2006

SAP MDM

Delivers a single version of the truthfor customers, suppliers, products, employees and user designatedobjects

Provides capabilities to share thissingle version of the truth internallyand externally with partners

Leverages existing IT investments inbusiness-critical data

Accelerates and improves theexecution of business processes

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Centralized Master Data Management

With SAP MDM, businesses can harness the potential of critical data to rapidly create innovative processes that drive growth and promote cost savings. Using standard global attributes, SAP MDM ensures that all systems receive the same master data during distribution. SAP MDM allows users to maintain a complete object definition, including object dependencies, in a centralized server for master data. Thereafter, central maintenance of unified master data allows users to execute data distribution in a controlled, visible, and traceable manner, supported with active status management of each distribution step.

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Enterprise Services Architecture (ESA) Foundation

The promise of enter- prise services arch-itecture (ESA) is to move companies away from mono-lithic, highly custom-ized, siloed app-lications and toward a standards-based, modular, approach that enables end-to-end, enterprise-wide business processes.

Accordingly, the im-plementation of aservice-oriented arch-itecture necessitates, first and foremost, a centralized, harmon-ized and unified source of master data.

As a component of the SAP NetWeaverplatform, upon which ESA is built, SAP

MDM uses XI to enable inter-system communication in a heterogeneous, multi-vendor technology environment. SAP MDM works out of the box with the SAP Business Intelligence (SAP BI) component of SAP NetWeaver. This brings together a powerful business intelligence platform, a comprehensive set of analysis tools, and industry-leading data warehousing capabilities. Harmonized data from SAP MDM also can be used for analysis and reporting within SAP BI.

By making use of SAP Enterprise Portal (SAP EP) technology, SAP MDM offers a role-based, personalized user paradigm, presenting users with business processes and inform-ation based on their business roles as users, managers, administrators, and so on. SAP MDM also leverages the knowledge management capabilities of SAP NetWeaver so associated content, such as part specifications, can be linked to associated master data. Integrating SAP MDM with the knowledge management capabilities of SAP NetWeaver allows companies to manage all facets of unstructured information – from collaborative authoring and publishing to advanced search and navigation.

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According to Andrew White, research director at Gartner Inc., "[MDM] is very important to SAP customers in their goals for realizing many of the benefits from adopting SOA and ESA in complex heterogeneous IT environments."3

Once in place, an MDM program serves well as the foundation for a phased ESA migration plan, providing the quality data needed for increased flexibility and responsiveness to ever-changing market demands.

MDM LANDSCAPE

SAP Enterprise Portal is the industry’s most comprehensive portal solution, providing a complete portal infrastructure along with bundled knowledge management and collabora-tion capabilities. It provides people-centric integration of all types of enterprise infor-mation, including SAP and third-party applications, structured and unstructured data, and Web content.

3

SearchSAP.com, “SAP News.” March 22, 2006

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SAP MDM components provide advanced master data management functionality. SAP MDM components include:

MDM Console is an administration tool used for managing and maintaining the MDM repository, and for operating the MDM server and DBMS. MDM Console is used for executing the following main tasks:

- Access an MDM server (mount/start MDM server)- Access an MDM repository (create/mount/load repository)- Create roles, users, logins and security controls; register client systems that

interact with MDM; define ports for importing/exporting data- Design/create new MDM repository; create/modify tables and fields of new or

existing MDM repository- Maintain integrity of MDM repositories using various backup and restore

mechanisms

MDM Data Manager (also known as Content Manager) is used for multiple purposes, including editing existing data records and creating new master data records, adding images, documentation/attachments/specification sheets, etc. MDM Data manager operates in six different, specifically purposed modes:

1. Record Mode is probably the most commonly used mode. Here users see all the details of a record, including pictures, attached documents, etc. Users can edit records and change details of specific fields including images and documents.

2. Hierarchy Mode is used to view and edit the hierarchy tables, taxonomy tables, and masks tables. In this mode, users can edit parent/child relationship and order of siblings.

3. Taxonomy Mode is where users edit the taxonomy tables in the repository. Users can create and maintain a category hierarchy and maintain the attributes pertaining to a specific category or sub-category.

