An IDC survey puts the MDM market at USD 10.4 billion by 2009, with a compound growth rate of 13.8%. To save you some Excel exercise, that puts the existing MDM market at USD 5 billion today. This seems quite high, and clearly involves counting the existing sub-markets of CDI (customer data integration) and PIM (product informaton management) which have been around a lot longer than general purpose MDM tools (e.g. Kalido MDM, Oracle Data Hub, Hyperion Razza and SAP MDM or whatever it is called this week). Certainly the latter tools are what has stirred up a lot of interest in the MDM market, since they promise to address the general problem of how to manage master data, rather than dealing with the speicifc point problems of customer and product. This is important, since BP uses Kalido MDM to manage 350 different types of master data, so if we have to have a different software solution for every data type then IT departments are going to be very disappointed indeed! In fact today there are relatively few deployed instances of general purpose MDM tools, which are quite young (KALIDO MDM went on general release in Q3 2004) so it is of great interest to those vendors as to how quickly the “general purpose MDM” market will pick up from its early beginnings to grow to a serious proportion of this overall market. IDC are the most quantitative and thorough of the industry analysts when it comes to market size data, though as ever caution should be used in projecting the future in a straight-line form. Still, even at the current market size of USD 5 billion, it can be seen that this market, which did not even really have a name a year or so ago, is generating a lot of interest.
At the 2005 Kalido User Group this week in London a survey was carried out of the attendees regarding the attendees persepctives on master data management. The striking result in the survey was that, although around two-thirds of the respondents (and these are serious companies, like BP, Unilever, Philips etc) felt that dealing with their companies master data was a “top three”priority issue for them, no less than 90% felt that the industry had failed to address it properly. While there are a few software products out there to help tackle customer data integration and product information management, very few address general issue of managing master data across a global corporation.
Large corporations are need to manage not just customers and products, but also other data such as brand, organization, people, price etc, which are scattered throughout a wide range of corporate systems, including multiple instances of ERP systems from the same vendor. The application consolidation that has been occurring in recent years has clearly failed to make inroads into this issue in the eyes of the people that matter: the customers.
Bloor analyst Harriet Frymanâ€™s article â€œmastering master dataâ€ raises some excellent points. She correctly points out that master data i.e. things other than business transactions, (such as â€œprice”, â€œcustomerâ€, â€œbrandâ€, â€œproductâ€, etc) are hopelessly fragmented in every organization of any size. Research from Tower Group indicates that a large company has 11 separate systems that think they own the master definitions of â€œproductâ€, and this always seemed to me an optimistic number. In the two global corporations I have worked in the number would be in the hundreds.
This is partly because even if you have a single ERP vendor, every separate implementation of that ERP system has a slightly different definition, and ERP systems are only some of the many systems that need master data. Since the major application vendors concentrate on turf-grabbing from each other (as we see this week with Oracleâ€™s takeover of the ailing Siebel) it is not in their interests to make it easy for other systems to interact with theirs. Their answer is â€œbuy everything from us,â€ a wholly impractical situation since no one vendor (not even SAP) covers more than 30-70% of a companyâ€™s business needs (and that is according to SAPâ€™s ex CEO). Hence the big application vendors are ill-suited to pick up the crown of the master data kingdom.
Instead what is needed are applications that are designed from the outset on the assumption that there are many, related versions of the truth, and that software has to be able to deal with this. This was the assumption on which KALIDO was developed at Shell, and any other vendor hoping to gain significant market share in this area needs to be able to deal with this reality also. Paradoxically, because the apps vendors are locked like dinosaurs in their â€œfootprintâ€ wars, I believe it will be the small furry mammal equivalents in software who will be able to produce working solutions here, since they do not have a massive legacy of application code to defend. Roll on the evolution.