Which do you love more: your ERP system or quality data?

 

Most companies accept making large investments in ERP systems.  But they hesitate to invest in tools to manage and leverage the product data those systems use. 

In an article describing the distinctive capabilities of product information management (PIM) solutions, master data management consultant Dan Power observes that “If CRM and ERP platforms were better able to manage master data, perhaps we wouldn’t need [product] MDM solutions.”

But they aren’t, so we do.  Companies need MDM systems to keep the master product data used in their ERP systems — and in all other enterprise activities — accurate and up-to-date.

MDM consultant Brian Hill suggests that more companies are realizing that maintaining their master data in their ERP system “has limitations when enhancing that data for enterprise use outside of the ERP.”  As a result, these companies

are investing in MDM as a way to allow them to respond quickly to ever-changing market conditions, accelerate product introductions, improve cross-channel and cross-line-of-business sales as well as improve the quality of their business analysis. For these companies, MDM has been a foundational element in pushing their competitive advantages further.

Still, some companies — often for budgetary but also for technical and “political” reasons — end up using their ERP system as the “repository” for their master product data, even though ERP systems aren’t designed to manage master data.  Those companies end up facing questions such as: 

Can we afford to use sub-optimal product data everywhere in our organization just because that’s the way our ERP system likes it?

Which are more important – the product-related functions (e.g., inventory management, BOMs) handled by our ERP system, or our other business activities that rely on the same product data? 

The last question reminds me of a Peanuts cartoon from the 1960s.  Lucy has accused Charlie Brown of being wishy-washy, and Charlie defensively asks her to prove it. 

Charlie Brown, Linus and Lucy

Linus struggles to keep the peace between a nonplussed Charlie Brown and a quizzical Lucy during a furious debate over the best approach to data de-duping.

Lucy: Who do you love more, your mother or your father?

Charlie Brown: Well, uh, that’s kind of…

Lucy: WISHY-WASHY!

Charlie Brown’s unresolved dilemma is similar to the one faced by companies that hesitate to acquire the tools they need to manage the master data used in their ERP systems.  They continue struggling with sub-optimal data across the enterprise just because their ERP system dictates it. 

At some point, successful enterprises come to understand that it isn’t an either-or proposition.  If you have ERP systems, you need to ensure the data they use are clean, properly managed, and easily accessed by other applications — and ERP systems themselves just aren’t up to the task.

That’s why an MDM hub makes so much sense,” Power says in another article. “It provides a neutral place for customer, product and other master data from all over the enterprise to be created, read, updated and managed.” This helps ensure “a single view of accurate, complete, timely and consistent master data across the enterprise.”

Even if you still have to continue maintaining your product data in your ERP system, the capabilities of an MDM platform can work in parallel to help better cleanse and standardize the data, enrich them with metadata such as product attributes and marketing descriptions, and leverage them in other applications such as business intelligence, marketing communications, and partner syndications. 

Jeff Kelly at SearchDataManagement.com notes that, “While laying the groundwork for MDM in operational ERP environments can be arduous, the benefits can be significant.”  And an article by Lindsay Konzak in Modern Distribution Management observes that “Improving the transmission and management of data between supplier and distributor can have big returns for both parties.” 

So ultimately the question isn’t, “Who do you love more, your mother or your father?”  The question is, “Don’t business-critical processes like sales, marketing, business intelligence, and compliance merit the same commitment to excellence as logistics and operational activities?”

Or,  put another way, “Isn’t gaining a competitive advantage through better information more important than doing things the way our ERP system wants them done?”

6 Responses to Which do you love more: your ERP system or quality data?

  1. This is one of those examples of why I feel that data quality is a technical problem. If ERP/CRM systems were built with MDM/DQ functions, the quality of the data would be managed in the a better and more efficient way.

  2. No organisation can run without an ERP system but it can easily survive without an MDM/PIM system and most do by using their website and or catalog as their MDM, which is why there is so much inadequate and plain bad information out there. To design an ERP with MDM capabilities is a backwards step to the system that does nothing well.

  3. FMJohnson says:

    Hi, William and Peter,

    Since we’re not likely to see ERP vendors add true data management or data quality capabilities to their offerings, perhaps the best way to think of the issue is that enterprises using ERP systems will always need some way to assure the proper management and quality of their data.

    Best practices and change management (i.e., human factors) will always be a critical part of that effort. But tools for enforcing data quality standards and managing master data in concert with ERP systems (and other enterprise apps) can help achieve the purpose more efficiently and with geater rigor.

  4. Dan Power says:

    @Frank,

    Thanks for including my thoughts in your blog article. Perhaps you’d be interested in contributing a guest article to the Hub Designs Magazine some time?

    In your article, you bring up some great points. What swings the discussion for me is that the ERP systems, since most of them (up until recently) have not had data quality or MDM functionality built in, enforce a “least common denominator” approach to managing product information.

    I think most enterprises are better served with a more proactive approach, which includes a data governance organization, the right processes to manage product information across the enterprise, and better than “least common denominator” software tools.

  5. FMJohnson says:

    Hi, Dan,

    Thank you for your gracious invitation. I’ll follow up shortly.

    “Least common denominator” is a very good characterization of the situation. Herbert Simon’s term “satisficing” also comes to mind. Companies shouldn’t have to “settle” for LCD or sub-optimal product data just because their legacy systems would otherwise dicate it.

    And in any case, as you suggest, having the right people (“data governance council”) and processes in place are key to getting the best results out of whatever data quality and management tools you have, whether they’re good or mediocre.

  6. […] therapy.  But it’s better than poisoning themselves with their own blood.  In the same way, enterprises that rely on ERP and other enterprise systems need to go through the effort of MDM and sound data governance to ensure they don’t poison their […]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: