Deploying SAP MDM

Managing Master Data to Maximize Value of

ERP, SCM and CRM Systems
Executive Summary

To run faster, leaner, more efficiently and profitably, companies have invested heavily
over the past decade in enterprise applications such as Enterprise Resource Planning
(ERP), Supply Chain Management (SCM) and Customer Relationship Management
(CRM). Because these systems support specialized functionality, they must each store
their own reference data about core business entities, which often leads to data
inconsistencies, duplications and errors. Siloed data also makes accurate, real-time,
enterprise-wide reporting virtually impossible. The ability to quickly transform business
processes and for these changes to be easily reflected in the supporting enterprise
applications is essential for an organization to compete in todays dynamic, fast-paced
environment. The challenge, however, is maintaining a single, accurate view of products,
customers, locations, and financial accounts across all core enterprise systems.

SAP Master Data Management (SAP MDM) a building block of SAP NetWeaverTM
enables companies to store, augment, and consolidate master data, while ensuring
consistent distribution to all applications and systems within the IT landscape. Working
across heterogeneous systems at multiple locations, SAP MDM leverages existing IT
investments in business-critical data, delivering centralized data management capabilities
and enabling organizations to realize maximum value from their core enterprise
applications.

This white paper examines the business drivers for MDM, provides an overview of the
SAP MDM solution, outlines how SAP MDM can maximize value from installed ERP,
SCM and CRM systems, and reviews the organizational impact of implementing SAP
MDM.

Contents:

1. MDM Defined
2. Why MDM Now?
3. An Overview of SAPs MDM
4. The Business Case: Maximizing the Value of ERP, SCM & CRM Systems
5. Implementing MDM: The Organizational Impact

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1. MDM DEFINED

Master data is data that describes an organizations
key business entities, such as customers, products,
vendors and employees. A master data management
(MDM) program combines data expertise, focused
business processes and specialized technology to en-
sure consistency and accuracy of data across organ-
izational and business process lines. Once in place,
an MDM program greatly simplifies application, pro-
cess and data integration, enables competitive agility
and responsiveness, and facilitates analytical accuracy
and real-time reporting
The technical component of MDM consists of middle-
ware that sits between an organizations various busi-
ness systems to provide all systems with a single
source of master data. MDM software tools provide a
centralized master data repository as well as advanced
functionality for data consolidation, distribution and
management.
Master data describes key areas of
your business ...
Customers (Names, addresses, phone
numbers, ...)
Products (Product attributes, list
prices, ...)
Suppliers (parent entities, addresses,
parts offered, ...)
Employees (id, name, title, address,
org unit, ...)
Master data is typically stored in
multiple, disconnected systems &
databases.
Unmanaged master data is
notoriously inaccurate, incomplete,
full of discrepancies, and leads to
poor business decisions.

Far from a single-shot, silver-bullet fix, MDM is best though of as an ongoing specialized
discipline requiring a dedicated team focused on continual improvement. Strict data
governance to identify and repair flawed business processes that contribute to the
problem of faulty data is essential. Establishing data stewardship, building consensus,
managing change, and affirming the corporate commitment to viewing and treating data
as a valuable asset is vital to a successful MDM program

2. WHY MDM NOW? Awash In Data

Data is a companys lifeblood, flowing through all

vital systems marketing, sales, manufacturing,
HR, finance and all points in between. Enthusiasm
for master data management (MDM) is on the rise,
which should come as no surprise as the big,
expensive ERP, SCM and CRM systems
implemented over the past decade deliver value
only when fueled by good, accurate, consistent data.
These systems generate and/or use exorbitant
amounts of data. In just 12 to 18 months, many
large businesses double the amount of data
generated and maintained, making it increasingly
critical and difficult for companies to improve data
quality and management and extract its maximum
value.

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Database Debacles

Bad data is poison, clogging operations, in-

creasing costs, prompting poor decisions and,
in the worst-case scenario, leading to jail time
for executives. Gartner estimates that more than
25% of critical data within large businesses is
somehow inaccurate or incomplete. Of 750 IT
professionals and business executives surveyed
by the Data Warehouse Institute in 2005, 53%
claim their companies have suffered losses or in-
creased costs because of poor data, up from 41%
in 2001.

Data Disconnect

Enterprises have long struggled with creating,

maintaining, integrating, and leveraging enterprise master data. Today, poor master data
management gets in the way of successfully completing ERP, SCM, and CRM projects or
results in an inability to achieve promised returns on investment (ROIs) from these costly
and complex systems.

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Regulatory Compliance
Escalating regulatory compliance pressure is also a powerful driver for MDM. Sarbanes-
Oxley, HIPAA, Basel II and Safe Harbor, to name but a few legislative mandates,
necessitate consistent, accurate reporting capabilities across an enterprise. Executives
need look no further than recent headlines to learn of the dire personal and professional
consequences that can result from poor data management and reporting.