4. Family Mode is where users further define taxonomic definitions for increased granularity. Also in family mode, an image for an entire list of products pertaining to a specific family can be added. Or in case of a vendor/customer, a logo can be added.

5. Layout Mode is specifically to facilitate catalog design. This is where catalog layout is created, fields are created for display, and the display look is established (vertical/horizontal, etc. ).

6. Publication Mode is used to publish catalogs to a DTP application such as Quark Express.

MDM Import Manager aggregates data from any electronic format with the ability to transform, restructure, normalize, cleanse and rationalize source data as part of the import process. Import Manager provides a 100% GUI environment to define transformations without the need for external application or programming. It allows for arbitrary restructuring of source data, mapping fields and individual mapping of values within

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those fields. Import Manager supports automatic data type conversion, field rather than record at a time exception handling.

MDM Syndicator is used for exchanging and completing repositories or repository subsets with other application systems (agencies) as well as customers and trading partners in a variety of industry-standard and customized XML and delimited text file transforms. Syndicator covers extraction of dedicated objects from repository based on a given structure with relevant key mappings at various levels. Syndicator also keeps track of what records have been sent, thus enabling net change data transfers.

Master Data Server manages accelerated access through the SQL DBMS to one or more repository databases containing product content, which it delivers to various SAP MDM modules and client apps across a network. The MDM Server provides an abstraction layer on top of the database, persistence of database objects and optimizes database object types based on the underlying database technology.

RDBMS is the relational database where the data repository is instantiated. SAP MDM currently supports Oracle, SQL Server and DB2.

Business Information Warehouse (SAP BW) is a data warehouse used as a basis for making strategic and operational decisions in companies. It combines state-of-the-art warehousing technology with preconfigured business content, and gives users a clear overview of company-internal data and any external data that is relevant. SAP Business Information Warehouse contains a wide selection of predefined reports that have been specially tailored to meet the needs of specific industry sectors and user groups, such as production planners, financial controllers, and human resource managers.

Exchange Infrastructure (SAP XI) is a building block of SAP NetWeaver and runs on SAP Web Application Server. With SAP MDM and SAP XI, companies can easily federate business processes by inserting master data object distribution mechanisms into other systems. Through the strength of its integration and data distribution capabilities, SAP XI enables a new breed of adaptive business solutions.

Master Data Client Systems are all application instances that interact with SAP MDM. These applications can be a source of master data, supplying data to SAP MDM through MDM Import Manager or these applications can be target systems consuming data published by SAP MDM through MDM Syndicator.

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4. The Business Case: Maximizing the Value of ERP, SCM & CRM Systems

A key selling point that drove adoption of ERP systems in the 1990s was the prospect of integrating much of an organization's core business functionality into a single, integrated application suite. It was believed that by creating and drawing on a central, consistent set of business data, ERP would eradicate the chaos being caused by data silos created and maintained in departments and subsidiaries.

While plenty of organizations bought into ERP, few ever came close to realizing those integration goals. The reality for the vast majority of businesses continues to be that data is dispersed across, and uniquely defined within, multiple different applications - and even within the same application. It is precisely this state of affairs that MDM is designed to rectify.

Benefits for Human Resources

Employee data is often maintained inconsistently within individual local systems, with each record accommodating only one specific role of an employee within the company.Consolidation of employee corporate information is a key requirement for optimization of resource assignment. Harmonization of employee data provides a coherent picture of employees in a large international corporation where mobility is a strategic need. By providing centralized, harmonized and consolidated employee data, SAP MDM enables an organization to hone its competitive edge by improving its ability to attract and retain an exemplary workforce, maximize employee resources and respond quickly and efficiently to market changes.

Benefits for Business IntelligenceAs the CEO tries to understand the company’s overall performance, he may find many different versions of the truth. Finance has its own set of revenue numbers, sales has another version, and the different business units may each have their own version of how much they contributed to revenue. By creating a single version of the truth that cannot be

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questioned because everyone is using the same data, MDM enables accurate, consistent, real-time business performance reporting.

