The Hard (and Fluffy!) ROI of Effective Master Data Management

The Hard (and Fluffy!) ROI of Effective Master Data Management

By | September 4, 2020

My friend is an accountant, and, even outside of work, she tends to make important decisions based solely on hard numbers. A few months ago, she heard about how there has been a big uptick in the number of people adopting pets, so she started considering if she should get a dog for the first time.

So she asked me about my experience as a dog owner. Being as extremely analytical as she is, her questions were focused on the expenses and financial gains of investing in a dog. I really wanted to persuade my friend that buying a dog would be a good idea for her, but while I do not think the decision to adopt a pet should be based on a hard return on investment analysis, I know how my friend looks at things, so I did the best I could to come up with some of the financial benefits around dog ownership, which I find costs an average of about $150 a month.

It was a bit of stretch and took quite a few assumptions, but I came up with some money-saving points, like less money on future health care if hanging out with a dog reduces your stress level, saving money on gym memberships if dog-walking replaces gym workouts and saving on home security system fees if your dog is protective enough.

Like my friend, analyzing ROI is extremely important to our SpheraCloud Master Data Management software customers. They need to justify the investment by showing upper management that the ROI is much stronger than what they can get from other possible investments.

I think if my friend were analyzing SpheraCloud MDM rather than dog adoption, she would be much more satisfied with the financial returns! With SpheraCloud MDM, the hard ROI analysis is extremely compelling without the need to stretch your imagination or make a lot of assumptions. For example, one of our customers that just started to use the solution this year analyzed their expected ROI in detail and here are some of the numbers they calculated (all are one-time savings in the first year except where noted):

  1.  By eliminating duplicate master data records, they estimate they will save between $2.1 million and 3.5 million.
  2.  By reducing the number of large and costly items needed in inventory, they will save between $700,000 and $1.4 million.
  3.  By rationalizing the number of unique items down to what is actually needed to run their business, they will save between $1.4 million and $2.1 million.
  4.  By enhancing their ability to use their Material Requirements Planning system to optimize procurement, they will save between $3.5 million and $7 million.
  5.  They will save between $1.2 million and $2 million annually through their stronger purchasing leverage that will lower contract pricing from their vendors.

These are big, compelling numbers, for sure, and ones that make a clear business case.

To help you calculate yours, we invite you to check out our new MDM ROI calculator; it should give you a ruff, sorry, rough idea of how to make your own business case. It only takes a few minutes


By the way, my friend did get a dog, and she’s loving being a dog owner! And at this point, whatever financial benefits she may or may not get pale in comparison to the intangible benefits she definitely gets, like companionship, entertainment and all the other joys her cute, fluffy friend brings her! And actually when it comes to an effective MDM software, there are intangibles with that as well, like a less frustrated workforce that can spend more time doing their jobs rather than searching for items, a safer workplace from processes and equipment that are running properly a higher percentage of the time and being fixed expeditiously, and an overall ability for everyone to focus more and more on higher-value work because MDM processes and item management are more efficient across the board.

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