Mentor graphics was one of thousands of companies that, taken together, invested billions of dollars on software and implementation of enterprise resource planning systems. But like many of those companies, the manufacturer of electronic design systems couldn’t always be sure that the information in its SAP order system was identical to what was contained in its Callidus sales commission system.
“If your order management system rolls up sales differently than the system that handles commission payments, you’ve got a problem,” says Jan-Willem Beldman, team leader for analytical applications quality at the Wilsonville, Ore., company.
Such anomalies and inconsistencies of the same information contained between and among various systems—information that is generally referred to as master data—are common in corporations. While no one has tallied revenue lost due to conflicting, inaccurate or outdated information upon which business decisions are based, observers say inconsistent information is a costly spike in the ribs of corporate America.
“Half of all problems with ERP systems are caused by master data issues,” confirms Bill Swanton, vice president at AMR Research. “And among large manufacturing companies, only about 20% to 25% have an active strategy for master data—information that affects systems and databases across the company. The rest are all wrestling with how to do it.”
It’s not just a problem confined to ERP or the manufacturing sector. “If your financial people have a data warehouse but they don’t trust the data, chances are it’s a data management problem,” Swanton adds. “The business driver here is a painful awareness that companies can’t do the things they thought they could with the systems they’ve already bought.”
But taming this data “monster” is more challenging than most companies realize. Just trying to keep key business data straight—that is, not only current and accurate, but synchronized so that the business unit in Munich uses the same data code to refer to a global client as does the main office in Pittsburgh—is often an arduous and challenging assignment.
Failure to do so can have dire consequences. Inconsistent and incorrect business information can cause companies to botch product shipments, confuse billings and alienate customers. What’s more, separate reports containing conflicting information, when presented in the corporate boardroom, not only cause confusion, they can embarrass the CIO.
“This inconsistency leads to the inability to make timely decisions, because there is not enough trust in the data,” says Jose Villacis, senior product marketing manager for Hyperion MDM at Hyperion Software, a provider of master data management (MDM) systems.
For a long while, Mentor Graphics tried to manually bandage the problem. When a new account manager joined the sales team, for example, the sales manager for that unit called around to find out whom to contact to ensure that the new person’s name would appear in the systems that needed to reflect the change—enterprise planning, sales commissions, human resources and the sales unit itself. In most cases, effecting the change meant filling out a form and sending it in to the information-technology group.
Already backlogged with an increasing number of such requested changes, an information-technology team of four people slotted the account manager change into the queue. In all, the sales and I.T. staffs had to perform up to a half-dozen steps.
“We were losing the fight of cleaning up all the data,” Beldman says. “We had to have someone call the account manager for SAP, the account manager for the commission system, and of course the manager in charge of our Oracle data warehouse.” To make this kind of change, the process took at least 24 hours.
“You could have a change that would require an information-technology person going in and making changes to the financial consolidation system, the planning system and the forecasting system,” he says. “And for all this data to be consistent, you’d have to be sure that no error was accidentally made in making these changes.”
The company knew there had to be a better way.
Mentor Graphics solved the problem, starting in 2003, by adopting a new process and technology to manage master data. The company installed Hyperion Master Data Management Server software, which automatically publishes changes about products, customers, sales and other corporate data to all its systems. The software also assigned the responsibility for making changes and updating master data to its business units.
Today, a Mentor Graphics sales department staffer makes the change in a few minutes. “We have really cut down the cycle and eliminated most of the manual steps involved with making this kind of business change,” Beldman says. “And now we have the assurance that the information is accurately updated in all our systems.”
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