Though master data management has been around since the middle of the 90s, it is often overlooked as a business opportunity by CEOs and others in C-suites. One of the reasons why it happens is because senior management doesn’t know what it can yield to business and how it works. Synopps Master Data Management experience shows that some introduction is always needed for the highest level of corporate hierarchy across all company’s functions, from financial to production, except IT.
What Is Master Data?
Master data (MD) is what an organization deals with in its everyday routine and with the help of what it deals with. This is the backbone information, also called non-transaction data, a foundation upon which the business lies. These are typically assets, products and services, licenses, customers, locations of production units and offices, inventories, supplies and suppliers, etc.
For example, a patient of a hospital, his (her) name, address, and other information are master data records. The location of the hospital, suppliers of the organization, staff, equipment also relate to MD.
What Is Master Data Management (MDM) In Brief?
Master data management is how an organization governs all master data flows: how it is captured, stored, delivered, analyzed. In an ideal world, MDM is a set of rules that regulate all the processes of handling master data. This set reflects the philosophy and business goals of the organizations. For instance, for the hospital it’s extremely important to comply with national legislation, not to let chaos with patients’ names happen as each of the patients has individual treatment. So the hospital should be on alert with personal data protection as a data leakage would be a very sensitive matter.
For a candy factory, it would be important to have a clear picture of customers to understand their needs and cost-cutting management to be able to keep prices low.
Basic for all master data strategies are keeping data on order: updated, accurate, non-redundant, and consistent across an organization.
We said “in an ideal world” assuming that the situation we described is not what always happens in the real world. Yes, it doesn’t as most entities don’t pay enough attention to building out a system to govern their master data. They leave it to ride and rely that separate departments are able to handle data they need to work and that they do it properly. This neglect leads to numerous negative effects. So a short version of an answer to the question in the headline sounds as “what you can expect from master data management is the absence of pains that would hurt profits and overall productivity of your organization”. Below is a synopsis of what you can protect your company from.
Why Should You Practice Master Data Management?
Speaking broadly, the absence of MDM or lack of it is a barrier to a clear vision of how business processes really run. Of course, a dirty car windshield doesn’t stop your driving, but reduces your control and increases the risk of an accident.
So where you’ll probably run into problems or what opportunities you will not be able to take advantage of?
Inaccurate records are the biggest pain associated with master data. Inaccuracy is a broad term that relates to inconsistent, outdated, insufficient information contained in different domains across an organization. Messy data significantly lengthens the time needed for writing reports, calculating expenses and makes it much more difficult targeted serving of customers. A typical negative situation that repeatedly occurs at companies are controversial data in reports submitted to government watchdogs or contacting a wrong client due to different data in various departments.
Redundant data emerges when each organization’s unit collects and stores information individually as it’s shown in the examples above without reference to a so-called golden record, or a single source of truth, a database that contains the right version of information. Why is it a problem apart from the fact that it causes inaccuracy and incompleteness? Redundancy of records means redundancy of costs as each bit of data requires resources — time, storage capacity, electricity, etc. Duplicates create “information fog”, a pile of data which is difficult to optimize and streamline. And the bigger business, the more data is stocked, frequently with an exponential increase.
Technical advancements of the XXI century cannot help an organization as artificial intelligence, automation, big data all work with information. Organization’s records are raw materials for “production facilities” of these smart hi-tech technologies, so poor quality records will get an entity to a poor quality outcome.
What Does MDM Do?
Master data management implements procedures on capture, storage, and sharing information throughout an organization. It can come in various forms which depend on a corporate structure, business goals, and what’s the state of records at the moment.
Before the design of the procedures, some operations are conducted. First of all, it is data cleansing that removes duplicates, then data enrichment that makes records complete and sufficient, and the establishment of the single source of truth. These three steps produce what constitutes an extended answer to the question in the headline:
— enhanced productivity;
— enabling AI, big data, robots, etc.;
— flawless and streamlined information flows within an organization;
— reduction in risks of regulatory non-compliance;
— direct savings on data storage;
— direct time savings on dealing with master data.
And the list goes on. Synopps’s experience says its length depends on both the company’s business task and the energy the company’s staff, including senior managers, are ready to devote to master data management.