Understanding Reference Data with Aaron Zornes

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There’s growing recognition in the analyst community that reference data is a form of master data that requires its own governance. Locations, currency codes, financial accounts, and organizational hierarchies are so widely used in an organization that mismatches can result in: reconciliation issues, poor quality analytics or even transactional failures.

While it’s easy to see how poor reference data management (RDM) can cause problems, many companies struggle with determining how to get started. Multiple questions arise: What’s the scope? How should one choose between RDM solutions? How do I compute ROI? To answer these questions and more, Orchestra Networks teamed up with Aaron Zornes, Chief Research Office of the MDM Institute and Godfather of MDM, for: Everything you ever wanted to know about Reference Data (but were afraid to ask).

In this hour long webcast featuring Aaron Zornes (MDM Institute) and Conrad Chuang (Orchestra Networks) you will learn the:

Characteristics of reference data,
Key features of a reference data management (RDM) solution,
Lessons learned RDM implementations,
and more

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Understanding Reference Data with Aaron Zornes

  1. 1. Understanding ReferenceData Management Aaron Zornes Chief Research Officer The MDM Institute Conrad Chuang Sr. Product Marketing Manager Orchestra Networks
  2. 2. Today’s Agenda  Part I: Reference Data Management Overview  What is reference data?  What is Reference Data Management (RDM)?  Key requirements for RDM solutions  Costs, savings & ROI scenarios  Part II: RDM Implementations  Q&A© 2012 The MDM Institute www.The-MDM-Institute.com
  3. 3. About the MDM Institute  Founded in 2004 to focus on  MDM Alert™ newsletter MDM business drivers & technology  MDM Market Pulse™ market challenges research & multi-client studies  MDM Institute Advisory  MDM Fast Track™ one-day Council™ of 150 Global 5000 IT public & onsite workshop rotating organizations with unlimited advice to key quarterly through major North individuals, e.g. CTOs, CIOs, data architects American, European, & Asia-Pacific metro areas  MDM Institute Business Council™ website access & email support MDM & Data Governance to 35,000+ members Summit™ annual conferences in London, NYC, San Francisco, Shanghai,  MDM Road Map & Milestones™ Singapore, Sydney, Tokyo & Toronto annual strategic planning assumptions About Aaron Zornes  Most quoted industry analyst authority on topics of MDM, RDM & MDG  Founder & Chief Research Officer of the MDM Institute  Founder & conference chairman for MDM & Data Governance Summits series  Founded & ran META Group’s largest research practice for 14 years  M.S. in Management Information Systems from University of Arizona “Independent, Authoritative, & Relevant”© 2012 The MDM Institute www.The-MDM-Institute.com
  4. 4. What is Reference Data? Reference data =“coded, semantically stable, relatively static data sets shared by multiple constituencies” (people, systems, & other master data domains) Industry Customers Geo Business Unit ID Sales Cost / Person Revenue Product Acct In the logical view, private & public forms of reference data connect domains & application; consistent values (& semantics) required for multi-domain views & hierarchies© 2012 The MDM Institute www.The-MDM-Institute.com
  5. 5. Why Reference Data? Why Now?  Errors in reference data will ripple outwards affecting quality Inconsistent Reporting of master data in each domain, which in turn affects quality in Transaction Failure all dependent transactional systems Regulatory Non-compliance  RDM needed in both operational & analytical MDM use cases where capability often used to provide attributes, hierarchies Systemic Failure & KPIs Central role of reference data means RDM becoming“starting point” for many organizations planning MDM & MDG© 2012 The MDM Institute www.The-MDM-Institute.com
  6. 6. RDM Prologue  In addition to MDM functionality, RDM systems also manage complex mappings btw different reference data representations & different data domains across enterprise  Governance of RDM is vital— manual or custom RDM often lacks change management, audit controls & granular security/permissions  Because reference data is used to drive key business processes & application logic, errors in reference data can have major negative & multiplicative business impact Just as businesses no longer build own CRM, ERP, &MDM systems, so too are organizations beginning to acquirecommercial RDM, which can be easily tailored or configured & have full ongoing support of major software vendor© 2012 The MDM Institute www.the-MDM-Institute.com
