Firstly, the questions from users regarding cloud computing are MDM are really tentative at best.  There are not many users seriously considering moving their entire data management efforts to the cloud.  One has to remember, MDM is as much about application information governance, so unless those applications reside in the cloud, moving data outside of the firewall simply adds more complexity.

Secondly, there is various data management services offered via on-demand, SaaS, or cloud, and these can help some of the technology aspects of MDM.  I am thinking specifically of data quality services.  These data quality services might be used for all manner of information management, but they could also be “called” by an application residing behind the firewall, in order to send select data “outside” for processing, upon which it is “returned” to the business.  Another aspect of MDM that is far more mature (since it existed before MDM did) was the idea of data enrichment and validation.  Several vendors and services offer a means to validate a customer credit worthiness, or provide additional data concerning a customer or product in order to enhance a specific business processes.  So “cloud” and MDM are friends already, but is “MDM” really destined for the cloud in its entirety?

Gartner’s position has been clear – yes, over time, selectively.  But there are numerous barriers.  The technology is not really a barrier – it is more of a challenge.  The real barriers are well documented – spanning clear line of sight to business case and business sponsor, change management, establishment of governance and so on.  So a cloud-based MDM offering does seem to offer some benefits, in removing some of the more tactical IT challenges, but does it alone help make the real barriers easier to overcome?  I wonder.

Though the physical hosting of data and data processing may reside on servers in the cloud, that is very different from re-locating the business role of data stewardship from

The physical hosting of data and data processing may reside on servers in the cloud, but that is very different from re-locating the business role of data stewardship from business users (behind the firewall) to some 3^rd party.  And can that third party be synonymous – which is the whole point about CPU capability in the cloud?  I doubt it.  Some years ago i2 Technologies implemented a unique solution for Vendor Managed Inventory (VMI).  They delivered what became a managed supply chain services whereby their employees did much of the planning processes for Panasonic as it maintained superior services levels for its TV’s through its retail channel partners like Best Buy.  This was years ago (though it may still be operating today), and the technology was hosted and operated by i2 but could have claimed that this was a cloud based solution, coupled with managed services.  Though innovative i2 was never able to monetize this idea well – the actual solution ended up being so unique in its work that it could be sold  “as is” not least because most other prospects where not willing to ‘give up’ that level of control on what was, in essence, a source of differentiation in the market place.  This could be what happens with “stewardship in the cloud”.

Overall though this new cloud offering will help the adoption of MDM.  Setting up some of the technology needed to support an MDM program looks easier to do, so more organizations can “kick the can” and see how it looks.  Perhaps some organizations will “play” with MDM and then “upgrade” to a real one later – not unlike Talend’s idea with its Community Edition-based MDM, Open Source Software solution, that has a logical “upgrade” path to that vendors Enterprise Edition.  But will large enterprise actually seek out full blown cloud-based MDM offering?  Or will this better suit smaller/mid-sized enterprise?

It would seem that Open Source Software and cloud Computing are set to impact the MDM market, but the question is, by how much and how soon?

By the way, Orchestra Networks have a cool video that coincides with today’s announcement: http://www.youtube.com/user/smartdatagovernance

In my travels I have spoken to many organizations who suggest that cloud is a great approach for things like email, but many other more complex and business differentiating applications remain firmly behind the enterprise firewall.  It would seem that ‘simple’ or bounded activities lend themselves to commoditized processing.  But the promise of cloud computing is keeping a lot of boffins busy thinking how everything else will change.  For one area, I am not so sure.

I happen to be an aged PC gamer.  I am bigoted in that I have always felt PC technology has been superior to consoles and any other form factor when it comes to the most demanding games.  And for me the graphics, chip speed and memory have always been better united and more capable on the PC.   But with cloud computing in the frame, surely the PC and console industry is ripe for revolution.

To be frank this industry has already been revolutionized by cloud computing.  Sales of physical form factors such as DVD (previously CD) are no longer growing as players can now more easily order and download games from the likes of Steam and Impulse.  The one thing missing is those richly detailed game manuals that are only a must for complex strategy games but there are even on-demand print services for these now.  You can even get access to a catalog of your old favorite games, at places like www.gog.com.

But today the ‘where’ the processing takes place is mixed.  Massively multiplayer games are   more about massively synchronized memory states between central servers (in the cloud) that host shared spaces for large number of players to maim dragons and hunt for loot.  Each players PC is tethered to the server real time so some local processing takes place.  Storage of state (where the player is in the game world when they log out) and their profile remains in the cloud.  But players also spend a lot of time playing single player games on their own PC, and there is a small but growing segment of games running totally in the cloud where the PC emulates that old idea, the networked PC.

