Monetizing Master Data Management Projects
Monetizing good Master Data Management practices can be challenging. We all look at the operational efficiencies, improved reporting and analysis, turning data into actionable information, and seeing the forest as well as the trees. Don’t get me wrong – All good stuff. But the CFOs out there are looking for something a little easier to put into the money column.
Sales Increase as a result of improved customer service might be attributed to both the MDM effort and the improved training of customer service professions. Reduced costs to create compliance reports could be caused by the correct alignment of subsidiary chart of accounts and ledger entries, but is it materially impactful to the bottom line.
One area we have seen with our customers is the trend to use Material/Item domain as their monetization anchor. Afterall – every Dollar, Pound or Euro saved equals ten in new sales. So reducing costs of goods, whether its raw material or operations items can have a direct impact that CFOs can measure and shareholders get value from.
Acquisitions and system consolidations are some of the instances where this monetization can be big. Identifying duplicate inventory across companies post-merger helps to reduce cost in direct ways. If the available inventory is greater, the inventory turn (and the costs associated with the replenishment) goes down. If the obsolete inventory in one company can be used by another, then this is cost avoidance in its purest sense with the multiplier of freeing up cash for improved operations, etc.
And in an acquisitive environment, doesn’t somebody in the executive ranks make a commitment to the shareholders that the “new” organization will offer economies of scale to improve the net overall performance of the merged organization. Of course – that is often the driver for an acquisition, namely increased sales, reduced costs, and improved margins and shareholder value.
Seen other ways of quantifying benefits from good master data management practices? Let us know…
This is Part 1 of a 2 part blog post. Read more on Monetization -Consolidations