  7. 7. Reference Data Categories Multi-Domain Real-Time / Transactional RDM Use Cases RDM Use Cases Countries & Subdivisions (FIPS10) Currencies (ISO 4217) Time Zones (ISO 8601) Security Prices Public Industry Classification (NAICS, ISIC) SWIFT BIC Codes (Payments) (External) ICD-9/10 Codes (Healthcare) ACORD/ISO Codes (Insurance) Customized Public Reference Semi- Standards (e.g. customized D&B) Private? (Shared) Shared Private Data (Finance) Legal Entities Private Chart of Accounts Reference data required for (Internal) Organizations transaction processing Employees (i.e., much of HR & Finance Data)© 2012 The MDM Institute www.The-MDM-Institute.com
  8. 8. Why Manage Reference Data Independently? (“Hub of hubs”? Federated vs. Centralized?) Industry Geo (NAICS, ISIC) Geo Customers (ISO3166, FIPS) Business Unit ID Sales Person Geo ERP Cost / Geo Revenue Acct Product Geo Geo Finance HR Geo BI/Analytics In the logical model, reference data connects domains & applications; in implementations local copies exist for each consumer; challenges include: governance, synchronizing, versioning, & custom hierarchies/internationalizations© 2012 The MDM Institute www.The-MDM-Institute.com
  9. 9. Critique of Current Approaches for Multi-Domain Reference Data RDM Solution Drawback Recommendation Custom-built, manual Heavy TCO burden Avoid unless reference data solutions demands are truly unique Spreadsheets Difficult to govern, secure, Distribute data in spreadsheets; version, & audit; no modeling, govern data in RDM solution poor hierarchy management Repurpose hierarchy Poor cross-domain support, no Seek out multi-domain RDM management solution classification mapping, few solution with hierarchy (MSFT MDS, ORCL DRM) enterprise integration options management Customize existing Rudimentary data modeling, Use multi-domain RDM solution domain-specific MDM lifecycle mgmt capabilities, & to maintain connections & (Customer or Product) governance features (esp. govern/update into CDI & PIM authoring & workflow) via data services ERP / Enterprise Limited governance, versioning, Master in external platform. Application distribution; also reference data RDM can be used to govern customized use in app may have baseline set, versions and limited appeal in other systems adaptations Real-time / industry- Premium priced R/T RDM Leverage R/T RDM solutions for specific RDM solutions do not represent good R/T use cases (trading, claims economic sense processing, payments)© 2012 The MDM Institute www.The-MDM-Institute.com
  10. 10. “Top 10” RDM Technical Evaluation Criteria 1. Administration of diverse reference data types 2. Ability to map reference data 3. Management of reference data sets 4. Architecture/performance 5. Hierarchy management over reference data sets 6. Connectivity/integration 7. Import & export 8. Versioning support 9. Security & access control 10. E2E lifecycle management Coming to market are RDM solutions characterized by multiple, diverse levels of integration w/ market-dominant MDM hubs as well as repackagings of existing mid-market MDM solutions – HOW TO EVALUATE?© 2012 The MDM Institute www.The-MDM-Institute.com
  11. 11. “Administration of Diverse RDM Top 10 Reference Data Types” Eval Criteria #1 Private Ref Data Public Ref Data From R. Thompson,/Credit Suisse, “Multidomain Enterprise Reference Data,” 7th Annual MDM & Data Governance Summit New York 2012 RDM solution should support a w ide m ix of data structures from nam e:value pairs to hierarchies (see criteria #5).© 2012 The MDM Institute www.The-MDM-Institute.com
  12. 12. “Ability to Map Reference Data” RDM Top 10 Eval Criteria #2 – pt. 1 (cross-dom ain m apping) LOCATIONS FINANCE ISO 3166 Name Code Issuing Country Name ISO 4217 (ISO3166) Code USA United States of America CHN People’s Republic of China USA US Dollar USD JPN Japan CHN Yuan Renminbi CNY ASM American Samoa JPN Japanese Yen JPY IOT British India Ocean Terr. ECU Ecuador SLV El Salvador Official ISO3166 GUM Guam Currency HTI Haiti USD ASM MHL Marshall Islands LOCATION & FINANCE USD IOT FSM Micronesia USD ECU MNP Northern Mariana Islands USD SLV PLW Palau USD GUM PAN Panama USD HTI USD MHL PRI Puerto Rico USD FSM TLS East Timor USD MNP TCA Turks and Caicos Islands USD PLW VIR Virgin Islands USD PAN USD PRI USD USD TLS TCA RDM solutions need to preserve USD USA values & m appings betw een reference data sets – both in USD VIR CNY CHN JPY JPN dom ain and across dom ains.© 2012 The MDM Institute www.The-MDM-Institute.com
