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What Your CEO Should Know About Master Data ManagementA Business Use Case on How You Can Use MDM to Drive Revenue and Improve Sales and Channel Performance

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Protected by one or more of the following U.S. Patents: 6,032,158; 5,794,246; 6,014,670; 6,339,775; 6,044,374; 6,208,990; 6,208,990; 6,850,947; 6,895,471; or by the following pending U.S. Patents: 09/644,280; 10/966,046; 10/727,700.

This edition published May 2013

1What Your CEO Should Know About Master Data Management

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Table of Contents

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

How Bad Data Undermines Sales Performance . . . . . . . . . . . . . . . . . . . 3

The Limitations of a Typical Flat Sales Report . . . . . . . . . . . . . . . . . . . . 3

Recognizing Data Duplicates and Discrepancies . . . . . . . . . . . . . . . . . . 5

Resolving Master Data into a Single Golden Record . . . . . . . . . . . . . . . 6

Improving Performance with a Complete Hierarchical Customer View . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Enriching Customer Account Views with Sales Potential . . . . . . . . . . . . 7

Visibility into Channel Coverage to Identify Gaps and Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Building a Competitive Advantage with Master Data Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

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Executive SummaryImagine yourself on an elevator with your CEO, who asks you about master data management (MDM). Your CEO heard that MDM could help companies improve their sales and channel partner performance—but how?

It’s a question that confronts business and IT managers in a range of industries as they look to sharpen sales performance. MDM is increasingly on the radar screen as a sales enabler, but many executives and business managers, and even some IT personnel, aren’t sure exactly how it works.

This executive brief illustrates in practical, step-by-step fashion how MDM clears the unreliable data smog that is so typical in complex sales environments. MDM generates a single, authoritative view of customer accounts, corporate locations and hierarchies (including divisions and subsidiaries), products, sales employees, territories, and channel partners. What your CEO needs to know about MDM is that it can deliver reliable data to empower sales, marketing, and partner channel personnel to:

• Maximize account penetration to increase revenue with cross-sell and up-sell

• Optimize channel operations by eliminating gaps and conflicts

• Increase speed and agility in both business and IT

3What Your CEO Should Know About Master Data Management

How Bad Data Undermines Sales PerformanceWhat is master data? Master data, also known as reference data, represents the people, places, and things that comprise a business—its customers, products, channel partners, suppliers, and more. The problem, from a B2B sales perspective, is that this information is littered across multiple systems such as finance, sales force automation (SFA), customer relationship management CRM), service and support, partner management, and marketing automation.

Take a simple example: If a customer is named “GE” in one application and “The General Electric Company” in another, customer-facing teams have no easy way to accurately identify the sales and revenues, product penetration, or sales and channel coverage for that customer account. Because there are multiple versions of the same information stored in different formats across disparate business applications, it’s not uncommon for sales and channel personnel to spend as much as 70 percent of their time searching for and reconciling this information—and just 30 percent of their time on customer engagement. This inefficiency can result in:

• Missed cross-sell and up-sell opportunities

• Account coverage gaps and conflicts

• Irrelevant and inept product offers to customers

• Costly delays in onboarding new channel partners

The Limitations of a Typical Flat Sales ReportLet’s look at how incomplete and inconsistent data hinders sales effectiveness at a hypothetical company we’ll call Acme, and how MDM gives customer-focused teams the accurate, complete information they need to excel.

Acme’s sales performance had declined over several months, and the CEO demanded an all-out effort to boost revenue by the end of the quarter by better meeting customer needs. Sales and partner managers were tasked with assessing the customer base for sales opportunities. A first step was to generate a list of top customers by revenue.

In Figure 1, we see a flat sales report that Acme produced by sourcing raw data from multiple systems. The report lists top customers in descending order, based on quarterly sales revenue; it’s called a “flat” report because it lacks context and dimension that would help Acme sales managers target their efforts. Despite this lack of context, most organizations use this type of report to make decisions.

