Master data management - the art of getting the business to lead the process

Global Head of IT at paint manufacturer Valspar tells Computing that for successful MDM it's important for IT to know just when to get out of the way

As a large global manufacturer of paints and coatings, Valspar should have a strong hand to play in negotiations with its 45,000 suppliers of 8,000 raw materials, able to use its global reach and clout to ensure competitive pricing and to minimise risk in the supply chain. However, this has not been the case due to the poor quality of the data in the company's ERP systems.

"We were finding that our buying power and our ability to leverage better negotiations and better contracts was limited by the age and the quality of the data available," says Steve Jenkins, global IT director at Valspar.

"To get the information that we needed to execute an RFQ [request for quote] or request for information took up to 10 months and by the time we got the information that data was already out of shelf life and was no longer accurate."

As well as being out of date, the data available to Valspar's buyers typically included duplicate records, multiple SKUs (product stock keeping units) for the same item and contradictory or inaccurate information about suppliers.

Like many large organisations Valspar has expanded largely through acquisitions. This has left a legacy of fractured information architecture, which is the root cause of the problems described above.

"Seventy-eight per cent of our sales transactions and spend transactions are on a common ERP," says Jenkins. "The other 22 per cent is split over 18 legacy systems, so it is very difficult to get global visibility of our transactions. Our spend for wholesale purchasing is the largest cost line on our P&L. We don't have good visibility of what we're spending, with whom and on what."

The problem had been recognised some time ago and finally last year a three-phase programme of master data management (MDM) was initiated at Valspar with the aim of standardising the core data across its territories and improving its quality.

The starting point was the raw materials and vendors domains. This first phase took nine months and was completed in March. This stage alone is expected to deliver return on investment (ROI) for the entire programme by the end of this year. The second domain to be cleaned up will be customers, and phase three will be products. The MDM programme is expected to be completed in 2016.

Letting the business take the lead

Cleaning up core data and ensuring it remains trustworthy requires far more than new technology. It demands changes in culture and practice too, which is why without proper management from the top it frequently fails to deliver. Jenkins says the way his team has approached the implementation to ensure it had executive buy-in from the beginning was all-important. We hear a lot about IT needing to "push for a place at the boardroom table", however IT equally needs to know when to step back and let the business take the lead.

"Getting MDM off the ground is not about the software, it's about the process," says Jenkins.

"IT drove the RFP in the business case process, but we partnered with a number of director-level colleagues from the business, shared our vision and got them to understand what we are trying to do. We wanted them to take the message and the vision to the C-level executives and tell them why we need MDM rather than the message coming from IT."

Jenkins continues: "Our CFO does not want the CIO to pitch a project like this to him, it should come from the business. That's the model we are replicating throughout our organisation for our RFP processes. Right from the beginning that ensured we got engagement from the business."

IT even led from the back during the part of the programme for which it was best qualified to make the final decision, namely the choice of MDM software.

"We never exposed what our preference was, the choice was made by the business," Jenkins says, explaining that the business was involved from the start and that its involvement continued throughout the selection process.

Fortunately the choices of IT and the business coincided in this case. Already a user of Informatica's data integration software, that provider was IT's preference out of an initial field that included IBM, Tibco and Oracle.

"We reduced it down to two finalists [the second was Oracle]. We have 17 functional capabilities as parameters and Informatica was the preferred choice in 16 of those."

Where IT has been slightly less successful in persuading the business, at least so far, is in hiring data stewards to ensure that an ongoing governance regime is in place.

"They understand the need but I still think that their position is that we can somehow get by without having to do that," Jenkins says. "We're just continuing to go through that process to try to convince them of the need. They are aware of it, but it's one thing acknowledging that there is a need, it's another thing putting a hand in your pocket and doing something about it."

Material benefits

Nine months in, what benefits has Valspar seen from MDM? Jenkins says that while it's early days, there are already some improvements, with many more expected to flow from having trustworthy master data.

"We are able to get greater visibility into our sourcing risk, to identify which of our most strategically important raw materials are single sourced, and to build remediation plans to address this sourcing risk," Jenkins says, going on to talk about his vision for a future in which all the domains are trusted and interlinked.

"Where currently it can take nine or 10 months our objective is to get to an RFX process where we can pretty much just press a button and fire off automated RFPs and RFQs to our vendors so we can accelerate raw material cost savings. When we have vendors increase their prices we want to be able to fire off an RFQ to other vendors."

Other benefits will include being able to bring newly acquired businesses on board much more quickly, integrating their IT with an already standardised core.

MDM is only one part of a larger spend analytics programme at the manufacturer, one that also includes working with business data provider Dun & Bradstreet to augment Valspar's vendor records with information about company hierarchies and credit ratings.

"We can see where we are single sourced and which vendors supply which materials and what other raw materials vendors can supply. That's very powerful," Jenkins says.

Ultimately, he'd like to arrive at a situation where the supply chain is optimised by having all domains linked through a central reference point.

"By merging all four domains we only need the bill of materials to link between raw material and product. We might be able to get to a point when we can press a button and say 'we have this sourcing risk with this raw material and here is a list of the customers and products that are affected'. That's an extremely powerful solution for us."