  13. 13. “Ability to Map Reference Data” RDM Top 10 Eval Criteria #2 – pt. 2 (tem poral referential integrity) 2012 VERSION 2012 Description 2007 VERSION NAICS 2007 Description 311224 Soybean and Other Oilseed MERGE NAICS Processing 311222 Soybean Processing 221114 Solar Electric Power Generation 311223 Other Oilseed Processing 221115 Wind Electric Power 221119 Other Electric Power Generation Generation - solar electric 221116 Geothermal Electric Power power generation Generation 221117 Biomass Electric Power Generation 221118 Other Electric Power SPLIT Generation RDM solution needs to m aintain link s betw een versions, creating a m igration path betw een versions of reference data. “Crossw alks” are im portant for understanding how som ething changed.© 2012 The MDM Institute www.The-MDM-Institute.com
  14. 14. “Mgmt of Reference Data Sets” RDM Top 10 (Governance w ork flow s) Eval Criteria #3 RACI Tasks User Sequence of Update sales interactions R hierarchies Rogers Change industry R classifications Romanova Approve hierarchies A and effective dates Stark Permissions Approve industry A classifications Banner A Approve merge into Fury Responsibilities effective dated An RDM solution needs to support governance w ork flow s; includes defining: responsible & accountable parties (including system s), perm issions & area of responsibility for each party (field, instance, container level), how parties interact/ tasks, & auditing/ history…© 2012 The MDM Institute www.The-MDM-Institute.com
  15. 15. “Hierarchy Management Over RDM Top 10 Eval Criteria #5 Reference Data Sets” Viewing customers by industry classification SIC Codes Customer & SIC Code Mapping Viewing drugs by Active Ingredient interactions and ICD10 Codes ICD-10 Codes Active Ingredients & ICD10 Mapping Active Ingredients & Product Mapping RDM solution should harness relationships betw een reference data sets & ex isting party or thing data to create hierarchies© 2012 The MDM Institute www.The-MDM-Institute.com
  16. 16. “Versioning Support” RDM Top 10 Eval Criteria #8 (a.k .a. tim e travel) Cost Centers Cost Centers Cost Centers (as-of 2012 Q2) (Current) (Effective 2013 Q1) TUR Cost Ctr DEU Cost Ctr DEU Cost Ctr EMEA OPS EMEA OPS EMEA OPS DEU Cost Ctr FRA Cost Ctr FRA Cost Ctr FRA Cost Ctr TUR Cost Ctr TUR Cost Ctr AP OPS JPN Cost Ctr APLA OPS JPN Cost Ctr JPN Cost Ctr APLA OPS MEX Cost Ctr MEX Cost Ctr CALA OPS MEX Cost Ctr CAN Cost Ctr CAN Cost Ctr CAN Cost Ctr NA OPS NA OPS NA OPS USA Cost Ctr USA Cost Ctr USA Cost CtrRDM solution needs versioning & “as of” / effective dating to support recall of reference data values, relationships or hierarchies. (versioning has *m ajor* im plications for analytics/ BI !)© 2012 The MDM Institute www.The-MDM-Institute.com
  17. 17. Reference Data Management Strategic Planning Assumption  During 2012-13, reference data will emerge as a key entry point for enterprises & in turn influence choice of MDM for Customer, Product & other domains  Concurrently, every MDM vendor will rush to market RDM solutions to apply MDM approach for centralized governance, stewardship & control  By 2013-14, large enterprises will also mandate that Reference Data be part of MDM platform native entities  By 2015, RDM will be commoditized via the efforts of MSFT & ORCL especially Managing “simple” reference data will prove to be a key sales entry point for MDM vendors© 2012 The MDM Institute www.The-MDM-Institute.com MDM MILESTONE
  18. 18. Competition for Multi-Domain RDM  Custom-built, manual solutions  Hierarchy management system adaptations  Do not readily support publish-subscribe, classification mapping, etc.  Custom MDM domain type  Lack of data modeling flexibility, rudimentary lifecycle management capabilities & limited data governance features, esp. authoring & workflow  Multi-domain RDM  RDBMS vs. semantic/OODBMS  Purpose-built or industry-specific RDM  Premium priced real-time RDM solutions do not represent good economic sense Seek out m ulti-dom ain RDM solution providers that understand & have ex perience addressing com plex ity of reference data© 2012 The MDM Institute www.The-MDM-Institute.com
  19. 19. “Top 10” RDM Technical Evaluation Criteria Re-Cap 1. Administration of diverse reference data types 2. Ability to map reference data 3. Management of reference data sets 4. Architecture/performance 5. Hierarchy management over reference data sets 6. Connectivity/integration 7. Import & export 8. Versioning support 9. Security & access control 10. E2E lifecycle management© 2012 The MDM Institute www.The-MDM-Institute.com
