Organizing Master Data Management

Organizing Master Data ManagementOrganizing Master Data ManagementFindings from an Expert Survey

Dr. Boris Otto, Andreas ReichertSierre March 23rd 2010

Institute of Information ManagementChair of Prof Dr Hubert Österle

Sierre, March 23rd, 2010

Chair of Prof. Dr. Hubert Österle

Agenda

1 I t d ti1. Introduction

2. Background and Research Approachg pp

3. Result Presentation

4. Discussion and Outlook

5. Project Context

© CC CDQ2 – Sierre, March 23rd, 2010, Boris Otto, Andreas Reichert / 2

1.1 Selected business requirements for master data quality

Compliance to regulations

Reporting (“Single Source of Truth”)

Business process integration

Customer-centric business models (“360 Degree View”)

Corporate purchasingCorporate purchasing

IT consolidation


1.2 Motivation and research question

Master data management (MDM) is referred to as an application-independent process for the description, ownership and management of core business data entities1,2

Establishing MDM is a Business Engineering3 task comprising design activities on strategic organizational and system levelactivities on strategic, organizational and system levelIn doing so, companies are confronted with the following questions:

What is the scope in terms of master data classes?Which tasks does the MDM organization cover?How much capacity in terms of human resources is required to carry out the tasks?Whom does the MDM organization report to?How should responsibilities be balanced between central and local control?

How do firms organize MDM?

1) DAMA. DAMA Data Management Body of Knowledge (DMBOK): Functional Framework, DAMA International, Lutz, FL, 2007.2) Smith, H.A. and McKeen, J.D. Developments in Practice XXX: Master Data Management: Salvation Or Snake Oil? Communications of the Association for

Information Systems, 23 (4). 63-72.3) Österle, H. Business Engineering: Transition to the Networked Enterprise. Electronic Markets, 6 (2). 14-16.


2.1 Background: Master data and MDM

Time reference Change frequency Volume volatility Existential i d dindependence

Master Data low low low high

Transactional high medium high lowData

g g

Inventory Data high high low low

MDM aims at creating an unambiguous understanding of a company’s core entities1.entities .

1) Smith, H.A. and McKeen, J.D. Developments in Practice XXX: Master Data Management: Salvation Or Snake Oil? Communications of the Association for Information Systems, 23 (4). 63-72.


2.2 Background: Organizational theory

The two major tasks of organizational design are the division of labor and coordination1

The organization of a company materializes in its organizational structure and in the process organization1

Grochla divides the goals of an organization into functional goalsGrochla divides the goals of an organization into functional goals (“Sachziele”) and formal goals (“Formalziele”)2

One can distinguish between primary and secondary organizations

1) Galbraith, J.R. Designing organizations: an executive guide to strategy, structure, and process. Jossey-Bass, San Francisco, 2002. 2) Grochla, E. Grundlagen der organisatorischen Gestaltung. Poeschel, Stuttgart, 1982.


2.3 Research approach

Project context is the Competence Center Corporate Data Quality (CC CDQ)Surveys objective is of descriptive naturey j pOnline questionnaire covering nine questions was usedClosed questions (except one for master data volumes) were usedSample consisted of 38 experts in the MDM domain from the e-mail distribution list of the CC CDQReturn rate was 50 percentReturn rate was 50 percentQuestions aimed at answer the following:

Is MDM part of the primary organization and - if so - where is it located in the organizational structure?What organizational from has been chosen (line function, shared service etc.)?What are the functional goals (in terms of tasks)?g ( )What is the scope (in terms of number master data classes such as customer data, material data etc. and of number of master data records)?How many employees work in the MDM organization (both central and local)?How many employees work in the MDM organization (both central and local)?


2.4 Survey participants

Company Unit of Analysis SIC Code SIC Description Revenue 2008

[bn EUR] Staff 2008 Country

Robert Bosch GmbH Corporation 36 Electrical Equipment and Components 45.0 283'000 GermanyALSTOM Power Division 36 Electrical Equipment and Components n/a n/a SwitzerlandKuehne + Nagel Inc. Corporation 44 Water Transportation 14.0 54'000 SwitzerlandSyngenta AG Corporation 28 Chemicals and Allied Products 12.0 24'000 SwitzerlandDeutsche Telekom AG Corporation 48 Communications 18.0 45'000 Germany

I d t i l d C i l M hi dOerlikon Textile Division 35 Industrial and Commercial Machinery and Computer Equip 0.6 7'500 Switzerland

Bayer CropScience Corporation 28 Chemicals and Allied Products 6.4 18'000 GermanyMars Corporation 20 Food and Kindred Products n.a. n.a. GermanyCorning Inc Corporation 32 Stone Clay Glass and Concrete Products 4 1 27'000 USACorning Inc Corporation 32 Stone, Clay, Glass and Concrete Products 4.1 27 000 USAB.Braun AG Corporation 80 Health Services 3.8 38'000 Germany

ABB Corporation 35 Industrial and Commercial Machinery and Computer Equip 24.2 119'000 Switzerland

