Master data management is used to improve the outcomes of an organizations most critical business processes. By enabling organizations to optimize enterprise master data, MDM can help companies get the intended value out of these activities and tune them to become strategic differentiators. Most companies start to master data with a single domain, usually the data type they consider to be most critical to their success. For some, it is customer data. For others, it is product data. However, once their initial implementation is in place, companies soon realize they can achieve a significant increase in business benefits through mastering additional domains and the relationships between them.
The business case for most MDM implementations is driven by the business imperatives of corporate leaders whose operational processes are substantially compromised by poor-quality data. Through their MDM successes, these leaders have learned that mastering multiple data domains can help them meet more of their business needs. For example, identifying customer buying patterns requires the ability to master both customer and product data, while streamlining supply chain issues depends on access to accurate product and supplier information. By mastering multiple data domains and managing their interrelationships, companies will see shorter cycle times, reduced (or controlled) costs, improved marketing, and better forecasting, planning, and transactional and analytical outcomes, which translate into measurable revenue and margin benefits.
Master data is the data that is most important to an organization successfully reaching its goals; it is the building blocks of every critical business transaction. Master data is typically redundantly stored and managed within multiple back office, front office, e-commerce, and business intelligence systems. Without MDM, these critical data tends to stay out of sync because its not integrated.
All data that flows through an enterprise can be categorized into six different types: who, what, when, where, how and why. Master data is about who, what, when and where. Who data is about the parties of interest that matter most to a business or organization including stakeholders, benefactors, customers, suppliers, owners, providers, partners, etc. What data is about the things that an organization buys, creates, provides or sells. When data is about the overlays of time, such as calendar years (which differ by culture and include cultural, religious and governmental holidays.) and time periods specific to an organization (fiscal year, product release schedule, marketing calendar and calendars for markets that an organization sells into). Where data includes locations in space, such as where people and organizations are located; where products are manufactured, shipped, sold, stored and inventoried; and the distribution locations and delivery addresses where they are shipped and used. When data is only mastered by a few organizations, because most companies rely instead on core functions within their applications and databases to properly tag events with dates and times.
Some organizations will get more value from mastering some kinds of master data, and others will benefit from mastering others. A shipping company, for example, gets far more value from mastering location data than a company that sells services over the Internet, which may care more about when data so it can time online promotions more effectively.
Whether theyre actively managing them or not, companies rely on understanding multiple master data domains and the relationships between them to successfully manage their business. Commercial enterprises derive substantial benefit from knowing about their customers, contacts, products, locations, licenses, suppliers and the relationships between them. Therefore, it is essential that organizations manage the integrity of that master data. Similarly, it is important for health care providers to master their patients, providers, treatments, facilities, labs and tests data. In fact, most organizations are best served by mastering who, what, when and where data types discussed above, but they also must manage the interdependencies between these domains.
What do we mean by the interdependencies of master data domains? Lets consider product data (what data) as an example. Product master data doesnt exist independently from other kinds of master data. Products exist for a period of time (when data), and have specific calendars associated with their creation, public introduction, marketing literature, first shipment, campaigns, market withdrawal and obsolescence. Physical products also have ties to various locations (where data). They were manufactured at a certain place, inspected or tested at another, and packaged, shipped, distributed and sold at other locations. When a company sells a product to a customer (who data), they want to know where and when that sale took place, where the product was shipped or downloaded, where it was installed and any conditions for its use. If product master data is integrated with time, location and customer master data, companies will benefit from better forecasting and planning, reduced costs and better margins.
Space and time data combinations are pervasive, but there are also other combinations of master data that are common in organizations and across many business processes. For example, a manufacturing company has supplier data (who), part data (what) and assembly location (where) data that exist in numerous systems and should be mastered. However, these data are naturally interdependent, which is where multidomain MDM really starts to add value: suppliers dont exist independently of what they sell, and their manufacturing and shipping locations are integral aspects of supplier data. Parts and components dont get purchased unless they are used to create something (which has its own bill of materials and interrelationships with other parts, components, assemblies and finished goods) during a specific period of time, to be produced and managed at specific locations. During the procurement cycle, the purchasing manager may add, cancel or modify contracts (another multidomain artifact), which will impact associations between suppliers, parts and components being purchased from them, manufacturing and delivery locations, and other data. If all of this associated data is not mastered, the overall integrity of a manufacturers procurement processes will be affected. Mastering multiple data domains will enable a manufacturer to plan better, reduce cycle times and control or decrease costs, which can translate into higher revenue and margins.