MDM on the Rise

Accordingly, MDM initiatives are growing in both number and importance. Research
firm IDC expects the master data management market to reach $10.4 billion by 2009
with a compound annual growth rate over the next five years of 13.8%.1 According to
Forrester Research, the typical Global 2000-size enterprise will budget/spend $1.2
million for CDI/MDM software solutions in the next 12 to 18 months, with an additional
$4 million for systems integration services.2

3. SAP MDM
Overview
SAP MDM demonstrates the benefits of
SAP MDM
a solution that combines SAP's business
Delivers a single version of the truth process expertise with its leading tech-
for customers, suppliers, products, nology platform for unprecedented levels of
employees and user designated data synchronization. Using SAP MDM
objects to maintain data and SAP Exchange Infra-
structure (XI) to distribute the data to other
Provides capabilities to share this systems, the SAP MDM platform is ca-
single version of the truth internally pable of delivering clean, accurate, consol-
and externally with partners idated and synchronized data to all users
throughout the entire enterprise, and to out-
Leverages existing IT investments in
side trading partners. By freeing critical bus-
business-critical data
iness processes from the confines of individ-
Accelerates and improves the ual applications, the SAP MDM platform
execution of business processes enables the creation and execution of
enterprise-wide processes smoothly and
consistently across system boundaries.
SAP MDM can be deployed on an evolutionary basis to minimize disruptions to the daily
flow of business; can be quickly implemented without altering the existing system
landscape; and is flexible to adapt to established business processes and organizational
structures.

1
IDC, Master Data Management: Worldwide Software and Services Forecast, 2005 -2009, October 6, 2005
2
Forrester, Trends 2006: Master Data Management, March 6, 2006

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Centralized Master Data Management
With SAP MDM, businesses can harness the potential of critical data to rapidly create
innovative processes that drive growth and promote cost savings. Using standard global
attributes, SAP MDM ensures that all systems receive the same master data during
distribution. SAP MDM allows users to maintain a complete object definition, including
object dependencies, in a centralized server for master data. Thereafter, central
maintenance of unified master data allows users to execute data distribution in a
controlled, visible, and traceable manner, supported with active status management of
each distribution step.

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Enterprise Services Architecture (ESA) Foundation
The promise of enter-
prise services arch-
itecture (ESA) is to
move companies
away from mono-
lithic, highly custom-
ized, siloed app-
lications and toward a
standards-based,
modular, approach
that enables end-to-
end, enterprise-wide
business processes.

Accordingly, the im-

plementation of a
service-oriented arch-
itecture necessitates,
first and foremost, a
centralized, harmon-
ized and unified
source of master data.

As a component of
the SAP NetWeaver
platform, upon which
ESA is built, SAP
MDM uses XI to enable inter-system communication in a heterogeneous, multi-vendor
technology environment. SAP MDM works out of the box with the SAP Business
Intelligence (SAP BI) component of SAP NetWeaver. This brings together a powerful
business intelligence platform, a comprehensive set of analysis tools, and industry-
leading data warehousing capabilities. Harmonized data from SAP MDM also can be
used for analysis and reporting within SAP BI.
By making use of SAP Enterprise Portal (SAP EP) technology, SAP MDM offers a role-
based, personalized user paradigm, presenting users with business processes and inform-
ation based on their business roles as users, managers, administrators, and so on. SAP
MDM also leverages the knowledge management capabilities of SAP NetWeaver so
associated content, such as part specifications, can be linked to associated master data.
Integrating SAP MDM with the knowledge management capabilities of SAP NetWeaver
allows companies to manage all facets of unstructured information from collaborative
authoring and publishing to advanced search and navigation.

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According to Andrew White, research director at Gartner Inc., "[MDM] is very important
to SAP customers in their goals for realizing many of the benefits from adopting SOA
and ESA in complex heterogeneous IT environments."3
Once in place, an MDM program serves well as the foundation for a phased ESA
migration plan, providing the quality data needed for increased flexibility and
responsiveness to ever-changing market demands.

MDM LANDSCAPE

SAP Enterprise Portal is the industrys most comprehensive portal solution, providing a
complete portal infrastructure along with bundled knowledge management and collabora-
tion capabilities. It provides people-centric integration of all types of enterprise infor-
mation, including SAP and third-party applications, structured and unstructured data, and
Web content.

