Build Your PIM Business Case5 Things to Consider

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Understand the Big Picture

The internationally renowned “futurist” Gerd Loenhard states: “Data is the new black gold.” What does he mean by that? In his opinion, collecting data, putting that data into context, and enriching the data so it becomes usable information represents a company’s greatest asset. Data thus usurps oil’s number one spot in the raw material line-up. Today, data is the fuel that will make businesses run tomorrow.

What kind of data is he talking about? Which kind of data is the most important? According to analysts, master data is the data that businesses need to be most concerned with, which consists of: product data, customer data, personnel data, organizational data,

financial data, supplier data, and geographical data. Leading analysts specify “multi-domain master data management” as one of the most important trends today. But just what is a multi-domain MDM?

In the Magic Quadrant Report of MDM for Product Data Solutions 2011, Gartner writes:“ … Multi-domain MDM technology is a purpose-built

solution targeted at addressing the multi-domain technology requirements of an MDM program. It includes the following characteristics:

• It can be implemented in a single instance as an easy way to manage relationships between data sets.

• The data model is uniform or is interoperable and able to manage cross-domain intersections.

• The workflow and user interface elements are uniform or interoperable.

• It supports at least one use case, implementation style, or organization/governance model, for specific industry scenarios...”

According to Gartner, multi-domain also encompasses the following data domains:• Product Data Sell• Product Datay Buy• Media Assets• Supplier Data• Location Data• Party Data

(Customer)• HR Data• Financial Data

Data has a strategic value. Connecting and networking all of your data provides improved analyses and faster processes. Recent corporate practice has proven one thing: This is the right goal to strive for and is worth the effort. However, if a project scope is too broad it can result in various master data being held in different systems. The consolidation of this data often takes a great deal of time and expense. Chapter 2 recommends a practical approach. ▼

IntroductionAccording to the PIM ROI study conducted in 2011, 60% of companies who have not yet adopted PIM miss the positive business case or cannot identify it. 40% of companies surveyed admit that they have no prior knowledge nor have they had the opportunity to identify these benefits. This white paper will address these challenges specifically. We will provide tips that companies can use to define their own individual business cases using PIM, as well as develop measurable success.

Define the business case with PIM and make success measurable.

Conclusion: Data has a strategic value. Connecting and networking all of your data provides improved analyses and faster processes.

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Think Strategically, Act Operationally

MDM projects are usually carried out by an interdisciplinary team consisting of members from different departments in a company. Of course, there is a project manager who has management’s support. The project group is responsible for determining some advantages for the team, which translates into benefits for the entire company. This means that the appropriate business case has to be defined for MDM projects.

This serves two purposes:First, doing this helps to define clear business benefits within the current year. Secondly, this helps to refine, define, and develop the overall goal of the stages that will follow. Therefore, experienced MDM consultants and analysts recommend starting with MDM domains that allow for rapid growth. Which kind of data is crucial to corporate success? Offering the right product to the right customer at the right time is the key to success.

Gartner MDM analyst Andrew White confirms the significance of product and customer data in this context. The demand for multi-domain projects has increased from 3% to 7%, but this still is not a huge jump. “Product data is slightly ahead of customer data as the two single largest (polarized) domains.” (Source: Gartner “MDM” Tagged Inquiries: By Data Domain, Individually tagged Any Core Topic, with “MDM” in Impact field, Alex Drobik, Feb 14 2012, Gartner Research Inc.) ▼

“ 80% of customers using PIM report that the quality of their product data has had” SOURCE: WWW.PIM-ROI.COM, STUDY 2011

Conclusion: The main goal is to have all data in the company synchronized and networked – but the real influencing factor that provides rapid success in the context of master data management is product data. Ultimately you will have to decide the domains for your business case that you feel will help you achieve the greatest success. The following chapter will show how to quantify the benefits in eight steps, independent of the data domains.

