Master Data Management (MDM) involves the process of creating a single master file for all data items across all external and internal data sources and software used by a company. The data is then thoroughly cleaned to form one record of the entire organization which is known as a gold record. The golden record guarantees the accuracy of queries and reports and increases confidence in the data-driven decisions made throughout the entire company. This article focuses on the advantages and disadvantages that master data management can bring. It offers common scenarios for use and best practices for businesses that are looking to adopt it.
How Does Master Data Management Work?
As companies continue to take into account data on an unprecedented magnitude–and are increasingly dependent on the data they collect to guide everything from operations and decision-making to customer relations and business intelligence, their dependence on this data is growing. It has to be reliable constant, reliable, and consistent.
Master Data Management describes the procedure that involves cleaning up and preparing data through deduplicating, reconciling, and enhancing it prior to allowing it to a repository to be utilized and maintained. The aim of advanced cleaning and preparation of data is to ensure all employees across the organization that the information is correct and trustworthy.
This is a great way to achieve two objectives:
- ensuring that business decisions and reports are based on accurate data
- Reduce conflicts by allowing all employees access to identical information
Master data records of an organization are called gold records due to the fact that the data they contain has been carefully processed, refined, and validated providing the “best representation of facts about the data.”
Also read: Top 20 Data Analytics Tools Used By Experts
Master Data Management Processes
Master data management is a process that requires both human resources and technology, however, it requires the support of the organization. Moving data into an MDM repository can be a tedious task and costly, as well as maintaining a single source to verify the truth of an enterprise requires a new method to work with data in order to ensure it stays exact and consistent.
The first step is to identify the relevant sources of data and their “owners” who are accountable for their data. The data contained in these sources needs to be analyzed. Depending on the size of the company or how it has dealt with using data in the past it can be a lengthy process.
Consider an organization that has bought another business that was using completely different technology. Every data item on both sides needs to be cross-referenced to avoid duplicate record types and then reformed into a consistent format. In addition, it is necessary to flag the records for irregularities, inaccuracies, or incompletion, and any inconsistencies must be eliminated.
This laborious task is typically accomplished with the help of data-mapping software. It is which is often integrated into MDM systems. The IT team in charge of the MDM process then develops an arrangement of master data records that map the data to their names in the sources. After the master data records are mapped to all variations in different systems the next step is for the company to determine how they want to keep and use the data in the future.
One option is to quickly condense all data to common names within the MDM repository. A different approach is to allow users to remain using their original names, which are not consistent within their own resident systems while letting the master management software automate the consolidation of the data into a uniform data repository. Both methods are viable and will be based on the workflow that is most appropriate.
Advantages of Master Data Management
There are many ways that MDM can benefit organizations, but here are a few of the most popular:
- Creates uniform data– every department in the organization makes use of the same golden data, which ensures that it’s accurate, consistent, and reliable.
- Assists with regulatory compliance– aggregate information from disparate departments and systems can be difficult to gather and can sometimes be in conflict, but standardized MDM data is in a single place and presents a more accurate picture.
- Reduces IT cost of assets– eliminating redundant, incomplete and unnecessary data, reduces the amount of storage capacity, and also saves the cost of processing and storage hardware.
- Enhances customer satisfaction– sales and service that reference the same information can result in greater satisfaction by providing all those who interact with customers a 360-degree view of the experience of customers.
Master Data Management Use Cases
A majority of organizations will benefit from adopting an approach to master data management however, it’s particularly designed for specific types of applications.
Mergers and Acquisitions
If one company buys another or merges with one in the same way, they have to combine their data. The data may be stored in various formats and systems as well as using different terminology. Master data management can assist in identifying commonalities and resolving variations using uniform standards, resulting in an overall continuous data record.
Customer Service and Satisfaction
MDM can provide an all-around view of the customer and their experience through the unification of data that comes from service, sales and fulfillment, returns, and even manufacturing and development. When all this information is integrated into the MDM repository, each department can view how customers have interacted with their organization. This allows employees to increase the customer experience grow the customer’s loyalty and increase revenue.
Product Engineering And Manufacturing
Consolidating the separate catalogs of parts in purchasing manufacturing, engineering, and purchasing within an MDM repository will prevent duplicate orders as well as alert buyers to problems that might have been discovered by other departments. This helps avoid mistakes that can occur when design specifications for engineering products do not match and manufacturing bill of materials. A common parts database could also combine outside part numbers and refer to the same item, such as the military part number from a specification that must be converted into an internal component number for the exact part.
Compliance and Regulation
Compliance auditors and regulators are increasingly requesting cross-departmental reports that combine data from across the entire business. An MDM method that standardizes the data of different departmental systems can help with this hybrid reporting while ensuring compliance and avoiding errors.
Master Data Management Challenges
Despite the obvious benefits associated with master database management its implementation isn’t simple and may cost a lot. These are the most significant issues that companies face when it comes to MDM.
It’s simple to make a commitment to the MDM program, yet it’s a challenge for everyone to perform their part on a regular basis. MDM isn’t a one-and-done solution. It requires a continuous commitment to be implemented initially and to maintain it as time passes.
Standardizing data derived from a range of sources isn’t straightforward work. How can you be certain that a specific data term in accounting systems means exactly the same as a version in manufacturing, for instance? The end users who are most familiar with the system must determine the meaning of each data item and then agree on the same, unifying definition for the various variants of data items.
There are different ways systems store and create data. Regulations can make things worse. For example, a firm that operates in multiple countries might find that some countries require numerics to be interpreted in more than two places in the direction to right the decimal point in some countries, while others do not. To meet reporting requirements, you may need different data formats to be used in different systems, further complicating the complexity of MDM.
In contrast to traditional records, unstructured data–photos and videos, emails and text messages, for example, are not tagged with data labeling. They must be manually annotated by the user, which is a labor-intensive and time-consuming process.
MDM is an information infrastructure project that requires people and systems throughout an entire company. It can take time to implement and the results aren’t always evident immediately. The stakeholders may be aware of the effort, time, and cost of the project without being able to discern what the cost is or what it is that will bring the business benefits.
Trends in Master Data Management
Master data management isn’t new, but it is changing as companies are becoming increasingly dependent upon data in all aspects of their business. As MDM is growing in popularity and is gaining traction, here are some trends that are shaping the market:
- The rapid growth of Internet of Things (IoT) information needs to be brought together and under control with other data.
- A vast amount of unstructured data needs to be noted and linked to the system’s data.
- Corporate initiatives that support companies with a customer-centric focus, and 360-degree views of data from customers.
- The advent of artificial intelligence (AI) and machine learning, which works with central data to discover the business, market, and operational trends.
- The shift to Omnichannel sales and services in which customer interaction can be handled and connected via chat telephone, chat, as well as brick and mortar.
Implementing a master data management strategy is an enormous task, and historically has restricted the task to huge enterprises where cross-departmental and cross-channel integration is vital. Smaller businesses may not have the resources required to initiate massive MDM initiatives however they have the requirement.
Technology is growing to keep up with the demands. A lot of vendors–enterprise resource plan (ERP) as well as customer relation management (CRM) suppliers for instance–have already integrated MDM devices directly into their platforms in order to bring them within the reach of small businesses.