Benefits for Supply Chain Management

According to a global commerce study, inaccurate product data leads to a $30+ billion cost on supply chains.4 MDM helps the supply chain process flow more smoothly, and it improves visibility of the orderfulfillment process inside the com-pany. That can lead to reduced inventories of the materials used tomake products (work-in-progress inventory), and it can help users better plan deliveries to customers, reducing the finished goods inventory at the warehouses and

shipping docks. With the centralized, accurate data that MDM provides, a company can save anywhere from 1-3% in supply chain costs.

Benefits for Customer Relationship Management

According to Gartner, the creation of an accurate, timely, and rich single view of the customer across channels and lines of business will be a key enabler for reducing costs, managing risk, and increasing revenue and profitability in customer-centric or-ganizations.5 Moreover, Gartner predicts that the creation of a master customer information database will deliver the most-accurate, up-to-date and complete single view of thecustomer across multiple channels and business lines in heterogeneous IT en-vironments through 2008.6 By creating a single 360 degree view of customers, MDM helps sales, marketing, and service teams better anticipate customer needs, provide targeted offers, and improve customer service.

4

GCI, Cap Gemini, “The Case for Global Standards: Creating the Business Case for Global Data Synchronisation in Your Company,” October 20025

Gartner, “Magic Quadrant for Customer Data Integration Hubs, 2Q06,” May 26, 20066

Ibid.

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5. Implementing MDM: The Organizational Impact

As aptly noted by Bill Swanton, research vice president with AMR Research Inc., "[MDM] is a set of business processes and technology, not just one or the other."7

Accordingly, MDM initiatives must be business driven and not seen as IT infrastructure enhancement projects.

Successful MDM initiatives begin with a close evaluation of business units to discover specific issues around inconsistent data. If MDM is implemented as an enabler of key business activities rather than as an infrastructure upgrade, the clear-cut business value delivered will provide the momentum for further MDM projects.

Build Incremental Value

While data quality is a big problem for many companies, launching a ‘big bang’ attack on this problem can result in a slippery slope to frustration and failure. The problem is one of sheer complexity. Massive amounts of data contained in heterogeneous, geographically disparate systems, flawed business processes and siloed business units cannot be vanquished with a single MDM stroke. The end result of a top-down, big bang approach to MDM is widespread business processes interruption, infectious lack of support and, ultimately, abandonment of the project.

Rather than embark on an unwieldy companywide MDM initiative, it is far better to target specific line-of-business applications where improvement in data quality and visibility will yield immediate and demonstrable ROI. Consultants should work closely with business managers to identify troublesome, data-dependent processes and build out an MDM strategy from these specific targets. Clients should be educated up front that MDM is not a one-shot deal. It's an analysis and remediation process followed by an ongoing commitment to improvement.

Governance

Data governance is integral to any MDM initiative. It is vital to identify and address faulty business processes that create data problems. As business processes are systematically fixed, a corporate cultural change on taking responsibility for data is needed to ensure maximum value from MDM. According to Swanton, “MDM projects that don’t budget for improved data governance will fail.” Underscoring this critical point, he adds, “that if companies don’t address the flawed business processes creating the data problems, implementing MDM software is throwing money away.”8

Organizational Impact

People don’t like to change, and MDM asks them to change how they do their jobs. That is why the value of MDM is so hard to pin down. The software is less important than the organizational changes companies make in the ways they do business. If MDM is used to improve the ways employees take orders and manufacture, ship and bill for goods, the value will be evident. If the software is simply installed without any attempt to improve 7

SearchDataManagement.com, “Building a Business Case for MDM,” December 13, 20058

Ibid

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the ways employees do their jobs, value will be hard to identify—indeed, the new software could slow processes down by simply replacing old software that employeesknow with new software that they don’t.

MDM is necessarily a cross-functional set of tools and processes that by its very nature requires its own dedicated organization to own and manage. The MDM organization does not need to be large or complicated, but it does need to be disciplined. As the keeper of the MDM processes and standards, the role of the MDM organization is as critical as the software itself in deriving true business-oriented value from a comprehensive MDM implementation.

SAP® is the registered trademark of SAP AG in Germany and several other countries.