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A close look at the report reveals several problems and limitations. Some of the company names appear to be approximately the same, but they are listed multiple times and by different locations. For instance, the report shows six references to The General Electric Company (which we’ll refer to as GE throughout this paper for simplicity). It seems that GE is a major customer of Acme, but whether it’s a single business or multiple subsidiaries of a parent company is not clear.

Figure 1. A flat sales report, which is produced from a reporting or business intelligence (BI) system—based on data from the data warehouse—shows sales by company without context and has the same companies listed multiple times because of data discrepancies.

5What Your CEO Should Know About Master Data Management

Recognizing Data Duplicates and DiscrepanciesWith Informatica® MDM™, Acme can recognize multiple instances of the same company and duplicate records, as Figure 2 illustrates. We can see, for instance, that the same GE Energy unit is listed twice because of the misspelled location name “Nisciyuna,” making it appear as if Acme had sold to two different companies. This incorrect information could have negative consequences later if business decisions are made based on this data.

Suppose that Acme’s marketing department was executing two marketing campaigns—one aimed at customers that had bought less than $30 million in goods and services and one for customers that purchased more than $30 million. As Figure 2 shows, the report erroneously lists sales of $28.33 million to GE Energy “Nisciyuna” and $15.88 million to GE Energy Niskayuna. In fact, the single GE Energy Niskayuna entity bought more than $44 million of goods and services, but discrepant data in the flawed flat report hides that fact.

As a result, Acme’s marketing team would have wasted time and money and risked the customer’s loyalty by aiming the wrong sub-$30 million campaign to GE Energy—twice! Our report shows only 20 companies, but Informatica MDM can recognize and reconcile duplicate and discrepant records for hundreds or thousands of companies.

Figure 2. Without Informatica MDM to recognize and reconcile duplicate company account records before they are pulled into the data warehouse, reports include duplicate records of the same company such as GE Energy highlighted above. Note that the MDM system does not manage transactional data such as sales figures. Only master data—business-critical data that is shared across multiple systems, such as customer account, location, product, and channel partner—is managed in the MDM system.

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Resolving Master Data into a Single Golden RecordInformatica MDM uses powerful cleansing, matching, merging, and deduplication technology to correct the errant records and resolve them into a single version of the truth, also called a “golden record,” that is propagated to all business applications and databases (or warehouses) tied into the MDM system, including our sample report. In Figure 3, we see that in our new report, generated from a BI system (which pulled data from a data warehouse that included both master data from the MDM system and transactional data), has removed duplicate entries for GE. (Other records on Jacada and Caterpillar have been corrected as well).

In addition, revenue numbers have been aggregated among the duplicate entities to show an accurate sales figure for each customer unit. Acme’s marketing department can see that GE Energy Niskayuna accounted for more than $44 million in sales, and it can target the GE unit with its campaign aimed at customers that have bought more than $30 million in goods and services.

Figure 3. Informatica MDM resolves duplicate records of customer accounts so that sales figures for single business entities can be aggregated correctly in the data warehouse and leveraged for reporting.

Improving Performance with a Complete Hierarchical Customer ViewWhile Acme’s customer sales data is now accurate, it doesn’t tell the complete story. What’s missing is a representation of the hierarchies that exist within GE—the subsidiaries and sub-subsidiaries that branch off from the parent company. Insight into the complex hierarchies that exist in large multinational corporations such as GE gives Acme sales and channel managers some distinct advantages.

7What Your CEO Should Know About Master Data Management

For instance, understanding complex hierarchies can help Acme sales representatives leverage relationships developed in one subsidiary across others. It can help sales managers identify opportunities, sharpen focus, and allocate resources. But it’s difficult to manually piece together information to build a hierarchy of a large customer—and difficult to keep it up to date, because subsidiaries are so frequently bought, sold, spun off, and renamed.

