Comments on: Estimating the Benefits of MDM http://masteringdatamanagement.com/index.php/2010/02/23/estimating-the-benefits-of-mdm/ Fri, 03 Feb 2012 21:34:04 +0000 hourly 1 http://wordpress.org/?v=3.0.4 By: Lawrence Dubov http://masteringdatamanagement.com/index.php/2010/02/23/estimating-the-benefits-of-mdm/comment-page-1/#comment-1861 Lawrence Dubov Fri, 26 Feb 2010 21:40:24 +0000 http://blog.initiate.com/?p=1398#comment-1861 Jackie, I totally agree that departmental focus and acceptance are important. Cost avoidance can be estimated in a number of ways. The most widely adopted method is thru • SLE is the single loss expectancy (expressed as the monetary value of the loss). • ARO is the annualized rate of occurrence. • ALE is the annualized loss expectancy. Using these variables we can define the following expression for cost avoidance calculations: ALE = SLE x ARO. You will need to understand business process to estimate these parameters. That said, you have to keep in mind that a lot of effort can be spent to evaluate cost avoidance for multiple processes. If a business process involves, let's say 5 FTE's and after the MDM implementation you will be able to make it 4 FTE's, 1 FTE is not a huge saving on the budgetary scale typical for enterprise MDM implementations to justify too much time on quantifying cost avoidance. You don't want to overanalyze a process that may give you 35-40k annually in cost avoidance. You need something more substantial. Everything counts though! You may want to look for bigger economic impacts thru new revenue opportunities. Thanks, Larry Jackie,

I totally agree that departmental focus and acceptance are important.

Cost avoidance can be estimated in a number of ways. The most widely adopted method is thru

• SLE is the single loss expectancy (expressed as the monetary value of the loss).
• ARO is the annualized rate of occurrence.
• ALE is the annualized loss expectancy.
Using these variables we can define the following expression for cost avoidance calculations:
ALE = SLE x ARO.

You will need to understand business process to estimate these parameters.

That said, you have to keep in mind that a lot of effort can be spent to evaluate cost avoidance for multiple processes. If a business process involves, let's say 5 FTE's and after the MDM implementation you will be able to make it 4 FTE's, 1 FTE is not a huge saving on the budgetary scale typical for enterprise MDM implementations to justify too much time on quantifying cost avoidance. You don't want to overanalyze a process that may give you 35-40k annually in cost avoidance. You need something more substantial. Everything counts though!

You may want to look for bigger economic impacts thru new revenue opportunities.

Thanks,
Larry

]]> By: Jackie Roberts http://masteringdatamanagement.com/index.php/2010/02/23/estimating-the-benefits-of-mdm/comment-page-1/#comment-1856 Jackie Roberts Fri, 26 Feb 2010 20:18:46 +0000 http://blog.initiate.com/?p=1398#comment-1856 Lawrence, This is an excellent subject and I will enjoy reading the sequels of "Estimating the Benefits of MDM". To add more complexity to quantitative (hard savings) and qualitative (soft savings) I find that if you are building the benefits model, you need to incorporate departmental focus. For instance within supply chain / purchasing hard savings are easily documented for a reduction of duplicates records in the system or a reduction of suppliers that sell the same item permitting the buyer to negotiate a cost savings base of volume. A MDM solution benefit for a maintenance focus would be the "right part, at the right time" or a functional spare part identified as part of the data governance structure to minimize down time of a manufacturing line. How is a cost avoidance number estimated in this scenario? Lawrence,
This is an excellent subject and I will enjoy reading the sequels of "Estimating the Benefits of MDM". To add more complexity to quantitative (hard savings) and qualitative (soft savings) I find that if you are building the benefits model, you need to incorporate departmental focus. For instance within supply chain / purchasing hard savings are easily documented for a reduction of duplicates records in the system or a reduction of suppliers that sell the same item permitting the buyer to negotiate a cost savings base of volume. A MDM solution benefit for a maintenance focus would be the "right part, at the right time" or a functional spare part identified as part of the data governance structure to minimize down time of a manufacturing line. How is a cost avoidance number estimated in this scenario?

]]> By: Garnie Bolling http://masteringdatamanagement.com/index.php/2010/02/23/estimating-the-benefits-of-mdm/comment-page-1/#comment-1791 Garnie Bolling Wed, 24 Feb 2010 23:51:22 +0000 http://blog.initiate.com/?p=1398#comment-1791 Lawrence, I look forward to this thread. Bottom up and Economic Value evaluations have always played a pivotal role in large initiatives like MDM. What is your thought on the hybrid approach of the two methods ? you said, "here is no wall between qualitative and quantitative benefits." In your opinion, has a hybrid approach worked ? and is there a benefit in doing both evaluations, and presenting the "value" from both angles ? I see value in both evaluation methods, but can a mix of the two really help business leaders latch on to the message and take ownership, or will it only confuse the business, in that "no matter which way you implement MDM, you will have benefits"...in my experience, if every avenue of approach is beneficial, it has always stalled the momentum... because there is no clear path... Thanks again, and I look forward to your future posts.. always good to read your posts. Lawrence, I look forward to this thread.

Bottom up and Economic Value evaluations have always played a pivotal role in large initiatives like MDM.

What is your thought on the hybrid approach of the two methods ? you said, "here is no wall between qualitative and quantitative benefits." In your opinion, has a hybrid approach worked ? and is there a benefit in doing both evaluations, and presenting the "value" from both angles ?

I see value in both evaluation methods, but can a mix of the two really help business leaders latch on to the message and take ownership, or will it only confuse the business, in that "no matter which way you implement MDM, you will have benefits"...in my experience, if every avenue of approach is beneficial, it has always stalled the momentum... because there is no clear path...

Thanks again, and I look forward to your future posts.. always good to read your posts.

]]> By: uberVU - social comments http://masteringdatamanagement.com/index.php/2010/02/23/estimating-the-benefits-of-mdm/comment-page-1/#comment-1764 uberVU - social comments Wed, 24 Feb 2010 11:31:26 +0000 http://blog.initiate.com/?p=1398#comment-1764 <strong>Social comments and analytics for this post...</strong> This post was mentioned on Twitter by faropress: Reading Larry Dubov on Estimating the Benefits of MDM - http://bit.ly/bUGIhZ - #MDM (via @Initiate)... Social comments and analytics for this post...

This post was mentioned on Twitter by faropress: Reading Larry Dubov on Estimating the Benefits of MDM - http://bit.ly/bUGIhZ - #MDM (via @Initiate)...

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