Reduce Operational Costs with an MDM Initiative

December 03 2013

Author: Christophe Marcant, VP, Product Strategy

Master Data Management (MDM) offers many benefits – improving the customer experience, increasing customer loyalty and boosting marketing efficiency – which all lead to increased revenue. However when making the business case for MDM, it’s important to take a look at some cost factors that contribute to the bottom line.

Investments in MDM solutions can also significantly reduce operational costs. According to the Aberdeen Group, the top pain point for data management is searching for information takes too long. For companies considered best in class for high levels of data quality and ease of use of their data systems, employees spent 1.5 hours a week searching for information. This increased to 10.3 hours per week per employee for companies considered being laggards with only 61 percent of master data complete and up-to-date.

In addition, the time to fix an error greatly increases for companies that do not have the technology, training, and policies and processes to ensure data quality through a formal MDM initiative. While companies with a centralized system are able to make one change, companies without formal MDM systems are faced with updating multiple records in multiple systems, databases and applications. While a best-in-class company only spends 1.5 hours to fix an error, a laggard spends 55 hours.

Multiply this by the number of records that need to be updated, and the costs for the hours spent by employees can be staggering. Aberdeen reports that the best-in-class companies were able to reduce operational costs by 8 percent by having a solid MDM initiative as the foundation. Laggards were only able to reduce operational costs by 1 percent. By wisely choosing an MDM technology partner and putting the systems in place for their MDM initiatives to succeed, companies can greatly reduce operational costs.

Aberdeen GroupSource: Aberdeen Group, March 2013

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