For the games i play I need a high end rig.  Would cloud computing provide the right opportunity for high end games to run?  Initially no, since so much of these games are designed to run in single memory space and many are not even using more than dual cores  anyway.  But high end games are both regular memory, and graphics memory.  How will cloud impact the delivery or rendering of high end graphics?  I can see low end games being offered via a commoditized pipe like cloud, but the high end stuff seems a way off.  At least that is how I see it.

But the law of unintended consequences reigns.  Cloud is opening up whole new markets for gamers- those that play casual games on mobile devices.  Smart phones seem to me to be like PCs in this sense; massive numbers of tethered devices to a central server.  And as games are dumbed down for mobile users, innovation will change direction again.  I’ll keep my six-core a while longer then.

I had a great day today with end users.  In fact days like this make it great fun to be an analyst.  The bad news is you get to learn a lot of stuff in a very short period of time; and such data points have to be reconciled to recent and more historical experience, data, and analysis.  I spotted a couple of interesting stories I wanted to share with you.

One user explained their terrible and current experiences with outsourcing aspects of IT and “cloud” offerings.  This user’s organization is in the middle of a major IT infrastructure outsourcing program with a large, reputable vendor.  The user had been maintaining 15+ or so data centers around the world supporting large global ERP installations and other business applications.  With one contract, and one SLA (over simplified, I know), the user had “handed over the keys of the data centers” to the vendor.  All well and good, you might think.

Problem: Some time later the business wishes to make changes to its business processes.  This means application architecture and information architecture have to change.  This results in a change in the configuration of the applications.   This is a pain because the IT, no longer in control of this stuff, has to go cap-in-hand to the 3^rd party provider and schedule all manner of meetings to design requirements and get the vendor to re-configure the systems.  This is not a quick process and in fact, in this case, results in wholesale changes in the basic agreement between user and outsourcer, since original SLAs are not sufficient for this “new” requirement.  As if a business’s processes never changes!

Now IT, still in the throes of paying and standing up a huge decision, is realizing that major hindrances have been established.  Business is not happy with IT (again) and long term, unless resolved, IT’s ability to enable business performance will be hampered.

The Woe of IT – Got to Start Running, Now

Another user explained how really successful his roll-out of cloud based email.  This user’s organization has many thousands of users now live, on a global email solution, managed in the cloud.  IT is no longer bound and hamstrung managing what is basically a low tech, relatively simple, near commoditized service.  IT looks like a hero; business is happy since the service is run efficiently, and everyone is happy.  Well, almost.  Two issues stand out – one good, one bad.

The bad news is this: If the business ever wanted to “merge” or align business processes/data (and hence business applications that represent business processes) with data managed in their email systems (some vendors like Microsoft, Oracle and SAP do this between messaging/mail and business apps like ERP) then a new level of IT complexity has emerged.  The data models and integration mechanisms, let alone governance, would have to span to business models and landscapes, which are not under the control of one organization.  This is not a show-stopper – not everyone wants to merge email with ERP; but the barrier is there nonetheless.  The barrier is fictional but exists when and if the need to integrate processes and data from in-cloud to out-cloud.

Now the good news: This user has figured out something very interesting.  The outsourcing of Email was a great success because, as the user pointed out, there was no configuration to “email”.  It is a standard process, highly commoditized.  So outsourcing of “out of the box” functionality made perfect sense.

The previous story above – the dark side of (cloud) outsourcing – highlights the complexities when non-commoditized, or applications that need revisions and configuration changes, are outsourced.  The first example highlights a fallacy: outsourcing/cloud makes perfect sense when commoditized services (email, CPU processing power) are identified.  When processes, applications and/or data have to change, and possibly frequently, a whole new level of complexity emerges.  And this complexity can be significant – even to the point of eliminating any savings that justified the outsourcing in the first place!

Lastly, the real benefit to this second user scenario is that the CIO in this instance has recognized the value IT should be providing the business.  The old days were focused on email; the future is focused on innovation.  This CIO has removed legacy work from his IT stack (and team) and has freed himself, and his team, to now sit with the business and explore new ways to help the business compete and win in its chosen market.  IT can focus on innovation with the business, not managing the trash.  IT can help lay new tracks, and not worry about keeping the train on time (as much).

