Disconnected, inaccurate, and unreliable data sets will have significant consequences for the business. Think: erroneous reporting that leads to misinformed decisions, failed business strategies, and lost revenue.
Implementing a master data management initiative helps organizations improve their data quality by centralizing, integrating, validating, and governing master data across all applications.
What is master data?
To borrow Gartner’s definition, master data is “the consistent and uniform set of identifiers and extended attributes that describes the core entities of the enterprise.” In other words, it is the core data that is essential to running business operations.
Master data can vary among and within industries depending on the business, analytics, and decision-making needs, but, in general, master data is categorized as being either traditional/operational or financial/analytical.
Traditional master data includes the datasets you would expect to generate from normal day-to-day operations, including customers, vendors, products, orders, and projects.
Financial master data, on the other hand, focuses on analytical data that is used to drive business intelligence. Financial master datasets include things such as hierarchy data and charts of account structures.
Both types of master data are essential to the enterprise, which makes master data management a critical business initiative.
What is master data management?
Master data that is inaccurate, inaccessible, and untrustworthy is not simply useless to a business—it's a liability. Building business strategies on unreliable data can create operational inefficiencies, financial inconsistencies, and legal ramifications.
To take and keep control of master data, many organizations are implementing master data management initiatives. Master data management is a dual effort between IT departments and the business to ensure shared master data is accurate, consistent, and uniform by enforcing governance and accountability across systems.
Although master data management is primarily technology-driven, a business normally takes the lead due to the many nuances in the data that require specific business domain knowledge.
The primary objective of master data management is to ensure the consistency and accuracy of all of the master data used for marketing, sales, supply chain management, financial reporting, and any other process that requires trustworthy information about specific entities. This is achieved by creating a single source of truth for business data that is accessible from multiple domains and systems.
There are four core pillars of master data management:
- Location
- Product
- Supplier
- Financials
Integrating management of all four pillars into one platform ensures your master data is accurate, consistent, and complete across your organization, upstream and downstream enterprise systems, and your partners’ systems.
Done well, master data management creates reliable, accurate business data that can be used to improve business outcomes by speeding up time to insight and increasing revenue growth. Master data management implementation also has a positive impact on operational activities by optimizing the supply chain, improving productivity, and increasing customer satisfaction.
What are 6 steps to kick-start your master data management initiative?
- Identify relevant data, business elements, and gaps in those business elements.
- Determine the quality of this data and how it currently varies across systems.
- Understand the level of organization you need to get from unstructured to structured data, for example.
- Decide which users need to have access to the master data and set security policies, roles, rights, and permissions.
- Initiate data governance policies to ensure all change requests follow a predefined process.
- Find a master data management partner you trust.
Discover the power of unified master data management and data governance.
Master data management is essential for accurate, complete, and consistent master data across all of your business and analytics systems. The quality of your operational and analytical master data impacts data-based decisions, innovation, customer satisfaction, productivity, revenue, and growth.
Implementing a master data management solution that also supports governance efforts will help ensure metadata changes in both your upstream and downstream systems are visible and validated so you have data you can trust.
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