A critical piece in managing your business data is the so-called “golden record.” That would be, according to TechTarget, “a single, well-defined version of all the data entities” in your business ecosystem.
Another name for the golden record is “single source of truth.” That source is where everyone in your organization can go to get a consistent answer or set of facts to run the business.
Shakespeare said it best in the Merchant of Venice: “All that glisters (glitters) is not gold.” So all that data you collect from everywhere, all the time, has to be purified, synched, and molded into a single controlling record for each of your business categories—in other words, mastered.
About this Post
In this post, we will describe how data mastering:
provides a consistent, central view of mission-critical data used by all your teams based on the same information
consolidates, bypasses, and avoids multiple versions of the truth gathered from various sources and stored as “fool’s gold” in silos across the organization
is categorized and stored where needed most—in the domains that comprise your business (customers, products, suppliers, etc.)
In support of the preceding, key points in this post will:
describe the purpose of master data management (MDM)
outline the five advantages of MDM
provide an example of MDM
highlight the set of tools used for MDM
What is the Purpose of Master Data Management?
The purpose of master data management is contained in its definition. MDM is a technology-enabled discipline where the business and its IT resources work together to ensure:
data uniformity and accuracy
accountability of the organization’s MDM assets
To enable that technology, master data management:
selects the best data, based on rules to build a golden record and then associates an ID to the record
applies or establishes rules that affect matching and merging the records
groups the records and applies the rules that merge records to determine a golden record.
There are many facets of MDM, which is why many businesses struggle to implement a strategy successfully. The system has to be flexible to start small and expand as you have more resources, money, etc. Generally, implementing MDM is an iterative process that systematically infuses more and more trust in the master data. It is essential to review and measure your MDM strategy as your business evolves, so it is also a never-ending process.
The 5 Advantages of Master Data Management
1. MDM Reduces Your Workload
With master data management, the master data is typically collected and updated at an organizational level. This eliminates the need for individual departments to collect & maintain that data.
MDM also streamlines the addition of new systems that contain master data. For example, if you purchase a company that maintains similar master data, you can more easily integrate that data into the existing applications, reporting, and analytical systems.
2. MDM Improves Data Quality
Where individual departments maintain their data silos, MDM resolves duplication of data. The outcome is consistent results in terms of reporting and cross-functional processes.
3. MDM Improves Decision-Making Accuracy
Company-wide decision processes depend on consistent and up-to-date data. MDM helps executives, senior management, and other employees make informed and fact-based decisions.
What does it cost your company when it makes a wrong business decision? Unfortunately, business graveyards are littered with examples of bad business decisions that cost billions or ended in bankruptcy or dissolution. Bad data costs U.S. companies an estimated $3.1 trillion per year, according to IBM. The costs of faulty data are many: inaccurate insights, wasteful investments, lost productivity, and ineffective marketing campaigns.
4. MDM Reduces Time to Market When Implementing New Applications and Systems
Mastering data reduces setup and preparation when implementing new applications and systems. MDM eliminates the manual process of validating master data for each new application by connecting to the master data directly. This means the information is uniform and streamlines the process of adding additional systems/applications.
5. MDM Supports Data Compliance and Governance Processes
Data compliance and governance are vital aspects of successful MDM. MDM is part of the complex solution to data compliance and governance. It does that by working in sync with the data governance policy the business has put into place by managing the data's integrity, security, and consistency.
Master Data Management Example
One use case for MDM would be when a business stores customer information in multiple systems. For example, customer records may have different attribute values like names/phones/addresses/titles.
The rules that define automation are set up in advance and, as previously mentioned, used only once by all the organization’s applications and systems. The first step would be to apply business rules to match and merge customer data to a single ID per customer.
MDM is a way to automate the matching and merging of data. Trying to do all that manually would be daunting, if not impossible.
The Tools of Master Data Management
MDM is achieved with a set of tools that will:
acquire the data to be mastered
cleanse the data
match and merge the data
Tools available can handle all aspects of MDM or offer more of an a la carte option. To choose the right tool for your business, you should work with a partner who understands your business's particular needs and how you use your data to provide best-practice insights into data management.
There are different tools, such as on-premise MDM, MDM in the cloud, and MDM as a service. Each of these master data management tools has different implications for licensing, how data moves into the system and other factors that need to be evaluated to choose the right one for your business. The compatibility of the MDM toolset with your existing infrastructure will be a consideration when selecting the best MDM tool.
Key Takeaways and Summary Points
Data is an organization’s most important asset. When consolidated and matched accurately, solid gold data can reveal opportunities, risks, and areas where the business can be improved. It can be your golden record—the single source of truth available to everyone in your organization.
Ensuring good quality data is becoming more critical to differentiate your organization. According to an Aberdeen survey, organizations that successfully generate business value from their data outperform similar companies by 9% in organic revenue growth.
Companies are facing an increasing number of data sources. Fragmented information from social media, mobile devices, the cloud, and other data sources can become difficult to manage and pull insights from.
The challenge is building and maintaining a trusted source. Critical data assets related to products, customers, suppliers, vendors, and employees cannot be analyzed without strict rules and management. With master data, organizations can control and manage key master data entities scattered across different applications and databases.
Finally, data is the backbone of a digital organization. Company data must always be accurate and reliable. You can accomplish this by implementing a Master Data approach for all your critical data assets.