Driven by demand from businesses seeking greater value and more control over their customer data, a new approach to data analysis and activation has emerged and become the “go-to” approach for building a data architecture.
Modern Data Infrastructure (MDI) – sometimes called the Modern Data Stack – is centred around an ecosystem of tools businesses use to collect, move, store, transform, analyse, and operationalize their data.
The MDI market has seen explosive growth in the last 5+ years. In fact, between 2015 and early of 2022 alone, the top 30 data infrastructure start-ups raised over $8 billion of venture capital. Compared to traditional data architectures and approaches, MDI tools are easier and faster to implement, easier to deploy and maintain, easier to build on top of, usually less expensive, and offer speed and scale as features.
So, with the category gaining so much traction, we thought it would be helpful to put together a primer on the what and why of MDI.
MDI is a combination of easy-to-integrate tools that can be tailored to solve very specific business use cases. It’s difficult to pinpoint when exactly MDI took off, but it’s likely the first tools that spawned the creation of MDI tools were cloud-based.
Cloud based tools (CB based MDIs) are often a foundational piece of an MDI. CB based MDIs make integrations, one of the most challenging parts of building a traditional data infrastructure, easy. This easy integration has allowed tools that run on customer data to flourish and an ecosystem of data tools to form.
MDI tools share some common features that make them easy to use and economical compared to old-school data architectures.
All-in-one marketing platforms – such as Salesforce Marketing Cloud and HubSpot Marketing Hub – have become popular over the last 10-15 years, and with good reason. They give businesses a single platform for all their digital marketing activities and help create unified customer profiles. They are far from perfect though.
They are rigid in their functionality, the customer profiles they create are often limited and rigid in use, and they make it difficult to work with your data outside of their tooling. Businesses built with MDI avoid this rigidity and expand the possibilities of what they can do with their data.
The pandemic made it clear that businesses lacked the agility they needed to operate in a digital-first market. The expectation is you deliver a personalized experience to your customers. To do that, you need the ability to target the right audience with the right message across your digital properties, respond to customer behaviour quickly across channels, and measure the impact of everything you execute so you know what works and what doesn’t. All-in-one marketing platforms make it difficult to be as agile as your business needs. Integrating a set of best-of-breed tools is often the best way to help your Marketing team be more agile and deliver better, personalized experiences. MDI was born from this use case and is often the best way to solve it.
Beyond avoiding the pitfalls of all-in-one marketing platforms, a well-built MDI offers businesses several other benefits. These benefits stem largely from the fact that MDI tools are almost exclusively managed SaaS, are frequently built to be cloud native, and are intentionally designed to integrate with other tools in the MDI ecosystem.
MDI tools give your digital business a competitive advantage by giving you faster and greater value out of your customer data. These tools along with new, long-term data storage strategies enabled by the low cost of storage in the warehouse, let you layer MDI tools on top of large, historic data sets to enable specific, tailored solutions that you couldn’t build before such as conversion attribution, advanced lead scoring, and ML-driven personalization.
Since MDI tools are almost always managed SaaS, they can scale almost infinitely. Expensive computations that took hours or longer with on-prem systems can be scaled in the cloud – often transparently to the user – driving down the time they take to execute.
It doesn’t take weeks or months to add a new data system anymore. You don’t have to provision infrastructure or deploy software. It’s easy to swap out or add MDI tools to suit your specific use cases. Now you can maximize flexibility and control while still keeping your costs low. You sign up for a new service and configure the integrations you need via the UI. It can take as little as a few hours to set up and integrate a new tool now.
MDI tools generally have consumption-based pricing. You only pay for what you use. Since MDI tools are almost always managed SaaS, you don’t have to invest in maintaining the systems. Maintaining five nines and scaling for peak are no longer your concern. That’s what you pay your vendor for.
MDI tools are built to plugin with other tools. They frequently offer out-of-the-box integrations with popular cloud services and platforms, so stitching together low-or-no-code systems is easier. Product-oriented MDI tools also regularly offer APIs or SDKs, so plugging them into custom-built applications or websites is easy.