Geberit Corporation 39 Misc. Manufacturing Industries 1.6 5'700 Switzerlandp gNestle S.A. Corporation 20 Food and Kindred Products 73.0 283'000 SwitzerlandPostFinance Corporation 60 Depository Institutions 1.5 2‘830 SwitzerlandDeutsche Bahn AG Division 40 Railroad Transportation 33.5 240'000 GermanyBASF Corporation 28 Chemicals and Allied Products 62.3 106'000 Germanyp yRWE AG Corporation 49 Electric, Gas & Sanitary Services 49.0 66'000 GermanyRoyal Philips Electronics Corporation 36 Electrical Equipment and Components 26.0 116'000 Netherlands

Tchibo GmbH Corporation 51 Non-Durable Goods 3.6 12'000 Germany


3.1 Reporting lines

16% Linked to central IT or Information Management

32%5%

Management

Linked to another central departments (e.g. Purchasing, Controlling)

11%

Controlling)Linked to a business department of a business unit

Linked to IT or InformationLinked to IT or Information Management in a business unit

Other

37%

n = 19.


3.2 Organizational form

5%

42%

21%

Line FunctionProject Organization42% Project OrganizationShared ServiceStaff FunctionVirtual Organization

16%

Virtual OrganizationOther

5%11%

n = 19.


3.3 Tasks

11%Other

84%

74%

Project support

Training of users

79%

8 %

Measurement and reporting of master data quality

j pp

84%

58%

D l t d i t f t d d d id li

Master data lifecycle activities (e.g. creation, maintenance, deactivation)

90%

84%

Development and maintenance of the master data strategy

Development and maintenance of standards and guidelines

74%Business user support

47%Application management for a master data management sof tware

0% 20% 40% 60% 80% 100%n = 19.


3.4 Scope

5%Other

63%Supplier/ vendor master data

68%

37%

Material and product master data

Organizational master data (e.g. cost center structures)

21%

68%

Human resources master data (e.g. employees, e-mail accounts)

p

47%Financial accounting master data (e.g. chart of accounts)

84%Customer master data

26%Asset master data

0% 20% 40% 60% 80% 100%n = 19.


3.5 Team size

26%26%32%

Less than 5Less than 5Between 5 and 10Between 10 and 20More than 20More than 20

26%16%

n = 19.


3.6 Results summary

MDM is seen as both an organizational and technical topic.Data quality management is considered to be an integral part of the MDM q y g g porganization.Companies do not specialize the MDM organization on certain master data classes Instead more than 63% are responsible for at least 3 differentclasses. Instead, more than 63% are responsible for at least 3 different master data classes.MDM per se is not a new topic. 42 percent of the respondents state that MDM activities have been carried out for more than 5 years.MDM organizations are relatively big in size. More than 45 percent of the companies employ more than 10 full time employeescompanies employ more than 10 full time employees.No clear statement can be made regarding the positioning of MDM in the organizational structure. 37 percent report to either a central or a local IT

fdepartment whereas 47 percent report to a business function such as purchasing or financial accounting.


4.1 Discussion and outlook

DiscussionResults provide first insight into current status of organizing master data

tmanagementResults are descriptive and form a starting point for future researchLimitations are due to the nature of expert interviews as a researchLimitations are due to the nature of expert interviews as a research method1:

Intentionally selected individuals rather than random selection of lsample

Typically small number of respondentsOutlook to future researchOutlook to future research

Case studies (e.g. on shared service center approaches)Analysis of “formal goals”Method support for the establishment of MDM

1) Meuser, M., Nagel, U.:(2002) :ExpertInneninterviews - vielfach erprobt, wenig bedacht. Ein Beitrag zur qualitativen Methodendiskussion. In: Bogner, A., Littig, B., Menz, W. (eds.): Das Experteninterview. Theorie, Methode, Anwendung. Leske und Budrich, Opladen, 71-93


5.1 Project context Competence Center Corporate Data Quality (CC CDQ)

Objective Development of strategies, concepts and solutions for corporate data quality j p g , p p q ymanagement (CDQM)

Consortium Bayer CropScience AG (since 2006)Beiersdorf AG (since 2008)Daimler AG (2006 - 2008)Daimler AG (2006 - 2008)DB Netz AG (since 2007)Deutsche Telekom AG (2006 - 2009)E.ON AG (2007 - 2008)ETA SA (2006 - 2008)ETA SA (2006 2008)Hewlett-Packard GmbH (since 2008)IBM Deutschland GmbH (since 2006)Migros-Genossenschafts-Bund (since 2009)Nestlé SA (since 2008)( )Novartis Pharma AG (since 2008)Siemens Enterprise Communications GmbH & Co. KG (since 2010)Syngenta AG (since 2009)ZF Friedrichshafen AG (2007 - 2008)


Contact Person

Dr. Boris OttoUniversity of St. GallenInstitute of Information ManagementE-mail: [email protected]@ gPhone: +41 71 224 32 20

Andreas ReichertUniversity of St. GallenInstitute of Information ManagementInstitute of Information ManagementE-mail: [email protected]: +41 71 224 38 80


Technology

Organizing Master Data Management