Choosing a solution or platform has to deliver business outcomes. During almost 20 years in the master data management market, two questions which are key to the customers I worked with: What is the ROI of MDM/PIM? How do I build the business case?
The ambition of my blog is to create an ultimate source for business and IT leaders who have to answer this question in their enterprise. I will cover different approaches, to achieve this goal. They reach from very simple, up to very academic and I will list the best whitepapers or articles which I can recommend.
MDM or PIM solutions are used by companies to drive outcomes in one area or even across all of the following business disciplines over time. Every use case can fit into this:
The Simple One
The best story I ever heard was a PIM Program Manager on stage at an e-commerce conference. He was asked how he sold the need for a PIM solution and the budget. His reply was “I told my CEO, if we do not do it, we will be dead”. What he meant was he told his CEO that without data they cannot sell digitally.
The Benchmark Lovers
If your company follows benchmarks from comparable companies, or even the same industry, you can work with examples. I have taken the freedom to list neutralized outcomes from different industries using MDM or PIM. Feel free to use them when you build your presentations.
Savings from reduced spare parts ordered 15%
Savings over $1M / project on administrative expenses
Savings of $3M / project from post project data entry
Visibility of what the rig has and where to procure from
Post project data entry savings $3M per project
Reduced acquisition costs for spare parts by 15%
Reduced catalog processing time from 4 month to <1 month
Catalog Page production time reduced 50%
$750K – $1,500K annual marketing cost savings
Saved over $10M in bulk material
Reduced project administration costs by $1M / project
Music & enterainment retail: Sales increase through faster SKU build & launch time; Improved time to market from 12 days to 4 days; Enabled product volume from 1M to 2M+ •
Fashion luxury retail: Productivity enhancement by 50-60% with improved data quality
Beauty & drug store retail: Increased productivity by 33%; Reduced new product introduction timeline by 80%
More examples grouped by use cases and written be a former colleague of mine, Antonia Renner. I added the industries too.
Significantly improved productivity and cost reduction
- 3x more output with the same team (multi merchant retail)
- 60% less steps to enrich products online (from 15 to 6 steps) (luxury retail)
- 100% less email exchanges to share and collect media data (from 25 to 0 emails) (luxury retail)
- 50% less in workload for data stewards (industrial distribution)
Speed & time to market
- 4x faster introduction of new products (multi merchant retail)
- 67% faster creation of customer quotes (from 60 to 20 min) (building distribution)
- 70% faster translation of product information (from 10 to 3 days) (luxury retail)
- 94% faster system integration from a new subsidiary acquisition (from 3 months 5 days) (industrial distribution)
- Up to 60% faster time to market by decreasing time to onboard new online product information (from several hours to only a few minutes) (consumer electronics)
- Grow the business 60% and hit sales targets and within two years as the full product range is available online (multi merchant retail)
Delivered market leading customer experiences with
- 25% less returns for online orders thanks to rich product information and informed purchase decisions (building material)
- Increased average basket size by 21% thanks to improved cross selling (building material)
- Increased online range coverage from 12% to 96% (multi merchant retail)
- Supported conversion rate boost of 10% to 20%(fashion brand)
Improved product data quality
- 80% reduction of product data quality issues (multi merchant retail)
In 2011 (working for Heiler Software) I published an extensive survey based on 400 retailers and manufacturers from 14 countries. The study with a university delivers more than 30 pages measurable results where attendees with roles in e-commerce, marketing, supply chain, procurement and IT shared their KPIs before and after implementing an PIM/MDM solution. This press release summarises the key findings of the research which was divided into three main areas: revenue growth, cost savings and operational efficiency. The most compelling outcomes im my view are these three: Conversation rates, margin increase and speed in in time-to-market.
The Gartner Way
If your company and leadership is more likely to follow Gartner Research, a key read is this paper on “How to create the business case for MDM”. (You can get this from Gartner if you have the subscription access or you have to find free downloads like this one.) A key factor is to etablish a formal process which allows you to get the buy-in from all key stakeholders across all levels. I think it is a nice graphical way, Gartner has defined.
The Harvey Balls
When presenting these examples to customers, I faced the following concerns and counters: “Are you willing to guarantee such results for us?” In this case my response is that it depends on the concrete situation in your company and the scope, politics, culture, change management and other factors have impact on how the results may look.
The second biggest challenge I hear is: “How do you map the outcome directly (1-to-1) to using MDM?” Answering this is more challenging. Yes is is hard to proof that the better conversation rate is achieved only by better data. A way to simplify this is the Harvey Ball concept. This methodology starts from the strategic initiatives on CEO level and drills down to operational levels and maps strategic change initiatives to MDM capabilities which enable such. Here comes a simplified version of that in context of enabling CPQ (configured price quotes):
The next level of analysis is to show, based on the Harvey Balls, how big the impact of the MDM capability is for the business initiative. In this case for CPQ.
At the end of the day you need a one page executive summary, where the value of the business change initiative must be clearly stated and you need metrics your CFO accepts and understands. CFOs like to see real KPIs. You may win their heart, when you talk about numbers in a sheet for example on the average deal size, gross margin, gross profit, net margin, operational profit and so on. Finally a chart paints a thousand words. The chart below is a neutralised example:
My appreciation for the Harvey Ball method goes to Michael Rice from Riversand, who has also spend time on this “interview on how to build the business cases for MDM” with me:
There is no ultimate guide to get this done by press of a button. The key factor is to understand the dynamics, culture and politics in our organisation and chose the way which matches best. Very often an external advisor can help to win trust with your C-suite. Finding the right advisor also should match your company’s style. Based on this you may invite the large consulting companies such as Accenture, PwC, EY etc, or better the regional MDM/PIM consulting firms, or even a self-employed individual advisor. Also the software vendors offer concepts to achieve this. Some even have dedicated teams for that. (Michael Rice)
One final thought: The ultimate supreme discipline is going back after key milestones or after implementations and track the progress over time. Do not forget to compare your expectations or goals with the outcomes later.
Resource library on the ROI of MDM & PIM:
Gartner Magic Quadrant for MDM Solutions 2019 (free download)
Gartner Critical Capabilities for MDM Solutions (Jan 2020)
Gartner: How to create the business case for MDM
Interview: How to build the business case for MDM/ PIM
Research: The ROI of PIM (key findings)