  20. 20. MDM Institute Field Reports – RDM  Aprimo LRDM  Microsoft RDM (Teradata) (to be announced)  DataFlux qMDM  Orchestra EBX5  IBM MDM RDM Hub  Profisee  Informatica RDM  SAP MDG-R  Kalido  Oracle Hyperion DRM  ASG ROCHADE  Software AG WebMethods (Metadata-driven RDM) OneData ** General-purpose or multi-domain RDM, not industry-specific or real- time RDM solutions such as capital markets, pharma, e.g., AIM, Asset Control, Eagle, Golden Source, Kingland Systems 360 Data, &RSD© 2012 The MDM Institute www.The-MDM-Institute.com
  21. 21. MDM Institute’s Field Reports on RDM© 2012 The MDM Institute www.The-MDM-Institute.com
  22. 22. Field Report: Orchestra Networks EBX5 for RDM Strengths Caveats  Robust solution for centralized DG,  Nascent North mgmt, stewardship, & distribution American market of enterprise reference data presence 1  Enterprise-scalable RDM  Shortage of EBX-  Strong taxonomy support & knowledgable mappings consultancies  Model-driven ease of deployment,  Vulnerability in implementation, & use (built-in rapidly evolving process flows + semantic database market crowded with underpinning) mega vendors &  Support for temporal reference other nouveau MDM data vendors  Cloud-based, SaaS option  Under invested in 1 – BNP Paribas, Crédit Suisse, Michelin, … marketing© 2012 The MDM Institute www.The-MDM-Institute.com
  23. 23. Technip: MDM / RDM essential to deliveringmulti-billion € oil & gas projects• Projects require coordination across multiple company and functional areas – Up to 16 Technip companies can be involved for one project• Data coherence, sharing and timely availability are key success factors• Private and Public reference data
  24. 24. Implementation: Hub and Registry
  25. 25. Adaptation / Customization essential to supportingdownstream applications Same structure, Different values Child inherits structure, but not labels. Good where same hierarchy is Parent used globally and only labels are changed Different structure, Same values Child inherits values, Different structure, but not structure. Different values Good when hierarchy is Child partially inherits customized to fit structure and values. functional area. Good where hierarchy and labels change overseas, such as a foreign subsidiary with a different product hierarchy
  26. 26. Benefits realized in every functional area
  27. 27. Bottom Line  RDM is more than “reference tables”– i.e., also complex mappings (logical & physical) between different representations, data domains, versions & hierarchies  RDM impedance mismatch = inconsistent reporting, regulatory noncompliance, transaction failures & systemic failures  Central role of reference data means RDM can be expected to become “starting point” for many organizations planning MDM & MDG  Majority of RDM solutions do not address notion of "temporal" reference data or provide governance  Market misconception/dogma that “RDM *must* be in same stack as multi-domain MDM” Buy, *don’t* build, RDM© 2012 The MDM Institute www.The-MDM-Institute.com
  28. 28. Q&A Aaron Zornes Conrad Chuang Chief Research Officer Sr. Product Marketing Manager The MDM Institute Orchestra Networks aaron.zornes@tcdii.com conrad.chuang@orchestranetworks.com www.linkedin.com/in/aaronzornes www.orchestranetworks.com/rdm @azornes @onmdm© 2012 The MDM Institute www.The-MDM-Institute.com
  29. 29. © 2010 The MDM Institute www.The-MDM-Institute.com
  30. 30. © 2010 The MDM Institute www.The-MDM-Institute.com
  31. 31. MDM & Data Governance Summit™ Conference Series MDM & Data Governance Summit Singapore Marina Bay Sands Resort ▪ December 4-5 MDM & Data Governance Summit Shanghai Shanghai International Convention Center ▪ March 2013 MDM & Data Governance Summit Europe Radisson BLU – London ▪ April 15-17, 2013 MDM & Data Governance Summit Asia-Pacific Four Points Darling Harbour– Sydney ▪ May 20-21, 2013 MDM & Data Governance Summit San Francisco Hyatt Embarcadero – San Francisco ▪ May 2013 MDM & Data Governance Tokyo Belle Salle Kanda– Tokyo ▪ June 14, 2013 MDM & Data Governance Summit Canada The Carlu – Toronto ▪ June 2013 MDM & Data Governance Summit New York Marriott Marquis NYC Times Square ▪ October 2-4, 2013 “More MDM programs get their successful start at MDM & Data Governance Summits than anywhere else”© 2012 The MDM Institute www.The-MDM-Institute.com
  32. 32. About Orchestra Networks• Orchestra Networks is a leading Reference / Master Data Management vendor.• Sole focus is MDM/RDM Platform: EBX5• Company founded in 2000• Stable, privately-held www.orchestranetworks.com/rdm

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