Many PIM projects are directly connected to ecommerce projects or even to multichannel business models. The benefits of using high quality product data can be measured immediately: increased sales and lower return rates. This is what the PIM ROI study demonstrates, among other things.

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Build the Business Case

How do I formulate my business case in the context of my MDM project? The following example is entirely independent whether product, customer, or supplier data is the primary focus. This illustration and definition of the eight steps is a summary based on Gartner Research.

1. Identify the business strategy and the stakeholders. These stakeholders typically include the business

process owners from the specialist department as well as IT and finance executives.

2. Select the proper business metrics. These metrics will be used to support the strategy you are going to be tracking. It should be noted that there are no overlaps or gaps in the ranges that are being considered.

3. Determine your performance. Do this by using your predetermined metrics and also compare against industry benchmarks.

4. Select a solution. The potential applications and their implications must be described from the

perspective of the business process, as measured by the chosen metrics.

5. Negotiate the targeted improvements. These improvements are to be measured by the chosen performance metrics. In this case, the reasons for any improvement must be shown in detail and the confirmation of the management should be sought.

6. Convert these improvements into financial targets.7. Calculate the entire cost of the investment that will

be incurred throughout the entire life cycle. Gartner developed the total cost of ownership methodology in 1987. The main idea is that not only the direct costs of an investment need to be considered, but also additional indirect costs such as training, failures, rent, and risk protection.

8. Calculate the ROI. There are various applicable methods. ▼

Conclusion: This is all very general. But how can these tips be put into concrete business practices? Who will help along the way? Informatica has collaborated with international consultants and PIM experts to create a conceptual design as part of the global ROI study. These last couple of chapters are devoted to giving you very specific methods and metrics for a successful PIM project. A reputable consultant can provide more than just general guidelines; he can provide concrete tools and best practices.

Identifying and meeting

with the stakeholders

Head of New Media, IT and

financial responsible

10% data completeness =1% sales close

index

Sales Close Index,New Customer Index,Wallet Share Index,New Products Index

Data quality, range of products, customer

contact, long tail, crossselling

Comparison, costs /benefits

Visitors*, cart*, salesclose index

improvement

Webshop analysis,

sales data, etc.

PIM license,performance,company and

infrastructure,maintenance,

data management,indirect training,

failures, rent,risk protection...

Discuss the targeted

improvements

Selecting theproper business

metrics

Calculate the ROI

Capturing and evaluating

currentperformance

Calculating thecomplete costs

Describingimplementation

usage

Transferringthe intended

improvements into nancial

events

1

5

28

37

46

SOURCE: ILLUSTRATION OF INFORMATICA BASED ON GARTNER RESEARCH

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Focus on an Implementation Style and Methodology for PIM

Have you decided on a solution after comprehensively analyzing all of the relevant factors? Hopefully the answer is yes. But how can this software solution actually improve your business? Can the provider or his implementation partner really help your project be successful? How do you implement the chosen solution so that it is profitable? Informatica Senior PIM consultant Michael Weiss states: “The successful PIM project relies on a specialized consulting methodology. It should cover three key areas: business processes, technical implementation, and professional project management.”

Consulting method/business processesA process-based consultant methodology provides a process map that demonstrates all possible business processes. The key here is to perform an end-to-end analysis of the process and system boundaries of specific PIM requirements.

The five main PIM processes that business consultants examine are:• input management, data integration• data management, data authoring, data mastering• asset management• internationalization• output management, data syndication, channel

distribution

One sub process that is relevant in every specific PIM scenario in the area of data management is, for example, setting up an item or product. Just like all the other process steps, this requires a specific procedure in order to ensure that all of the required information is at hand. The result of this is that specific requirements will be delivered and proposals will be created for the recommended approaches to the solution. ▼“ The successful PIM project

relies on a specialized consulting methodology.”

