The recent financial crisis will not deter financial institutions from investing in master data management (MDM) and data quality systems, according to a recent survey conducted by consulting firm the Information Difference and sponsored by Trillium Software. The findings of the survey suggest that these initiatives will be of mounting importance to businesses in the near future, explains Ed Wrazen, vice president of product development and strategy at the enterprise data quality vendor.
The survey was aimed at gaining greater insight into the views and plans of businesses regarding their current or planned MDM and data quality initiatives and the consulting firm spoke to a total of 92 respondents with this goal in mind. It also explored the views of businesses on the impact of the financial crisis and credit crunch on their current and future plans for implementation of these initiatives.
According to Information Difference, the majority of respondents were from North America (57%) and Europe (31%). Most of the respondents were from companies having annual revenues greater than US$1 billion and this was not limited to financial services firms.
Wrazen highlights some of the key findings of the survey to illustrate his point: “While 58% of the companies surveyed have implemented MDM or data quality initiatives, of the 42% remaining: 42% plan to implement data quality and MDM within one to three years and 11% plan to implement data quality within one to three years.”
Moreover, of the 58% who currently are in the process of implementations, 40% told Information Difference that they intend to accelerate or are already accelerating the implementation in the light of the current financial crisis. Out of the total 92 respondents, 50% said that in the light of the financial crisis, implementation of data quality and MDM should be given a higher priority.
“These findings suggest that at least over the next one to three years, MDM and data quality initiatives will be of mounting importance to businesses and, in light of recent events, we would suggest that this is especially true in the financial services sector,” says Wrazen.
The key drivers for investment in this space are primarily being driven by corporate strategy for governance, risk and compliance, increased operational efficiencies and customer information consolidation, he continues. This includes the need to judge and ensure the reliability of risk reference data before using it as a basis for decision making. “Poor data could support a wrong risk decision at a time when the institution is vulnerable and very reliant upon its executives making good, evidence based decisions,” he explains.
It also includes the need to prove to regulators that the data supporting their risk positions is correct and accurate, and to avoid having to make excessive risk capital reserves where risk data is not considered reliable. It results in a reduction of cost overhead and wastage due to inconsistent information and reporting across business units – products, MRO, logistics, supplier management, procurement and finance functions, contends Wrazen.
Moreover, it helps provide know your customer and enhanced customer information and analytics across the enterprise. This can be used for customer data integration and intelligence and avoidance of revenue leakage and incorrect billing, he adds.
According to analysts the Information Difference who conducted the survey the current economic climate has not had a significant impact on budgets for these projects in the short term. Only 9% of respondents said they planned to delay implementation for a year and 8% indicated they planned to put their implementations and plans on hold.
Dave Waddington, senior vice president and head of research at the firm, explains: “There is no substantial move towards delaying current plans, although 23% of those already engaged in implementations have chosen to delay either their data quality and or MDM initiatives. Indeed of those businesses that have already implemented, 40% have elected to accelerate their rollout. In terms of the overall picture, only 8% suggest that they have put their plans on hold. This suggests no major retrenchment in rollout and adoption plans, which is positive news for integrators and vendors.”
This seems to indicate that MDM and data quality initiatives thus far have achieved some level of immunity from the current financial crisis. How long this remains the case is yet to be discovered.