The conclusion?  With the pressure on IT, in many cases with a smaller staff to a year ago, there is a race being run.  Leaders/CIO’s need to identify commodity processes and services ASAP and outsource where possible, being careful not to readily outsource complex processes and services that may need to change dynamically in support of business change.  Winners of this race will do this first, and free up brain power and money to embed themselves in the business.  Losers will be stuck governing email.  Get running.

Interestingly Kirk also mentioned that Wipro was working with some prominent university to research how organizations develop winning and dominant models in, as Wipro calls it, 21st century virtualized organizations.  What struck me as I listened is that this took me back to the days when I was working with Joe Andraski and many others on Collaborative Planning, Forecasting and Replenishment (CPFR).  You can see a lot of my old white papers here.  Many moons ago I would sit in the middle of a long table, facilitating the development of a collaborative business processes between a retailer and its supplier.  It felt more like participating at the Treaty of Versailles or maybe the Congress of Vienna!  Each organization has their own set of rules, objectives, resources, data, applications, desires, managers and customers.  And on a few occasions, otherwise summarized as B2B, they sometimes coincided.

The one key idea I took to heard was that one characteristic always popped up in environments where collaboration was sustained, and produced results for both parties over and over again.  The idea I summarize with the term, “shared P&L”.  The idea is that when objectives align, and stake-holders share goals, resources, risks, rewards, processes, data, and effort, true collaboration happens – and sticks.  When organizations remain and operate as separate and discrete organization, all that can really happen is cooperation – even if leaders call it collaboration.  Seems like Wipro is on that same journey.

One opportunity that was missed (I felt) was when Wipro highlighted their business strategy as it relates to cloud computing.  One session introduced five key themes Wipro was focused on (Information Management was one) and how they related to a number of important technological developments (Cloud computing was one).  There were lots of examples of futuristic states and visions regarding how platforms-as-a-service, and software-as-service and so on intersected with four of the five themes, but when it came to “information-as-a-service”, and how it intersected with the five, I was under whelmed.

More importantly, there was NO intersection between information-as-a-service and the other four; and for “Information Management” the forward looking, futuristic state was listed as, “Reports and Analytics on tap”.  That was it.  That was the sum total for vision for the biggest single idea in the room.  I felt that Wipro, which was claiming end users were looking to them for leadership and vision, for the 21^st century organization, had completely missed the boat.  

On the one hand, information is the greatest inhibitor to the success of Cloud Computing, if it is to ever move beyond a conversation of “free CPU access.  The lack of effective Information architecture and management will bring any vision for cloud based apps to their knees.   Second, information in the cloud is also the greatest opportunity!  Maybe I will get the chance to explore with them this opportunity – and maybe next time I can report a different finding.

Preparations this week focused on getting our last presentations into our editing machine such that they can be formatted, made consistent, and cleaned up for public consumption.  Once the presentations are completed we then begin the slow process if distilling from the key messages, and creating a body of work that is to be published over the next couple of quarters.  Our Summits force us to put on paper all the good, new ideas and content that we have explored with users recently that has not hitherto been published.  These Summits, though a lot of work, are a great way to keep forcing our brains to dump content onto paper, thus freeing up more space for the next set of client interactions.

I had some interesting inquiries this week.  Here is a smattering of the more notable:

On Monday I had a real interesting call with a large industrial end user client that wanted to explore options for – wait for it – “cloud based MDM”!  Well, I knew I was in for an exciting conversation already since that is an odd topic.  I have blogged on this before(SaaS moves the process boundary, does not necessarily change the process, and can make integration of master data more complex); there are not real cloud based MDM offerings today, and really only a very small handful of end users have asked about this – more for interest than anything else.  Only one serious vendor has talked to me about this opportunity – and a credible vendor at that.  But, as I have said before, this is a complex topic.  On the one hand it makes sense that aspects, even all of MDM, should/could go outside the firewall, but the costs to move to that state increase for each and every object.  Those costs relate to integration, synchronization, management and so on.  Application infrastructure gets more complex as a result – until and if enough master data exists outside the firewall at which point the costs, and complexity, fall.  But there must be a tipping point at which this takes place.  Question is – which industry, which business processes, and which master data, are close to that tipping point?  

On Tuesday I had a real good call with an energy user.  This was a large organization with a strong IT shop; I spoke with several senior architecture folks were trying to invigorate their overall information management (IM) strategy.  They knew that MDM played a role in overall IM but they were not totally clear what the relationship was; and they also had an issue with “getting started” – how could they get interest from the business to help them with their IM strategy?  We explored MDM and its connections to IM, as well as to Business Intelligence and Business Applications, and very quickly the client realize that MDM is a great place to start their IM invigoration efforts!  I suspect that I will be talking with them a few times in the next few months to help guide them through their MDM launch.