An example of the “data management”

sub processes

Data management

Maintain techn.features & attributes

Createitem / product

Maintain hierarchy &classication systems

MaintainPrices

Maintain logisticalinformation

Deleteitem / product

Maintain textinformation

Check data quality &reporting

Maintain customer &channel specific data

Maintainrelations

Data Harmonization& Normalization

DataVersioning

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IMPLEMENTATIONS METHODIn order to implement the new business processes, or ones that have been modified to conform to requirements in a solution, an appropriate implementation is required – one that builds seamlessly on the process view. Doing this ensures that the proper software and hardware are used. It takes care of test scenarios and test management. It ensures that customized adaptations function optimally. As a rule, technical consultants usually take on these and similar tasks. They work with the customer to find a way to pass the customer solution on to support in the best manner possible for further assistance regarding the defined milestones.

PROJECT MANAGEMENT METHODOLOGY (PMI)Every project needs a professional project management. A good project therefore requires a project office so that project goals and risks, the schedule, and costs can be carefully and accurately monitored. This allows for changes or delays in the project to be handled more efficiently because they are transparent and communicated. The Project Management Institute http://www.pmi.org certifies employees according to international standards. This helps PIM customers achieve optimal “expectation management,” helps them adhere to important milestones, and of course, helps them measure the success of their solution. ▼

Conclusion: When choosing your PIM solution, don’t just rely on the strength of the company and its scope of function. Focus rather on selecting the proper methodology in order to ensure your project and solution is successful. The last chapter will cover what the success factors and criteria are for measuring this. Measure Performance and Results of PIM.

For example:• What are the conditions for establishing articles and / or products? Which upstream systems (PLM, ERP,

external sources such as upstream suppliers) are involved in setting this up? At what point / milestone do these data become relevant to PIM?

• Which procedure is recommended for collecting information? Does it make sense to conduct workshops or individual interviews? Which roles and departments, and which external partners should be considered; which stakeholders are relevant? What are the typical questions that need to be asked, and which ones are necessary?

• What are the tools that can help with this? (Questionnaires and templates for documentation and evaluation)

• What other sub processes are going to be influenced by this?• What are the industry-typical best practices?• What concrete solution approaches can be mapped to the specific requirements profile? Are customer-

specific enhancements needed in addition to standard functions? Which applications should be modelled as an implementation design?

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Measure Performance and Results of PIM

When introducing software that is going to significantly modify processes and impact the success of the business, it is critically important to be able to demonstrate rapid, measurable success. This study (http://www. pim-roi.com) is oriented toward the “Informatica PIM Business Value Model.” Thus, measurable criteria can be divided into three groups:

• The business model: implementing a particular business model, or even an entirely new one.

• Growth: increasing sales and profit margins.• Cost optimization: the results of streamlined and

efficient processes.

The entire global business consulting team at Informatica works according to this methodology, and trains the international partner network as well as the internal departments. Retailers and manufacturers can determine their success factors using a matrix of various key performance indicators (KPIs) and benchmarks, and define them as criteria for evaluating the success of the project.

Companies that launch MDM projects know their business and possess a clear vision. A product information management solution supports the company in saving on costs and promoting sales.

The following example shows the top 15 factors that 300 large companies rated as the most important in a Informatica study for measuring the success of a PIM (MDM for product data). These are just an excerpt of all the factors that the companies named. ●

Business Model

Processes

IncreaseRevenue

CostCu�ing

Tip: Ask your vendor or implementation company for a business value model. They can provide a set of performance indicators to choose from. Pick those which match your business cases.

KPI’s FOR MEASURING COST SAVINGS

Step 1 Number of returnsStep 2 Completeness of dataStep 3 Error rateStep 4 Search times for itemsStep 5 Production costs catalogStep 6 Localization costsStep 7 Individualization costsStep 8 Data processing time

KPI’s FOR MEASURING SALES AND GROWTH

Step 1 Total salesStep 2 Conversion RateStep 3 Time-to-MarketStep 4 New customersStep 5 Data integration timesStep 6 Product innovationsStep 7 Sales per chart

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