3
SearchSAP.com, SAP News. March 22, 2006

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SAP MDM components provide advanced master data management functionality. SAP
MDM components include:

MDM Console is an administration tool used for managing and maintaining the MDM
repository, and for operating the MDM server and DBMS. MDM Console is used for
executing the following main tasks:

- Access an MDM server (mount/start MDM server)

- Access an MDM repository (create/mount/load repository)
- Create roles, users, logins and security controls; register client systems that
interact with MDM; define ports for importing/exporting data
- Design/create new MDM repository; create/modify tables and fields of new or
existing MDM repository
- Maintain integrity of MDM repositories using various backup and restore
mechanisms

MDM Data Manager (also known as Content Manager) is used for multiple purposes,
including editing existing data records and creating new master data records, adding
images, documentation/attachments/specification sheets, etc. MDM Data manager
operates in six different, specifically purposed modes:

1. Record Mode is probably the most commonly used mode. Here users see all the
details of a record, including pictures, attached documents, etc. Users can edit
records and change details of specific fields including images and documents.
2. Hierarchy Mode is used to view and edit the hierarchy tables, taxonomy tables,
and masks tables. In this mode, users can edit parent/child relationship and order
of siblings.
3. Taxonomy Mode is where users edit the taxonomy tables in the repository. Users
can create and maintain a category hierarchy and maintain the attributes
pertaining to a specific category or sub-category.
4. Family Mode is where users further define taxonomic definitions for increased
granularity. Also in family mode, an image for an entire list of products pertaining
to a specific family can be added. Or in case of a vendor/customer, a logo can be
added.
5. Layout Mode is specifically to facilitate catalog design. This is where catalog
layout is created, fields are created for display, and the display look is established
(vertical/horizontal, etc. ).
6. Publication Mode is used to publish catalogs to a DTP application such as Quark
Express.

MDM Import Manager aggregates data from any electronic format with the ability to
transform, restructure, normalize, cleanse and rationalize source data as part of the import
process. Import Manager provides a 100% GUI environment to define transformations
without the need for external application or programming. It allows for arbitrary
restructuring of source data, mapping fields and individual mapping of values within

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those fields. Import Manager supports automatic data type conversion, field rather than
record at a time exception handling.

MDM Syndicator is used for exchanging and completing repositories or repository

subsets with other application systems (agencies) as well as customers and trading
partners in a variety of industry-standard and customized XML and delimited text file
transforms. Syndicator covers extraction of dedicated objects from repository based on a
given structure with relevant key mappings at various levels. Syndicator also keeps track
of what records have been sent, thus enabling net change data transfers.

Master Data Server manages accelerated access through the SQL DBMS to one or more
repository databases containing product content, which it delivers to various SAP MDM
modules and client apps across a network. The MDM Server provides an abstraction
layer on top of the database, persistence of database objects and optimizes database
object types based on the underlying database technology.

RDBMS is the relational database where the data repository is instantiated. SAP MDM
currently supports Oracle, SQL Server and DB2.

Business Information Warehouse (SAP BW) is a data warehouse used as a basis for
making strategic and operational decisions in companies. It combines state-of-the-art
warehousing technology with preconfigured business content, and gives users a clear
overview of company-internal data and any external data that is relevant. SAP Business
Information Warehouse contains a wide selection of predefined reports that have been
specially tailored to meet the needs of specific industry sectors and user groups, such as
production planners, financial controllers, and human resource managers.

Exchange Infrastructure (SAP XI) is a building block of SAP NetWeaver and runs on
SAP Web Application Server. With SAP MDM and SAP XI, companies can easily
federate business processes by inserting master data object distribution mechanisms into
other systems. Through the strength of its integration and data distribution capabilities,
SAP XI enables a new breed of adaptive business solutions.

Master Data Client Systems are all application instances that interact with SAP MDM.
These applications can be a source of master data, supplying data to SAP MDM through
MDM Import Manager or these applications can be target systems consuming data
published by SAP MDM through MDM Syndicator.

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4. The Business Case: Maximizing the Value of ERP, SCM & CRM Systems
A key selling point that drove adoption of ERP systems in the 1990s was the prospect of
integrating much of an organization's core business functionality into a single, integrated
application suite. It was believed that by creating and drawing on a central, consistent set
of business data, ERP would eradicate the chaos being caused by data silos created and
maintained in departments and subsidiaries.
While plenty of organizations bought into ERP, few ever came close to realizing those
integration goals. The reality for the vast majority of businesses continues to be that data
is dispersed across, and uniquely defined within, multiple different applications - and
even within the same application. It is precisely this state of affairs that MDM is designed
to rectify.