Multidomain MDM can also be helpful in law enforcement. For example, a police officer (who data) gets notified on the radio that there is a code violation (what data) happening at a specific location (where data) at a particular time (when data). The specific code informs the officer that there is an armed robbery in process and it may even include instructions on how to proceed. For this incident, the master data domains involved are the location or address, the robbery event that has happened, the parties (who data) involved, which include the officer, suspects, witnesses, victims and perhaps an organization, most likely a store or bank, where the incident occurred. In addition, there are potential weapons and vehicles (what data) involved, which will have registration numbers and license plates.
All of these data elements exist around a single event, and create a very complex combination of master data domains that can be immediately brought together and managed at one point in time. If these master data domains are not managed, the ability to correlate events across towns, similar events, suspects, known associates, vehicle registrations, etc. are hampered, putting law enforcement at a disadvantage in their role of protecting citizens, neighborhoods and communities. The benefits, if multiple domains are managed, are not necessarily measured in financial terms, but instead in how the technologies will increase the protection of communities from harmful people and organizations.
In the financial world, accounts are the association between individuals, households, organizations (trusts, boards, companies), portfolios, products, instruments, holdings, locations, policies, balances and calendar periods. If any of these master data domains are inaccurate, the consequences may be dire for the account holders, participants and institutions. Not only must the individual data domains be managed, the interrelationships between them also must be governed to complete business transactions and meet governance, regulatory and compliance demands. Financial companies that leverage multidomain MDM to know their customers better and offer them more comprehensive products and services can reap many benefits to revenue and wallet-share.
Like single-domain MDM, multidomain MDM provides business benefits to operational business transactions and increases the quality of analytical applications. The following are some examples of the transactional and analytical benefits of multidomain MDM.
Consider the supply chain management example previously mentioned. Multidomain MDM enables tactical processes, but strategic decisions will also benefit. Tactical activities might include checking on parts availability, delivery schedules, compliance and other operational measures. Strategic business issues require a manufacturer to take greater control of its vendor and supplier relationships to optimize costs and meet production requirements and demand forecasts. For example, the company may need to measure and compare suppliers contractual compliance in order to choose which of its suppliers are most profitable to do business with. Comparing suppliers involves measuring the costs and benefits of supplier networks against prices, lead times, volume requirements, shipping and other qualities of service metrics. This strategic process entails ensuring that each transaction is tied to the best supplier, for the right products or components, at the most advantageous lead times, prices and fulfillment schedules. If demand changes due to calendar cycles economic, marketplace or competitor issues, manufacturers need to predict the impact of these changes and be able to quickly respond by selecting the vendors that will contribute the greatest value in terms of helping to increase revenue and margins.
Multidomain MDM can also be effectively applied to marketing analytics. Most commercial enterprises need to constantly analyze the effectiveness of their marketing campaigns and plan new ones to increase sales. However, this analytical use case is only half the battle. In order to select the optimum promotion or campaign for a specific transaction, companies also need to be able to ascertain, in real time, who a customer is, what products or licenses they own or have owned, the status of their account relationships, and what relationships they may have with other influential customers. This process requires interaction among four master data domains (location, customer, product/service and time). If these four domains are presented together for analytical purposes, the marketing department can more easily identify the appropriate targets for specific promotions or campaigns, which will result in a reduction in costs and an increase in sales.
Building on Value
Multidomain MDM provides organizations with the data they need to better manage relationships with customers, suppliers and partners and to better understand the complexity of the goods and services they provide. The result is more substantial business benefits than result from only mastering a single data domain. By providing who, what, when and where master data to the entire organization, companies can more easily support and improve their most valuable transactional and analytical business processes. The results are tangible improvements to bottom line costs and top line revenues as well as many intangible benefits.
Organizations that decide to master more than one data domain are best served by deploying an MDM architecture that has a coherent, unified approach to dealing with all master data types, rather than having inconsistent approaches to each one and a profusion of data hubs based on disintegrated technologies. Once you decide on the domains of highest value to your organization, youll need to wrestle with how to implement your multidomain MDM solution(s). These topics will be covered in future articles.
Register or login for access to this item and much more
All Information Management content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access