Figure 4 illustrates hierarchical relationships within GE, including correct names, locations, and data on sales that Acme has made to these GE entities. In this case, Informatica MDM has imported data from a third-party provider such as Dun & Bradstreet or Experian to construct the hierarchies. This accurate hierarchy can now be pulled into the data warehouse and correctly associated with Acme’s internal sales data.

Enriching Customer Account Views with Sales Potential Then, to help its customer-focused teams zero in on sales challenges and opportunities, Acme has associated its accurate master data with additional information that illustrates the total sales potential of each customer and subsidiary, and the percentage of total sales potential that Acme has achieved. For instance, managers can see that sales are at 98 percent of potential at GE Energy Niskayuna, but only 35 percent at GE Oil & Gas, and can tailor marketing and sales efforts accordingly.

Figure 4. The data warehouse combines accurate customer accounts and their hierarchies, which are managed by Informatica MDM, with sales figures, enabling sales and channel personnel to easily pull up reports from their BI system and view accurate corporate structures as well as revenue figures and sales potential for the parent company and each division.

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Visibility into Channel Coverage to Identify Gaps and ConflictsBecause Acme is using Informatica MDM to manage master data by creating “golden profiles” and managing customer account hierarchies and then leveraging this information in the data warehouse for reporting, the company now has a sound view of the hierarchies within GE and other customers. Acme also can readily view the products that are being used at each location, and the opportunity to drive more sales by location. As Figure 5 shows, Acme then uses Informatica MDM to further enrich the report with another dimension—channel partner coverage and status.

By using an MDM system, Acme has an accurate customer account hierarchy. To improve their customer experience and go-to-market strategy, the sales and channel operations teams now want to identify coverage issues such as account sales channel gaps and conflicts. By managing master data about sales employees, territories and channel partners as well as the relationships between them in the MDM system, the team can pull this data into the data warehouse and use it to augment their report further. The report below identifies potentially costly gaps and conflicts that Acme can work to address. With Informatica MDM, Acme can continuously monitor and manage these entities and relationships to optimize sales performance.

Figure 5. Informatica MDM can enrich sales reports by managing master data and providing the data warehouse with accurate data about customer accounts, sales employees, sales territories, and channel partners as well as the relationships between them to help identify potentially costly customer account gaps and conflicts.

9What Your CEO Should Know About Master Data Management

Building a Competitive Advantage with Master Data ManagementOur sample report was generated by a BI or analytics tool and was based on data from the data warehouse, which combines master data and transactional data. This report is only one example of how a company can use reliable and related master data to empower sales, marketing, and partner channel personnel with key insights about the business. Informatica MDM makes it easy to supply the business with the accurate master data needed to generate similar (and more detailed) reports by contracts, products, partners, and more areas to answer such questions as:

• Which of our customers have which of our products?

• What degree of product penetration do we have in a given customer?

• What can I learn about product affinity and customer type?

• Which of our partners are selling which type of products?

• Which partners are most effective from a contract size perspective?

• Which laggard accounts should we focus on?

As this business use case shows, MDM isn’t rocket science. It’s a practical, proven technology in use at leading companies around the world that’s providing a decided competitive advantage and quantifiable return on investment (ROI). By generating a single, authoritative view of business-critical data, MDM is helping to make possible the high-caliber sales and channel performance that CEOs demand of their businesses. Next time you are in the elevator with your CEO, take the opportunity to explain what that executive should know about MDM.

Learn MoreLearn more about the Informatica Platform. Visit us at www.informatica.com or call +1 650-385-5000 (1-800-653-3871 in the U.S.).

About InformaticaInformatica Corporation (NASDAQ: INFA) is the world’s number one independent provider of data integration software. Organizations around the world rely on Informatica for maximizing return on data to drive their top business imperatives. Worldwide, over 4,630 enterprises depend on Informatica to fully leverage their information assets residing on-premise, in the Cloud and across social networks.

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