Outsourcing the Master Data Management Process
One of the fastest growing processes in popularity to be housed in a Shared Services environment is that of Master Data Management (MDM). Once the process is in Shared Services, some companies have taken the next step and transitioned this vital function to a 3rd party. How that transition is carried out and how to best manage the ongoing administration of this critical function will be the focus of this research abstract as we feature the actual experiences of a company that has achieved success in this area.
On a recent Peeriosity PeercastTM, a Peeriosity member company with over 15,000 employees and over $10 billion USD in revenue, shared their recent experiences with the Master Data Management process.
In the eleven years prior to 2016, which is when the company executed contracts with Genpact and Infosys to outsource significant portions of Information Technology & Global Business Services, the company had focused on the consolidation, standardization, and documentation of the process areas impacted by their implementation of SAP. At the time of the sourcing event, the outsourcing companies had not yet demonstrated their ability to support Master Data Management, so Conagra chose to exclude this critical area from the outsourcing scope. After three years of proven ability, they decided to leverage the existing contracts to expand their responsibility into the MDM space.
First to transition were the Master Data activities related to the customer, vendor, pricing, and Indirect Purchasing. Three additional areas that they are currently transitioning include direct materials, finished goods, and product information management, with the expectation that the transitions will be completed by late 2019.
One of the design requirements was to have the MDM Outsourcing Team mirror the company’s domestic office hours. Another success factor was the creation and utilization of a performance dashboard that helps them to have informed discussions with the service providers and be able to effectively monitor their performance compared to the service level agreement targets.
Some of the lessons learned during this transition include the following:
- The lack of questions during knowledge transfer to the service providers is due to a cultural norm. Areas of misunderstanding were flushed out during parallel run attempts.
- Prioritization across tasks/domains was not obvious. At a later point, they created a daily checklist for their supervisor to go through each morning and report how he would mobilize his team for the day based on active tickets.
- Company knowledge is limited, so you can’t make assumptions about what someone would domestically consider being logical.
Additional details are part of the actual member presentation, including such areas as approach/timing, communication, execution, and ongoing management. These can be found on the Peeriosity member website under Peercast Results.
iPollingTM Results Review
A recent Peeriosity poll developed using the iPollingTM technology provides some interesting insights related to the transition of Master Data Management to Shared Services. The first of two poll questions focused on the primary organization in which the Master Data Management function is currently performed. Looking at the results, Shared Services is clearly dominant in this area, with 65% of the companies responding in that manner, followed by 16% residing in the decentralized business units, and 10% having this function as part of a centralized IT organization.
The second poll question then looked at the status of transitioning the Master Data Management function to Shared Services. Not surprisingly, 60% have completed that transition, with 7% that are currently evaluating doing so. The remaining 33% have not yet evaluated this type of organizational alignment.
The following are some comments made by Peeriosity members related to this poll:
Consumer Products & Services Member: We’re currently going through a Vendor Data Opportunity project, which could result in recommending a different org structure (i.e., roll up under Shared Services).
Manufacturing Member: Evaluating a vendor master office as a first step to moving to a Shared Services Center.
Consumer Products & Services Member: Master Data is owned by the service lines within Shared Services (e.g., HR Shared Services owns employee master data, Procure to Pay owns vendor master data, etc.).
Other Member: At our company, we have Supplier and Customer Master Data in Finance. However, Employee Master Data resides within Human Resources.
As outsourcing providers continue to mature in providing Master Data Management services to major companies, this opportunity will increasingly become a viable option for many organizations. While the decision to outsource any process is complex, ensuring the competence of the provider in this area is especially important, considering the sensitivity and critical nature of the Master Data Management process.
What is the status at your company with respect to where the Master Data Management process is performed? Is your current approach meeting your needs or is it time to consider other possible options?
Who are your peers and how are you collaborating with them?
“PeercastsTM” are private, professionally facilitated webcasts that feature leading member company experiences on specific topics as a catalyst for broader discussion. Access is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from attending or accessing discussion content. Members can see who is registered to attend in advance, with discussion recordings, supporting polls, and presentation materials online and available whenever convenient for the member. Using Peeriosity’s integrated email system, Peer MailTM, attendees can easily communicate at any time with other attending peers by selecting them from the list of registered attendees.
“iPollingTM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility of all respondents and their comments. Using Peeriosity’s integrated email system, Peer MailTM, members can easily communicate at any time with others who participated in iPollingTM.
Peeriosity members are invited to log into www.peeriosity.com to join the discussion and connect with Peers. Membership is for practitioners only, with no consultants or vendors permitted. To learn more about Peeriosity, click here.