Why Your Business Needs Master Data Management
Despite data being largely regarded as a company’s most valuable asset, it can be unwieldy, and many businesses simply don’t have a good handle on it. Companies often employ multiple applications to store and manage data, many of which don’t share master data definitions and standards for the same entity, be it a customer, product or supplier. These companies are often at a disadvantage because they can’t create a single 360-degree view of key data assets — known as a golden record — across the enterprise.
For example: Without full and consistent knowledge of a customer across — or even within — business units, a company might try to upsell a customer on a product it already has. That identity confusion “undermines credibility and trust,” says Doug Henschen, vice president and principal analyst at Constellation Research.
Enter master data management, or MDM.
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What Is Master Data?
As a business seeks to unite and share data assets, it must first identify a core set of data that is crucial to business operations. This is known as master data — data that has the “consistent and uniform set of identifiers and extended attributes that describes the core entities of the enterprise including customers, prospects, citizens, suppliers, sites, hierarchies and chart of accounts,” according to Gartner.
What Is Master Data Management?
Once an IT team has identified this data, they can begin organizing it at a central point of reference. This is known as master data management, a business process backed by facilitating tools that aim to help resolve data confusion, such as errors, overlaps and redundancies. MDM processes, in concert with master data management tools, seek to facilitate a 360-degree view of data, arming a company with the ability to serve customers more efficiently, resolve questions more quickly, facilitate transactions with greater accuracy and generally improve the customer experience.
How to Choose a Master Data Management Tool
By taking an MDM approach and using MDM tools, IT departments can rationalize, improve and reduce costs associated with data migration and integration, says Kelle O'Neal, founder and CEO of business advisory and enterprise information management consultancy First San Francisco Partners. “From a value perspective, all these things help an IT department run more efficiently, with less cost for both people and systems,” O’Neal says.
According to O’Neal, a master data management tool must be able to do the following:
- Integrate data into a hub to simplify adding new sources of data
- Update what is considered a master record
- Understand, update and audit the business rules that create the master data
- Create alerts, communication and process or system updates based on changes in the master data
- Manage the operations of the hub from both a technical perspective and a data stewardship perspective
- Provide reporting so people can understand what is being mastered, why and how quickly
- "Unmerge” two records that have been combined as part of a process to create a golden record
MDM should also make it easy to share data out of the hub, so that companies and teams can more easily tap and use data.
“It is critical to be able to easily consume it via downstream systems,” says O’Neal.
O’Neal also advises that business processes need to pivot in order to take full advantage of mastered data. Each golden record, combined with transactional information, presents a way to tell the 360-degree story that is required for accurate data analytics and decision-making, she notes.
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MDM Takes Big Data to the Cloud
Like most everything these days, MDM solutions can take up residence in the cloud. Cloud-based MDM products offer businesses agility, elastic scalability and services-based integration, federation and orchestration for their data.
“Cloud-based MDM systems that themselves can work with REST [Representational State Transfer] APIs and cloud-oriented microservices architectures — capturing and federating master data out wherever it’s from or needed — are better equipped to deal with the needs of organizations that are deploying in clouds and using a mix of cloud-based applications,” says Henschen.
When it comes to using a true, multi-tenant offering from an MDM vendor — that is, a public cloud that hosts one business’s applications along with those of other companies on the same servers — companies should first consider how they are structuring their MDM initiatives. MDM in the cloud makes sense if the process a company takes to master data is relatively straightforward, mirroring the ways that other companies in the environment operate.
Given that it’s a hybrid world, O’Neal stresses the importance of confirming integration capabilities when considering cloud MDM: Is it easy to move data between an on-premises system or another cloud provider and the MDM cloud solution?
Strategies to Get Started with Master Data Management
So, where to begin? Business and IT leaders interested in MDM should start with a single domain and one line of business before plunging in with other data, Henschen advises.
“Move out from one line to tackle other lines of business on the same domain, then move into a new domain area and repeat,” he says, noting that it’s also important to take the time to train users and align processes to get the most out of these deployments.
It should also be noted that companies can tap MDM solutions for unstructured data as well. First San Francisco Partners already has seen companies create mini-MDM solutions within their data lakes to provide this context.
“Dealing with the unstructured and semi-structured data associated with Big Data is a cutting-edge area for MDM,” says Henschen, adding that this component can be put to work to help companies better understand customers and their attitudes about products and brands.
Going forward, it’s likely that MDM solutions will continue to evolve to help companies better understand their customers.
“As an industry, we continue to learn and take this learning from one practice area and apply it to another,” O’Neal says.
