Updated from Nov. 25
IBM (IBM - Get Report) is betting a billion dollars that it can parlay its investment in a complex technology used to aggregate disparate threads of corporate data into a serious competitive advantage over rivals Oracle (ORCL - Get Report) and SAP (SAP - Get Report).
In the last three last years, Big Blue has built a 1,000-person business unit, acquired five privately held companies, and spent heavily on R&D in an effort to exploit the growing market for master data management, or MDM.
Why spend so much? By 2009, the MDM market is expected to grow to $10.4 billion, from $5.4 billion, a compound growth rate of 13.8%, according to market research firm IDC. By contrast, the market for database software is growing at a compounded rate of just 6.4%, though from a much larger base. What's more, master data technology is closely related to both middleware and database software; winning in MDM opens the door to lucrative cross-selling.Simply put, MDM attempts to give businesses a single, accurate view of customers, partners or suppliers, by drawing data from separate stores of data scattered across an enterprise. Daniel Drucker, who heads IBM's MDM business, illustrates the benefits of the technology by recounting the experience of a Las Vegas casino that nabbed a card cheat. Casino security officials ran the cardsharp's phone number through the MDM system and found that it matched a phone number the dealer gave on his employment application two years previously. Both were arrested. "For the last 30 years, companies have deployed applications, but each one only looks at a piece of the data," Drucker says. Data on a customer's mortgage, for example, that are stored in one software application are often not available via other applications used by the same company. So, a call-center staffer might miss the opportunity to sell mortgage insurance or another related product when the customer calls on another matter. Even worse, data in one store may be older and no longer accurate, as addresses and phone numbers change.