I will start with another assertion every business has master data. Master data or key reference data is that which defines or refines enterprise data transactions. It is almost always cross-functional and is the corporations reference or gold-standard information about its key entities (i.e.: actors in the business process)
The complexity of IT systems has caused IT to become reactive rather than proactive. This I believe is because of a number of reasons but primarily:
- Silod solutions, dbs and applications with trapped business rules
- Multiple sources of information and no single source of the truth
- No Architectural Blueprints to the enterprise
Master data is the critical information that provides context and integrity to transactional data in the enterprise. Some of the typical characteristics of Master Data that help understand it better are:
- Master Data usually contains hierarchies that provide ways to aggregate transactional data, e.g., customers roll up to households, time periods that roll up to weeks, months, quarters, etc.
- Master Data typically changes less frequently than transactional data and share a one-to-many relationship, e.g., one claim may have multiple payment transactions
- Master Data is almost always cross-functional, e.g., the list of customers that is used by Marketing, Sales, Finance etc.
What is Master Data Management one may ask? Master Data Management [MDM] is a set of processes (and technologies) that govern the creation, persistence, manipulation, usage and quality of master data. A properly implemented MDM solution clearly identifies the people, including their roles and responsibilities, to ensure that the goals of the solution are met. MDM is not a technology but a process.
Why is MDM important? Without master data, the transactional data of the enterprise lacks context and integrity, which are essential to running a business and maintaining competitive advantage. I have heard that statistically, about 40% of enterprise data is Master Data; therefore, it addresses nearly half of the data-related issues and concerns faced by any organization
I have heard people in the industry confuse MDM with Data Governance [DG]. DG creates accountability for the data within an enterprise whereas MDM creates the single source of truth to use with transactional data. Allow me to shed some more light:
- Data Governance is the development of a data strategy and implementation of a quality and control program. It defines the goals and objectives of organization (treat data as an asset of organization MDM is a goal but a subset of the corporations data). Data Governance creates the policies, procedures, process (What, Who, When, Where) and provides structure, communications, and accountability along with implementation / conflict resolution (the How).
- MDM brings together single, consistent view of data that may reside in multiple source applications (CRM, ERP, financial applications, Web servers) by maintaining a single source of critical data. One can then cross-reference and synchronize the data across all other mission-critical applications - critical business data would then flow (usually in real-time) to multiple applications for single view of customers, suppliers and other data.
I will expand upon this in my next blog