Author: Dan Power, President, Hub Designs
Over the past seven years I’ve been involved in many different initiatives involving master data management (MDM). When companies skip over developing a business case, there are inevitable problems down the road. Either it’s difficult initially to “sell” the initiative to decision makers in senior management, or when companies run into challenges during the implementation process, there’s no agreed-upon return on investment (ROI) to inspire the business sponsors to “go to bat” for the program.
Here are some thoughts on the importance of creating a business case for your MDM program:
• Why: What if your management team tells you that you don’t need a business case? This can set you up for a real “Catch 22.” Later on, when the project runs into the inevitable snags, you won’t be able to point to a defined ROI. Since you didn’t measure the “before” state, you won’t be able to track the improvement from “before” to “after.” And you won’t be able to give a concrete answer to the question: “Tell me again, why are we doing this?”
• Who: Cast a wide net in your organization. Talk to as many departments, divisions, geographic locations, strategic business units, etc. as you can. Ask them about their data “horror stories”—both one-time things and recurring problems. Look for costly and inefficient processes, manual reconciliation of data, lost revenue, fines, and third party logistics charges – any problems that can be traced back to inaccurate, incomplete, out of date or inconsistent information.
• What: Essentially, you’re selling the vision in your business case. On the benefits side, you’re going to fix the issues you identified in talking to the different parts of the business. Don’t forget the cost side, though. Doing a meaningful cost/benefit analysis requires realistic estimated costs for any software licenses and maintenance contracts, new hardware, and related implementation costs.
• When: Address this as early as you can. Don’t put it off – you’ll need the business case to get the project approved, and to manage it as you execute against your strategy. Start with some education for the various stakeholders, do a current state assessment so you’ll know where you’re starting from, and a strategic roadmap (future state design). Once you’ve done that, you’ll know what gaps need to be addressed through technology. Persuading senior management to invest in new capabilities is exactly when you’ll need the business case.
• Where: Develop a plan that addresses the enterprise globally. That doesn’t mean you have to address everything and every location at once. In fact, it’s probably more effective to start your MDM initiative with a defined scope for your first phase—particular functional areas, organizational units, or geographic areas. For example, the first phase may be consolidating, cleansing, governing and synchronizing product data to support an upcoming product information management (PIM) project. But you should have a program that addresses the company’s needs globally through a series of discrete phases, each of which delivers measurable benefits.
• How and how much: So how do you create a business case, and how much will it cost? While you can do this fairly quickly, don’t expect it to be free. Depending on who’s doing the work and the complexity of your organization, it can be anywhere from 2-3 weeks to 8-12 weeks. Your company may have an existing template and process for developing an ROI analysis and business case.
Here is a suggested outline for an MDM business case:
• Executive Summary
• Business Need and Background
• Metrics and Justification
• Capabilities of Proposed Solution
• Expected Benefits and Cost Estimate
• Return on Investment Analysis
• Business Case Summary
Of course, there’s an art to identifying the stakeholders, selecting the metrics they care about, and researching the company’s current performance against those metrics. Estimating the expected costs and benefits, and converting them to financial results and an ROI can be challenging as well.
Usually, the biggest cost is not acting – continuing to live with the “hidden costs” of bad data throughout the company. So make sure your business case compares the cost of your proposed solution to the cost of doing nothing.
About the Author
Dan Power is the President of Hub Designs, a global consulting firm focused on strategy development, solution delivery and thought leadership for master data management (MDM) and information governance. He is the publisher of Hub Designs Magazine, a widely read online publication covering MDM. Dan is the author of more than 30 articles and white papers, and is a frequent speaker at industry conferences and events. You can reach him here.