Master Data Management – Why It’s Essential For Your Organization

What Is Master Data?

Master data is key information that is critical to the operation of a business. In other words, it encompasses the key business entities like customer, product, employee, vendor etc.

Master data should not be confused with transactional data or the data in a data warehouse.  OLTP takes care of the daily operations/ transactions of an organization. These are action details or in other words verbs like in grammar. Master data has all the business entities of an organization like customer, products, employee, location etc. These are like nouns in grammar. E.g. Employee works in location. Employee and Location make up master data whereas work details are stored in OLTP database. Master data is used by multiple transaction based applications in an organization and is in normalized form. A data warehouse stores the data in a de-normalized way with star or snow flake schema. This data is used for non-operational purpose to help in aiding business specific decisions. We will have to update the dimension tables daily based on updates from the master data.

Using Master Data In The Organization

Master data is used in numerous applications within an organization. Each application has its own database and the same master data is stored in multiple databases. Each application uses this master data in a different way and the developers building or maintaining an application are worried about managing their own data which is a subset of the domain rather than having a single version of the truth. This would lead to data being duplicated and inconsistent across different applications within the same organization. There are three common issues with master data:

  1. Data Synchronization: Since the master data is used by multiple applications, incorrect data can lead to undesired consequences and prove critical to the success of an organization. Say, for example a customer moves from one state to another and he updates the customer service department. But customer service does not update the marketing department and the accounts department. The marketing department would still send advertisements/ promotions to the old address thereby leading to a loss of advertising dollars. The accounts department would continue sending the bill to the old address and continue deducting sales tax for the old address instead of the new state thereby leading to legal compliance issues. Similar issues can arise when say a customer gets married and she changes her last name. It could lead to duplicate entries for the same customer with different names across different applications.
  2. Mergers: We see a lot of mergers and acquisitions in the corporate world. Each company has its own master data for customer, product etc in bits and pieces across its own set of applications. The same data could be present in both companies with different database keys. Say, for example we have the same customer, who is identified by his SSN in company 1. But company 2 does not have his SSN information. Also, his address could be different across different companies as one of them might not have updated their records.
  3. Building new applications: Companies are constantly adding new services and coming up with new innovative ways to serve their customers and capture a bigger share of the market. When this happens, they will have to identify the data that will be needed for the new system. But the data is spread all over the company in bits and pieces. So, it can be a nightmare trying to identify all the systems that have a subset of the data needed.

So, there is a need to collect, correct, merge and manage this high value data and ensure its quality and integrity so that there is just a single version of the truth. This will ensure that all applications in an organization have access to the most accurate data and be informed when it changes. There are many advantages of creating a centralized master data management solution. A company could send a single consolidated monthly bill for all the services provided to him. It will enable the company to have a better understanding of the customers’ needs based upon his purchases and have a effective targeted marketing strategy with promotions and product information. It will prevent sending the same information multiple times to the same customer. Since, there is a single version of the truth, it can prevent fraudulent reporting. Also, it provides the senior management with most accurate data on vendor and accounts helping them to make better business decisions on what extra incentives can be provided to a vendor based on revenue volumes.

Requirements For A Master Data Solution

A master data management solution accumulates data from the source application, consolidates and makes it available to other applications within an organization. It manages the common data and the applications that access it. Whenever, the data in an application changes, it spawns processes to accumulate the pieces of data and build a single unified version of the truth in a master data model.  It provides a single version of the truth for each subject area of a business like customer, product, employee etc. The key essentials for any master data management solution are:

  1. Identify all the data sources for the information you need and convert to a common format.
  2. Analyze the quality of the data and correct if required.
  3. Assemble this master list of data in a centralized database and share it. Provide access to new applications that would need this data.
  4. If there are existing applications that cannot be migrated immediately to the centralized database, then a trigger based mechanism should be set up to consolidate and update the centralized database whenever the data in an existing system changes.
  5. Whenever the master data in the centralized database changes, all the surrounding stakeholder applications would have to be notified.

For more information or to know how master data management can benefit your organization please contact