Yet Another (External) Data Source?

The Question about External Data is ... (Photo by Colin_K on Flickr)There is an ongoing thread about handling external data sources in MDM. In his post: “Top 14 MDM Misconceptions“, William McKnight says “Third-party data is largely about extending the profile of important subject areas, which are mastered in MDM. Taking third-party data into organizations has actually kicked off many MDM programs”.  In Third-Party Data and MDM Henrik Liliendahl Sorensen sees Social Data as the next big wave of External Data.

We had once at Semarchy a great discussion about external and social data sources. At a certain point we stopped and wondered why there was such a buzz about these sources. Being a platform that supports extensibility through plugins makes Convergence for MDM able to leverage any source as “yet another data source”. Name it Google Maps, Bing Maps, Yahoo Places, D&B, GDSN, Twitter or Facebook. If there is a way to access this external data, then Convergence for MDM can (and does) use it.

Which brought us to another discussion: Should we recommend using extensively these sources of information in MDM projects? We can easily see the added value of D&B or GDSN information.  We see the interest in the data exchanged with business partners. We start seeing tremendous power in the relations and information from social networks. We also feel challenged by this uncontrolled and gigantic mass of data and the risks attached to this data that we do not entirely control.

There are fundamental questions that we must ask ourselves while considering these data sources:

  • Are they accurate? Fresh? Comprehensive?
  • Can we legally use and correlate them with existing data sources?
  • Should we copy their content of refer to them?
  • Will they remain available in the future under the same terms?
  • Is there measurable value for our company in their data?

At the end of the day, the question is not whether or how external and social sources can be used for MDM. They can be used. The real question is a Governance question: Do they represent a significant source of value for the business for a limited risk?

0 replies
  1. Henrik Liliendahl Sørensen
    Henrik Liliendahl Sørensen says:

    Indeed FX, it is much about balancing the use of internal and external data.

    As a tool vendor like Semarchy it may be very wise to be open and support all hybrids your clients may decide.

    Probably I’m a bit biased by coming from Scandinavia, where not at least public sector big reference data (address, property, business and citizen directories) are available, and has been used in ensuring quality of party master data for many years.

    At iDQ, where I’m engaged right now, we have as consequence developed an MDM service that mash up internal and external data both in onboarding processes and during lifelong maintenance processes.

    Reply
  2. FX Nicolas
    FX Nicolas says:

    This is most interesting! The rest of europe looks like a mess compared to scandinavia.

    Have you looked into external sources correlation (Looking into all social networks at once) to increase data accuracy and reliability?

    Reply
  3. Olivier Kenji Mathurin
    Olivier Kenji Mathurin says:

    Funnily in the financial services industry, the question is turned upside-down: is there any good reason NOT to use a third-party source?

    Maybe the sector is much use to third party vendors, with market data vendors who have extended their coverage over the years to deliver reference data (Securities, Issuers, Legal Entities etc.) now value-added data to reduce cost of regulatory compliance (SIX package for FATCA, Solvency etc.).
    On the other side the number of Data Utilities has exploded: firms which have already invested in MDM technology/process/people and who seek to generate additional revenues by offering their services to other firms as an outsourcer – rationalize costs by enrolling a service provider who can easierly amortize the investment.

    This is definitely a trend that is accelerating since 1-2 years: buy-side firms outsourcing their data stewardship activities to reduce costs.

    As a firm, why should I invest in maintaining data internally when I can pay someone else to do it? “Data Quality” in the industry is directly linked to economic impact. If I buy the data, I do pay for getting the quality of the data so I dont need to check it. If the data is risky, then I can buy it from two sources and double check it. I can even combine several data sources to source my Master Data: Data experts have even developped an own skill to know in which context using a specific data vendor is more relevant. Doing so, I can save me expensive operational costs “just” to get high quality data.

    Again, the trend is that firms will continue to maintain internally value-added data that make them competitive and that they obviously cant buy anywhere else – and they might even sell these value-added data to other firms even competitors. For the rest, they will just buy from data vendor or outsource. But in any case, Data Governance and Data Integration remain a challenge, to combine and add new sources of data when needed.

    For more info, I made a nice whitepaper about this trend of outsourcing data management earlier this year:
    http://www.aimsoftware.com/news/white-paper-outsourcing-reference-data-management-opportunities-for-cost-reduction-and-new-revenue-sources-free-download

    Reply
    • FX Nicolas
      FX Nicolas says:

      Thanks for this comment. It is interesting to see how the finance industry was able to work its way through datanomics so fast.

      Reply

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