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Don’t Wait, Seek Alternatives to MDS Now

Microsoft MDS – CIOs Should Seek Alternatives

Microsoft Master Data Services (MDS) has been bundled within SQL Server software (2008 R2) since 2010 and is being used across a wide array of companies.  MDS enables a SQL Server database to act as a single source of truth within their organizations, with some basic master data persistence, synchronization, quality, and data syndication capabilities. 

While not a complete enterprise-class master data management (MDM) solution like those in Gartner’s MDM Magic Quadrant, MDS can be a sufficient solution for reference data and a limited number of other master data use cases.  So, while the capabilities of MDS significantly pale in comparison to best-of-breed MDM solutions, having some decent data management capabilities without significant incremental costs means MDS has been widely implemented, and used.     

The MDS Dilemma: Low-Cost but Limited Functionality

However, as vendors of best-of-breed MDM solutions have aggressively invested in adding features and functions to their solutions over recent years, the integration of new features into MDS has lagged.  The slow pace of major improvements to MDS, in conjunction with many companies outgrowing the limitations of MDS for enterprise-class MDM, leads many data leaders to question if MDS is the right fit.

Typically, the biggest concerns expressed from users of MDS were around missing functionality for complex hierarchy management, data quality (including complex entity resolution/matching), and data governance.  Data leaders would also express significant concerns around a general lack of visibility on the MDS roadmap and confusion on Microsoft’s commitment to MDS as a product.   

For many data leaders, the uncertainty of the long-term fit of MDS has a paralyzing effect at a time when most companies are investing heavily in digital transformation and acceleration.    

Microsoft’s Support Plan for MDS

Some of the concerns regarding whether Microsoft will continue to support MDM were partially addressed recently with the release of SQL Server 2022, which included a refreshed version of MDS. 

However, it still significantly lags the broader MDM market on features and functions, and looming questions about the overall commitment of Microsoft to this product remain, especially considering major commitments by Microsoft to other data management solutions, like the Azure Data Factory and Purview. 

What this means is that MDS will continue to be a cause for stress among data leaders who are struggling to understand if they should continue using MDS, or if they should look at other MDM solutions. 

And this stress is completely valid given that many companies are actively using MDS to support operational MDM use cases, including reference data.  This means that any effort to replace MDS could be highly disruptive to downstream business processes that are reliant on MDS as a source of master data. 

Worse yet, it’s often the case that MDS was implemented years ago, and many of the people who may have supported its deployment (either from the business application or IT side) are no longer with the company.  In these scenarios, for many data leaders the risk of possible business disruption weighs heavily on the decision to reluctantly stick with the MDS status quo, as suboptimal as it may be.  

MDS in 2023: Where Do We Go from Here? 

It’s a foregone conclusion that best-of-breed MDM software providers will continue to invest in their platforms.  And given the history of MDS, it’s very likely that the lack of functional parity between MDS and MDM software solutions will only worsen.  

And with every day that passes, organizations without an enterprise-class MDM solution will increasingly lag their peers who are leveraging MDM for a competitive market advantage.  As noted in the last MDM Magic Quadrant, master data management has transitioned from a ‘nice to have’ to a ‘must have’, and any company serious about digital transformation needs to operate from a solid foundation of master data.    

What this means is that data leaders dependent on MDS will very shortly be faced with a difficult decision.  What is the best way to make the jump to a better, more robust MDM solution that aligns to our long-term data strategy without completely breaking every legacy process dependent on MDS?

Modern Data Management to Support Digital Transformation

Data leaders that are dependent on MDS should start looking for alternative solutions sooner rather than later or run the risk that in the next release of SQL Server MDS is no longer supported, or worse yet, sunset altogether.  Being on the offence, not the defense, will at least give those leaders the time and options that taking a defensive posture likely will not provide. 

This does mean some data leaders will need to pay for an MDM solution where they’re essentially getting one for ‘free’ now.  However, given the increased dependency on MDM as a foundation of digital transformation, it’s logical to assume most companies will have significant challenges that could easily justify the investment needed for a new MDM platform.  It’s not a lack of a business need that stops CIOs from considering a replacement of MDS, it’s the fear associated to what could go wrong when they tried to replace it.

Not only does moving from MDS to a new MDM provide better capabilities, but it also likely better aligns to a company’s overall IT strategy.  The reality of the rapidly evolving modern data ecosystem is that complex data management capabilities, like MDM and data governance, aren’t being coded into the database management systems. They’re being deployed as freestanding applications that are deeply integrated to cloud data ecosystems, like Azure and AWS. 

Clearly there are benefits to having some data management capabilities within the databases used by business applications, but more advanced data management capabilities are being deployed independently of database management systems (DBMS).  This makes complete sense given the average large company will be running numerous databases, but increasingly all those databases are being deployed in a very limited number of cloud environments (and often only just one).   

To help data leaders overcome the fears of replacing MDS, they should plan on running MDS in parallel with a new MDM solution. The new MDM solution will likely be FAR better suited to support more complex and customer-facing use cases in the digital realm, where it’s likely companies will be able to easily identify net-new MDM use cases that don’t require both the new solution and MDS to be utilized. 

Over time, so long as Microsoft (MSFT) is supporting MDS, companies can plan on slowly migrating MDM processes off MDS and on to the new MDM platform.  There are costs of having two systems where there was previously one, but the business case of the new MDM platform will likely be justified given the functional deficit most companies have experienced for the years they’ve forgone investment in a more robust MDM solution.  


MDS has been a decent, low-cost solution to help companies support a limited number of MDM use cases for over a decade. 

For some companies early in their MDM journeys, MDS may remain a viable solution for MDM in the short term.  However, the MDM requirements of most companies that could justify using MDS over the last 10 years, today significantly exceed the capabilities of MDS.  Given MDM has transitioned to a must-have capability to support the digital aspirations of companies, data leaders that are dependent on MDS should seek to implement best-of-breed MDM solutions that better align to both their long-term business and IT strategies.  For most companies, taking a ‘wait and see’ approach on the capabilities offered by enterprise-class MDM solutions in favor of continued use of MDS represents a material risk in their ability to meet evolving business needs.


Malcolm Hawker

Malcolm Hawker is a thought leader in the fields of data s, Master Data Management (MDM) and data governance. As an ex-Gartner analyst, he has consulted to some of the largest businesses in the world on their enterprise information management strategies. Malcolm is a frequent public speaker on data and analytics best practices, and he cherishes the opportunity to share practical and actionable insights on how companies can achieve their strategic imperatives by improving their approach to data management. 

Malcolm’s mission is to raise the awareness of the value of MDM and data governance to senior data leaders at companies across the globe. MDM and data governance remain significant challenges to most companies but can be address through the application of practical and outcome-driven data management best practices. Malcolm’s goal is to empower companies with the confidence and knowledge needed to become truly data driven. He holds degrees from the University of Alberta (Bachelor of Commerce) and the University of Florida (MA).

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