Benefits for Human Resources

Employee data is often maintained inconsistently within individual local systems, with
each record accommodating only one specific role of an employee within the company.
Consolidation of employee corporate information is a key requirement for optimization
of resource assignment. Harmonization of employee data provides a coherent picture of
employees in a large international corporation where mobility is a strategic need. By
providing centralized, harmonized and consolidated employee data, SAP MDM enables
an organization to hone its competitive edge by improving its ability to attract and retain
an exemplary workforce, maximize employee resources and respond quickly and
efficiently to market changes.
Benefits for Business Intelligence
As the CEO tries to understand the companys overall performance, he may find many
different versions of the truth. Finance has its own set of revenue numbers, sales has
another version, and the different business units may each have their own version of how
much they contributed to revenue. By creating a single version of the truth that cannot be

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questioned because everyone is using the same data, MDM enables accurate, consistent,
real-time business performance reporting.

Benefits for Supply Chain

Management
According to a global commerce
study, inaccurate product data leads
to a $30+ billion cost on supply
chains.4 MDM helps the supply
chain process flow more smoothly,
and it improves visibility of the order
fulfillment process inside the com-
pany. That can lead to reduced
inventories of the materials used to
make products (work-in-progress
inventory), and it can help users
better plan deliveries to customers,
reducing the finished goods
inventory at the warehouses and
shipping docks. With the centralized, accurate data that MDM provides, a company can
save anywhere from 1-3% in supply chain costs.
Benefits for Customer Relationship Management
According to Gartner, the creation of
an accurate, timely, and rich single
view of the customer across channels
and lines of business will be a key
enabler for reducing costs, managing
risk, and increasing revenue and
profitability in customer-centric or-
ganizations.5 Moreover, Gartner
predicts that the creation of a master
customer information database will
deliver the most-accurate, up-to-date
and complete single view of the
customer across multiple channels and
business lines in heterogeneous IT en-
vironments through 2008.6 By creating
a single 360 degree view of customers, MDM helps sales, marketing, and service teams
better anticipate customer needs, provide targeted offers, and improve customer service.

4
GCI, Cap Gemini, The Case for Global Standards: Creating the Business Case for Global Data Synchronisation in
Your Company, October 2002
5
Gartner, Magic Quadrant for Customer Data Integration Hubs, 2Q06, May 26, 2006
6
Ibid.

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5. Implementing MDM: The Organizational Impact

As aptly noted by Bill Swanton, research vice president with AMR Research Inc.,
"[MDM] is a set of business processes and technology, not just one or the other."7
Accordingly, MDM initiatives must be business driven and not seen as IT infrastructure
enhancement projects.
Successful MDM initiatives begin with a close evaluation of business units to discover
specific issues around inconsistent data. If MDM is implemented as an enabler of key
business activities rather than as an infrastructure upgrade, the clear-cut business value
delivered will provide the momentum for further MDM projects.

Build Incremental Value

While data quality is a big problem for many companies, launching a big bang attack on
this problem can result in a slippery slope to frustration and failure. The problem is one
of sheer complexity. Massive amounts of data contained in heterogeneous,
geographically disparate systems, flawed business processes and siloed business units
cannot be vanquished with a single MDM stroke. The end result of a top-down, big bang
approach to MDM is widespread business processes interruption, infectious lack of
support and, ultimately, abandonment of the project.
Rather than embark on an unwieldy companywide MDM initiative, it is far better to
target specific line-of-business applications where improvement in data quality and
visibility will yield immediate and demonstrable ROI. Consultants should work closely
with business managers to identify troublesome, data-dependent processes and build out
an MDM strategy from these specific targets. Clients should be educated up front that
MDM is not a one-shot deal. It's an analysis and remediation process followed by an
ongoing commitment to improvement.

Governance
Data governance is integral to any MDM initiative. It is vital to identify and address
faulty business processes that create data problems. As business processes are
systematically fixed, a corporate cultural change on taking responsibility for data is
needed to ensure maximum value from MDM. According to Swanton, MDM projects
that dont budget for improved data governance will fail. Underscoring this critical
point, he adds, that if companies dont address the flawed business processes creating
the data problems, implementing MDM software is throwing money away.8

Organizational Impact
People dont like to change, and MDM asks them to change how they do their jobs. That
is why the value of MDM is so hard to pin down. The software is less important than the
organizational changes companies make in the ways they do business. If MDM is used to
improve the ways employees take orders and manufacture, ship and bill for goods, the
value will be evident. If the software is simply installed without any attempt to improve
7
SearchDataManagement.com, Building a Business Case for MDM, December 13, 2005
8
Ibid

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the ways employees do their jobs, value will be hard to identifyindeed, the new
software could slow processes down by simply replacing old software that employees
know with new software that they dont.

MDM is necessarily a cross-functional set of tools and processes that by its very nature
requires its own dedicated organization to own and manage. The MDM organization
does not need to be large or complicated, but it does need to be disciplined. As the
keeper of the MDM processes and standards, the role of the MDM organization is as
critical as the software itself in deriving true business-oriented value from a
comprehensive MDM implementation.

SAP is the registered trademark of SAP AG in Germany and several other countries.

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