On Wednesday I presented on MDM vendors to our MDM Special Interest Group (SIG) that is part of our EXP program’s Best Practice Council.  I highlighted the lenses through which we look at the MDM landscape (data domain, use cases, industries) and then talked about how the vendors align both in terms of capability, versus direction.  Many vendors are “good” at one thing/area, and have plans to be “good” at many others.

On Thursday I had a call with an end user firm that I know very well.  In a previous life I worked for an organization that had a business relationship with this client, so I knew something about their business.  They are in consumer goods/fine chemical industry segment, and they are struggling with one aspect of MDM – that being the link between MDM and product design/development, clinical trials, and operations/manufacturing.  The client has a lot of experience with operational MDM for traditional objects, such as customer and product, but this aspect of MDM was more focused on multi-enterprise considerations of sharing complex and confidential information that drive product design, development and acceptance.  

On Friday I joined one of our more interesting virtual research communities (B2B) that span several other formal communities, to explore how business to business is evolving.  My interests, including Supply Chain Management (SCM), concerned both the drivers for why business processes are moving outside the firewall, and with Master Data Management (MDM), what are the barriers and inhibitors to that movement. By exploring one specific phenomenon, related to e-Invoicing, we concluded that we need to identify scenarios by which users can evaluate a longer term B2B strategy.  You might not see the connection – between e-Invoicing and long term B2B strategy – but it is there.  More on this later…

So it was a great week – brimming with client interaction, and research production.  Time for a rest, and a cold one.  Have a good weekend.

a)     where is the master data mastered?  Has this location moved?

b)     Is the business process different, or is SaaS simply being used to move the boundary of application interchange across the firewall?

So far, all SaaS offerings I have seen really only move the boundary of the processes, and as such, the “what” moves across the firewall changes.  The business process itself is virtually unchanged. 

Secondly, where the master data is mastered has also not changed.  For most firms, though not all, master data is viewed as sacrosanct and is mastered – and protected – behind their firewall.  Only subsets of master data are exposed in any B2B fashion (think of what content goes into an EDI transaction) and there are strict controls over what is hosted or managed outside the firewall.

If the user is not willing to accept the change in costs, both in terms of organization and technology, associated with the movement of master data mastering, and if the processes remain pretty much the same and the boundaries are just moving around, the SaaS offering itself is pretty much a waste of time.  And this last point was the most interesting for me: I represent business users who talk about business process and execution of same; and the knowledge of MDM exposes to me some major issues and challenges with SaaS; yet technologists that are into architecture, SaaS and cloud computing hype, would argue that such (new) applications are “awesome” and “new” and “innovative”.  They may by – but I challenge vendors to explain to business users what is the material benefit to the business in deploying SaaS offerings.

By the way, Happy New Year to you!

The Content in the cloud note really talks about content as email and records management.  There are, of course, lots of email content and records across firms.  In my part of the business, there is an awful lot of highly machine readable data also, that acts like content in that the machine readability is not as high as users would like, or worse, there are competing or alternative ways of interpreting that data.  So the note made me think of an MDM Prediction we are working on for our end of year publication.  

We stated at our recent MDM Summit, “By 2012, 20% of revenues associated with MDM will be sourced by Software as a Service (SaaS) or Cloud Computing Deployment models”.  For MDM, content is real business data that can be used to make the business work more efficiently or effectively.  And some business oriented master data is already sourced from “cloud-based” offerings.  In MDM for Customer Data there are many marketing service providers that offer actual data (think Acxiom, D&B, TDlinx, customer data) as well as services (think of cleaning up customer data files) and in MDM for Product Data there are industry oriented product catalogs (think Bighammer, 1-SYNC, Inovis) that help grease the skids of business-to-business.  So cloud-based content is not new to MDM; but there is certainly a potential for more hosted offerings, services, and data, in the cloud.

The question today is really focused on, “to what degree do firms accept, and even seek, what might be perceived as confidential information, from outside the firewall?”  Some few firms accept that some aspects of product data are NOT confidential and COULD be sourced from outside the firewall.  But when it comes to customer data, and even customer lists, that data is a tad more sensitive.  So MDM spend, related to SaaS and cloud based computing, is likely to be held back for some time.  Perhaps the 20% by 2012 was overstated at the Summit: it might be nearer 10% or even less.  What do you think?