What is Master Data Management (MDM)?
Master Data Management is a business-led program for ensuring that the organization’s shared data--aka master data--is consistent and accurate. Master Data Management programs include the people, processes, and systems used to keep master data accurate and consistent.
Most organizations today operate a number of different systems that all contain important data on customers, the business or other crucial business KPIs such as CRM’s, ERP’s, etc. This leads to data silos, duplicated data, incomplete data and therefore, a disjointed view of the business. Since data is in many different places and in many different languages, answering simple business questions such as “What services did our customers use the most last quarter?” or “Who is our most profitable customer?” becomes difficult.
In order for Master Data Management to work, it must be a group effort that should be an ongoing endeavor. Usually, larger organizations will elect a group of people to establish and enforce best practices for data quality. Connecting data sources and providing data governance cuts across an entire organization. Therefore, buy-in and support from upper management are crucial to the success of any master data management program.
What is the “Master Data” in “Master Data Management?”
But what is master data? Master data, along with reference data, and metadata, is a key organizational data asset. While far more complex definitions for master data can be found on the internet, to simplify, master data are the entities that drive business processes, are evaluated by analytics, and are controlled through governance processes.
- From an operations, or business process point of view, master data typically represents the transactable entities. For example, if we look at a typical order-to-cash process: customer buys a product from a store location using an an asset (i.e. self-service kiosk); the italicised words--customer, product, location, asset--are all example of master data. In addition the financial account to which the sale is recorded, or the employees that staff the store location are also master data. While the systems that hold master data usually don’t record transactions, they hold the consistent entity information to ensure business processes do not fail.
- From an analytical perspective, or business intelligence point of view, master data are the entities that the organization tracks or examines. For example, to report on same store sales, a dashboard would use aggregate transactional data from each financial account tied to store locations. A report would provide wallet-share details by reporting on customers’ attach rate to the product portfolio. In both example the italicised words--financial account, location, customer, product--are master data. While the systems that hold master data usually don’t have the transactional details, they hold the conformed dimensions and attributes (i.e. master data!) used by analytical tools to properly aggregate and analyze the data so the reports, dashboards, et al are accurate.
- And, finally, from a governance perspective master data are the entities subject to controls. For example, privacy regulations often dictate how customer, employee, or patient data should be controlled. Assets and Locations are governed by risk management policies, such as emergency response plans, or asset management policies. Accounting regimes (e.g. GAAP, IFRS) and financial regulations influence the design and control of of financial account hierarchies. While the systems that hold master data don’t usually record the policy and governance details (that’s what data governance, or GRC platforms provide) they often have the entities that define the scope for the governance team.
One of the innovative ways TIBCO thinks about master data and master data management is that we do not believe that organizations need to purchase three different software platforms to manage master data (ie. an Operational MDM, Analytical MDM, or Governance-oriented MDM). In fact, because these use cases are so closely co-linked, we believe that having one platform that supports all three use cases is beneficial from a cost and effort perspective.
The Benefits of Master Data Management
Increase revenue growth
To provide personalized cross-sell and up-sell offers, you need access to reliable and complete data for all customer touchpoints. MDM can provide a consolidated source of key master data on customers, products, and relationships between master data entities. This accurate data source helps to increase revenue by appropriately responding to customers on their channel of choice. With a better understanding of your customers, you can ensure that the right cross-sell and up-sell offers are sent to the right customers at the right time.
With Master Data Management, you can eliminate IT overhead and costs and drive operational efficiencies by providing a complete, consistent, reliable source of master data across your organization. MDM will also help improve visibility and control over business activities by managing sophisticated relationships across products, customers, vendors, and locations.
Optimize your supply chain
Master Data Management offers a centralized perspective on products, and accurate information on inventory, product returns, and out-of-stock items across the supply chain, improving inventory management, forecasting, and customer service. You can ensure accurate, timely information is provided to support decisions and actions made by the applications, processes, and people that run your business.
Identify and act on insights faster
Master Data Management can speed up time-to-insight and action by allowing business users to directly access, manage, and visually interact with master data. With a richer source of product, customer, and vendor data, you can introduce new products and services faster.
Improve Customer Satisfaction
You can also accelerate loyalty and increase sales with Master Data Management by personalizing interactions, delivering a consistent experience across channels, and tailoring products and services to your customer’s specific wants and needs.
Centralized and complete master data helps to reduce costs associated with compliance reporting and penalties. With master data management, fewer vendor and product compliance issues lead to faster new product introductions and vendor onboarding.
Essential Master Data Management Capabilities
Flexible and multi-domain
An extensible master data repository with flexible data modeling features provides a centralized view of all relationships between data types, clarifying complex cross-domain relationships, providing a flexible and multi-domain master data management solution.
MDM platforms should support all four main styles of master data management:
- Centrally authored- In this style data is authored in the MDM, other systems subscribe to the MDM for master data (or the MDM pushes the data into downstream applications).
- Consolidation - Source systems feed data into the MDM for consolidation into golden records
- Coexistence - A mashup of centrally authored and consolidation that allows for creation of data in multiple systems (including the MDM).
- Registry - Rather than consolidating records, joining/aligning unique identifiers from across all the systems into join tables.
Real-time, secure data
The top MDM solutions today allow you to publish and subscribe to data on demand, providing accurate master data to systems when and how you need it without compromising security. With real-time data, users can better react to the data and make faster decisions based on the insights discovered.
Data and Workflow visualization
The best MDM solutions provide a data visualization component that allows you to identify and easily fix quality issues. The capability can also helps users collaborate to constantly make improvements, monitor processes, and create dashboards for actionable data analysis.
A customizable, business-friendly user interface
A zero coding visual design time environment allows you to develop custom UIs using simple drag and drop actions. You can design cleaner, simpler, and more flexible role-based user interfaces for your master data management solution.
Getting the Most Value from Master Data Management
Data is an organization’s most important asset. When consolidated and matched in an accurate way, it can reveal opportunities, risks, and areas where the business can be improved. Companies are facing an increasing number of data sources and fragmented information from social media, mobile devices, the cloud, and other data sources.
The challenge is building and maintaining a trusted source of critical data assets related to products, customers, suppliers, vendors, and employees. With MDM, organizations can control and manage key master data entities scattered across different applications and databases.
Ensuring good quality data is becoming more important to differentiate your organization. According to an Aberdeen survey, organizations that successfully generate business value from their data outperform similar companies by 9% in organic revenue growth. Data is the backbone of a digital organization, so it has to be accurate and reliable, which can be accomplished by implementing MDM.
Common Master Data Management Sources
- Unstructured data
- Social media, email, etc.
- Transactional data
- Customer data, cross-channel interactions, etc.
- Hierarchical data
- Reference data
- Master data
- Customer data
- Supplier data
- Product data
What are some top use cases?
- Faster product launches
- Improving customer service
- Providing personalized marketing
- Supply chain efficiency
- Monitoring customer information
- Operational efficiency
- Brand consistency
- Customer journey analytics
- AI and IoT applications
- GDPR compliance
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