What is Master Data Management?|The Complete Guide for 2023
In this era of Big Data, every organization is generating data like never before. A modern organization operates multiple applications and systems to store customer data, enterprise data, performance metrics, business KPIs, etc. Most companies deploy a common set of applications involving Enterprise Resource Planning (ERP), Customer Relationships Management (CRM), Business Intelligence (BI), and Marketing Automation to drive their business. Now, imagine managing data of thousands of different products and tens of thousands of customers. This is where Master Data Management comes in.
Table of Contents
Master Data Management is aimed at providing synchronization to the most critical pieces of data in an organization. Master data is a single source of customer data, product data, or business data used across multiple systems and applications in an organization. This article will help you understand how Master Data Management helps companies manage their ever-increasing volumes of data. Let’s get started.
Table of Contents
- What is Master Data?
- Examples of Master Data
- What is Master Data Management?
- What is the need for Master Data Management?
- Benefits of Master Data Management
- Master Data Management Capabilities
What is Master Data?
Master Data is a key organizational data asset and is often referred to as the single source of business data used across multiple application systems in an organization. In simple words, Master Data are the entities that drive your business processes. They are assessed by analytics and are controlled through governance processes.
Master Data is basically all the data that is critical to business operations and often looked upon for decision-making. It’s the master file of the nouns of the business, your customers, your vendors, your partners, your prospects, your brands, your services, your suppliers, etc. This data is usually shared with multiple departments and personnel across the organization.
Examples of Master Data
To get a better understanding of Master Data, let’s discuss a few examples.
- Business Operations: In the domain of business operations, Master Data typically refers to transactive entities. Let’s consider a common Order-to-Cash transaction process where a customer buys your product at a store location via an asset (let’s say, a Self-Service Kiosk). Here, Customer, Product Location, and Asset are all examples of Master Data. While the systems that store Master Data don’t record transactions, they contain consistent entity information to streamline business processes.
- Business Analytics: In the domain of Business Analytics, Master Data are the entities that the organization tracks or examines. For example, to report Store Sales, a dashboard would use transactional data from every financial account associated with store locations. And, a report on the same Store Sales would provide wallet-share details by reporting on customers’ attach rate to the product portfolio. Here, Financial Account, Location, Customer, and Product are all examples of Master Data. While the systems that store Master Data don’t record transaction details, they contain the conformed dimensions and attributes used by Data Analytics tools to integrate and analyze the data.
- Governance: From the governance side of things, Master Data refers to the entities subject to controls. For instance, privacy regulations often control how the data of customers, employees, or patients are regulated. Assets and Locations are governed by risk management policies, such as Emergency Response Plans. Financial regimes and regulations dictate the design and control of financial account hierarchies. While the systems that store Master Data don’t record the policy and governance details, they contain the entities that define the scope for the Governance Team.
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What is Master Data Management?
Master Data Management (MDM) is a business-led program that ensures the consistency and accuracy of an organization’s shared data, also known as Master Data. Master Data Management (MDM) creates a single master record for each person, place, or asset in a business across all Data Sources (internal and external) and systems.
Once created, this Master Data serves as the single source and a trusted view of business-critical data that can be shared and managed across the organization. This data is free from duplication, inconsistency, errors, and redundancy, and can be used to promote accurate reporting which in turn helps the stakeholders make smarter and informed business decisions.
Master Data Management includes the technology, people, tools, processes, and systems used to establish a single & unified source of truth, i.e., the Master Data, and to ensure its accuracy and consistency. MDM relies heavily on the principles of data governance and automates how business data is governed, managed, and shared across multiple applications used by organizations. MDM further leverages Data Integration, Data Enrichment, and Data Quality techniques to create master records. Artificial Intelligence (AI) is used to discover, match, and merge data across the systems storing it.
What is the need for Master Data Management?
Modern organizations operate a number of system applications to cater to business needs and an organization’s data often comes from multiple sources. On top of that, business data across multiple departments and divisions within the organization. As a result, modern organizations have thousands of customer records across departments underutilized or not connected at all, leading to an increase in redundancy. This leads to Data Silos, Incomplete Data, Duplicated Data, Conflicting Data, and therefore, a disjointed view of the business.
As your business scales, the complexities are bound to increase. With an increase in the volume, variety, and veracity of data, managing your most critical data becomes a challenging and daunting task. On top of that, the costs associated with having multiple sources of information in large organizations can be very high. Basically, the need for accurate and timely information is acute, and that combined with managing the ever-increasing amount of data is a never-ending challenge. Well, worry no more, Master Data Management is here to rescue you from all the hardship.
MDM addresses the challenges associated with having multiple and disparate applications that create, collect, and access data across multiple channels. This includes ERPs, CRMs, Shipping Systems, Invoicing Systems, Web Portals, and more. Having a single and trusted source of consistent and reliable data helps organizations to get a bigger and better view of their customers, products, and vendors. This in turn helps to drive customer engagement and prevent disjointed customer experiences in companies with multiple points of interaction.
Here are a few other concerns addressed by Master Data Management.
- Manual data entry and errors associated with it such as miskeyed entries and incomplete data fields.
- Duplicate data entries.
- Different name usage such as GE or General Electric.
- Data that has been updated in 1 system, but not in others.
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Benefits of Master Data Management
- Eliminates Redundancy: By establishing a single source of business-critical data, MDM eliminates costly redundancies in organizations that rely upon multiple and conflicting sources of information.
- Improves Productivity: Having all of your organization’s business-critical data in one place, and the ability to share that across the organization with ease reduces Data Silos and increases collaboration.
- Save Resources: As discussed already, there are high costs associated with managing a large number of sources and applications. With Master Data Management, you can save time on managing infrastructure activities with automated and streamlined data processes.
- Enhanced Data Analytics: With all your critical data in one place, you can easily get the best out of your clean data with Data Analytics tools. You can gain important critical customer insights, act on them, and deliver a personalized customer experience in no time,
- Improved Compliance: Having centralized master data helps in reducing compliance costs associated with reporting and penalties. Having Master Data Management in place leads to fewer vendor and product compliance issues. This in turn helps in faster product introductions and seamless vendor onboarding.
Master Data Management Capabilities
- Flexible and Multi-domain: A well-equipped Master Data Repository with flexible Data Modeling features provides a bigger and centralized view of all data types and relationships among them. This simplifies the complex cross-domain relationships and provides a flexible and multi-domain Master Data Management solution.
- Real-time and Secure Data: With top MDM solutions, you can subscribe and publish data on demand. This provides accurate data to systems and applications without compromising security. Having up-to-date data in real-time allows users to extract actionable insights and make smarter business decisions.
- Data and Workflow Visualization: Best Master Data Management solutions are equipped with a Data Visualization component to easily discover and fix quality issues. This also allows users to collaborate on data and create attractive visualizations and dashboards for better decision-making.
- Customizable User Interface: MDM solutions provide users with a no-code visual design-time environment and drag-and-drop functionalities for developing custom UIs. Users can easily create simpler, cleaner, and flexible role-based User Interfaces for their Master Data Management solution.
Master Data Management (MDM) comprises the technology, people, tools, and processes that ensure data is shared and coordinated well across the enterprise. MDM provides a single unified Master Data service that provides accurate, error-free, updated, and consistent data across the organization.
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