Understanding Reference Data with Aaron Zornes

Understanding Reference
Data Management

Aaron Zornes
Chief Research Officer
The MDM Institute

Conrad Chuang
Sr. Product Marketing Manager
Orchestra Networks

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

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”

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

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

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 acquire
commercial 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

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)


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

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)

“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?

“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).

“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.

“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.

“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…

“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

“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 Ctr

RDM 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 !)

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

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

“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


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


MDM Institute’s Field Reports on RDM


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

Technip: MDM / RDM essential to delivering
multi-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

Implementation: Hub and Registry

Adaptation / Customization essential to supporting
downstream 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

Benefits realized in every functional area

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

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


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”

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

Understanding Reference Data with Aaron Zornes

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