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Posted by Rob Karel on January 5, 2012
Happy New Year! As we kick off 2012, I’d like to reflect on what was accomplished during the past year in the “trusted data” areas of master data management (MDM), data quality (DQ), and data governance and consider what we might expect in the year to come. I also hear quite a bit of noise from vendors and analysts alike about what they want the MDM market to be in 2012, so I wanted to share my thoughts on what’s real and what (in my opinion) remains hype.
I also just completed Forrester’s December 2011 Global MDM Survey of 274 MDM professionals. While the majority of those results will be shared in the annual MDM Trends research that I’ll be publishing later in Q1, here’s a taste of some of the intriguing results.
Let’s first reflect on what I’ve witnessed from my clients’ MDM journeys throughout 2011:
- Data governance remained a challenge. In the abovementioned MDM survey, only 20% responded that they have a high or very high level of data governance maturity, indicating that significant work remains. But on the positive side, I’m witnessing increasing business sponsorship and prioritization, which has helped many organizations pilot programs to cut their teeth and build some repeatable processes, foundational policies, and early measurements to start building a case to increase data governance investment and momentum.
- Multidomain MDM hit its stride. User interest in multidomain MDM strategies has finally caught up with vendors’ product capabilities and messaging. In Forrester’s MDM Survey, 47% responded that the scope of their MDM programs include more than two data domains to master, while another 9% are focused on dual-domain solutions (e.g, customer and product).
- Business process and master data alignment became a no-brainer way to position data priorities. It’s been almost 2½ years since my colleague Clay Richardson and I first published research on our process data management approach, which aims to better coordinate data management and business process management (BPM) efforts. The fact that business processes and decisions require trustworthy data, and that data improvement initiatives should be framed in the context of the business value it generates is a no-brainer, right? If that’s the case, why do so few organizations actually coordinate these efforts? Well, this message has been very widely embraced; most MDM and BPM practitioners, vendors, and analysts alike now at least recognize that they need to improve their abilities to place master data efforts in the context of critical business processes to encourage business collaboration and sponsorship.
- There was minimal MDM market movement in terms of M&A or consolidation. In 2010, we saw major movement in the MDM and DQ landscape with the acquisitions of Siver Creek Systems by Oracle, Siperian by Informatica, Initiate Systems by IBM, Netrics by Tibco, and Data Foundations by Software AG. In comparison, the MDM M&A market in 2011 was nonexistent. Beyond Oracle’s smallish acquisition of Datanomic to finally wrap customer DQ capabilities within its own portfolio, we haven’t seen any other significant activity of note. (I’m not implying there have been no other small acquisitions, OEMs, or other partnerships, but in my opinion nothing that significantly affected the market — let me know if you think I missed something!).
With 2011 wrapped up, here’s what I expect to see in 2012:
- M&A acquisition activity to return. Macroeconomic conditions permitting, I specifically see a few M&A trends as a high potential in 2012. These include:
- Governance-driven MDM solution consolidation. Also known as analytical MDM, I’m referring to solutions like Kalido and Orchestra Networks who traditionally specialize in version-controlled hierarchy management with embedded stewardship workflows across multiple data domains. These solutions don’t compete directly with operational MDM hubs, but could be a nice complement for hub vendors, just as Oracle’s Data Relationship Manager (DRM, which came to Oracle via its Hyperion acquisition) has been a powerful complement for its MDM hubs. I could see IBM, Informatica, SAP, Software AG, or Tibco making a move here.
- Product information management (PIM) consolidation. While many of today’s major multidomain MDM vendors began their MDM journey years ago with acquisitions of PIM vendors (e.g., IBM acquired Trigo, SAP acquired A2i, Teradata acquired MDM assets from i2, and Tibco acquired Velosel), there hasn’t been a significant PIM acquisition of note in years. With the multidomain wars significantly heated at this point, the ability to compete effectively across all data domains will be increasingly important. Potential acquirers over the next 12 to 24 months will include DataFlux, Informatica, Microsoft, and Software AG. Potential targets could include Heiler, Hybris, Liaison Technologies, Agility (formerly Pindar), and Riversand Technologies.
- Industry-specific solutions. Surprisingly, the MDM market remains immature across industries when it comes to highly specialized vertical solutions that can provide deep functional and scalable MDM capabilities. But there are exceptions, especially in the financial services and securities markets where a number of solutions have reached high levels of credibility. These include Asset Control, Cadis, Eagle Investment Systems, Golden Source, and Kingland Systems. Potential acquirers here would most likely be limited to the Big Four: IBM, Informatica, Oracle, and SAP.
- Complementary functional acquisitions. In addition to the pure MDM consolidation implied in the first three bullets above, I also wouldn’t be surprised to see MDM vendors acquiring technology to enhance capabilities in BPM/workflow management, enterprise search, data warehouse (appliances), and analytics.
- Stewardship process automation. Whether this comes from MDM technology vendors or organizations leveraging their existing collaboration, workflow, and social technologies, expect to see more end user investment in enabling data governance functional responsibilities such as standards, rules and policy definitions, exception handling, and notification/approval workflows. In Forrester’s MDM Survey, 66% of MDM practitioners already use technology enablers to support their data governance processes, regardless of whether they use capabilities provided by MDM or BPM vendors or build custom solutions on their own. The market opportunity is here and growing.
- Data quality-as-a-service (DQaaS) options increasing. I expect more and more traditional, on-premises data management software vendors (as well as smaller startups and pure-plays) with DQ capabilities to test the cloud waters by offering pay-as-you-go or subscription DQ services: tactical data cleansing, verification, and enrichment capabilities like those provided by D&B 360, salesforce.com’s Data.com, and StrikeIron. This will be a necessary precursor to true DQ and MDM platforms in the cloud (see below).
Equally as important, all hype aside, here’s what MDM will NOT be about in 2012:
- MDM in the cloud? Not yet. Aside from classic hosted MDM scenarios (i.e., hosted database marketing service providers (MSPs) supporting direct marketing campaign management and analytics; hosted or BPO PIM solutions), most customer and multidomain MDM solutions remain on-premises. While 23% of respondents to Forrester’s December 2011 MDM survey said they would seriously consider or are very interested in cloud-based MDM solutions, 63% still said they are most likely or not at all interested. I expect 2012 and 2013 to be years of rational experimentation for cloud MDM, with a few early adopters paving the way for increased interest and momentum in 2014 and beyond.
- Big data is not yet in play for most MDM programs. According to our MDM survey, only 9% have big data requirements or implications on their MDM road maps, while 72% have not gotten there yet or are not considering it. Big data is absolutely big, but right now the experimentation with it lives with most organization’s BI and advanced analytics function and has not yet evolved into the enterprise architecture-led cross-enterprise capability where many MDM initiatives reside.
I’d love to hear your thoughts, especially if you think there are any major trends I might have missed! And of course, may your 2012 be filled with cleaner data!