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Gartner Expects 14% Growth in Master Data Management Software Revenue for 2010

Analysts project master data management software market will reach $1.5 billion by year end.

Worldwide master data management software revenue will reach $1.5 billion in 2010, a 14 percent increase from 2009, according to Gartner. MDM is being adopted to support numerous business and IT efforts that deliver revenue, service, agility and risk management improvement, cost reduction and integration simplification.

The analyst firm defines master data management as "a technology-enabled business discipline in which business and IT organizations work together to ensure the uniformity, accuracy, stewardship, semantic consistency and accountability of the organization's official, shared master data assets," according to John Radcliffe, research vice president. "Today, most organizations juggle multiple sets of business and data applications across corporate, regional and local systems. At the same time, customers are demanding faster and more complex responses from organizations, leading to an inconsistency that hinders the organization's ability to measure and move within the market. With MDM, CIOs can create a unified view of existing data, leading to greater enterprise agility, simplified integration and, ultimately, improved profitability."

Gartner has compiled several MDM predictions to help organizations plan for 2011 and beyond. These include:

- From 2009 through 2014, MDM software markets will grow at a compound annual growth rate of 18%, from $1.3 billion to $2.9 billion.

- Gartner foresees a larger, more unified MDM software market reaching nearly $3 billion by 2014.

- By 2015, 10 percent of packaged MDM implementations will be delivered as software as a service in the public cloud. MDM today is typically implemented on-premises. This is partly because MDM software providers have, so far, not created specific MDM-as-a-service products that are scalable and elastic or multitenanted, and also because there is reluctance in many organizations to place such important, heavily shared data as master data outside the firewall. However, on-premises MDM solutions are increasingly being integrated with SaaS applications, and there are examples of MDM solutions already being implemented in the public cloud.

Gartner says that MDM software vendors will seek to leverage the cloud-computing value proposition and ramp up their marketing of MDM-as-a-service, in defined scenarios, and they will also put development focus on MDM solutions that conform better with the stricter definition of cloud computing (i.e., scalable, elastic and with a shared infrastructure). Once organizations gain more experience with the public cloud and private cloud, the early adopters will seek to gain the same benefits with a wider range of software, including packaged MDM solutions.

Gartner advises organizations to consider implementing MDM solutions in the cloud if they don't have the skills in-house, if a subscription model is more acceptable than a capital expense, and if the planned MDM capability is restricted in scope to mainly one functional group within the organization, or is initiative-specific and a consolidation-style implementation mainly used for analysis and reporting purposes.

- Through 2015, 66 percent of organizations that initiate an MDM program will struggle to demonstrate the business value of MDM.

If IT departments initiate an MDM initiative, they often struggle to get the business on board and to demonstrate the business value of MDM, particularly if there are no business-process-oriented metrics and financial quantifications to define and measure success, Gartner analysts say. MDM needs to align with the business vision and strategy, and will require executive business sponsorship, strong involvement of business stakeholders and change management.

"It's not just an IT project. The business needs to take responsibility and be accountable for master data governance and stewardship," says Radcliffe.

"Unless organizations take a holistic, business-driven approach to MDM, addressing governance and metrics requirements in particular, they risk having their MDM programs fail," he says. "Internal politics won't be brought under control without a governance framework, and without a metrics structure, there will be no way of objectively defining what success looks like and measuring whether or not it has been achieved."

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