K
Kathleen Martin
Guest
The lifeblood of business is data, and business stakeholders need at least a basic understanding of how their IT teams use and manage that data. There are three keys to understanding master data: what it is, what can happen if it’s badly managed, and the business stakeholder’s role in master data management (MDM).
The First Key: What Is Master Data?
Master data is the core data that is absolutely essential for operations within your enterprise, division, or department. Think of master data as the nouns representing key elements of your business.
In this example, the master data is in bold:
Buyer Name at Company placed an order for 20 of SKU XXXXX on MM-DD-YYYY and has been invoiced $10000.
Other types of data that are important for business leaders are transactional data and analytical data.
In this example, the transactional data is in bold:
Buyer Name at Company placed an order for 20 of SKU XXXXX on MM-DD-YYYY and has been invoiced $10000.
In line with the above examples, analytical data would be data that has been aggregated in order to identify patterns and trends of interest. For example, analytical data may comprise average order sizes for the company, seasonality of purchases, the regions where purchases are on average more than a certain dollar amount, and so on.
(NicoElNino/Shutterstock)
Because master data is key for many business processes and related IT systems, it needs to be managed and standardized, so it can be used seamlessly by IT processes across an organization. It also needs to be governed in line with risk management and regulatory compliance needs.
Customer, employee, or patient data may be master data, and privacy regulations like General Data Protection Regulation (GDPR) and Health Insurance Portability and Accountability Act (HIPAA) require governance and management of that data. Data about a business’s assets and locations may be master data, and will be needed to meet risk management policies.
Managing master data requires cross-functional collaboration across an organization, and business stakeholders must be part of those efforts.
The Second Key: What Can Happen If Master Data Is Not Well Managed?
If master data represents the most important aspects of your business, there are far-reaching consequences for it being poorly managed.
Challenges that arise with mismanaged master data include:
The First Key: What Is Master Data?
Master data is the core data that is absolutely essential for operations within your enterprise, division, or department. Think of master data as the nouns representing key elements of your business.
In this example, the master data is in bold:
Buyer Name at Company placed an order for 20 of SKU XXXXX on MM-DD-YYYY and has been invoiced $10000.
Other types of data that are important for business leaders are transactional data and analytical data.
In this example, the transactional data is in bold:
Buyer Name at Company placed an order for 20 of SKU XXXXX on MM-DD-YYYY and has been invoiced $10000.
In line with the above examples, analytical data would be data that has been aggregated in order to identify patterns and trends of interest. For example, analytical data may comprise average order sizes for the company, seasonality of purchases, the regions where purchases are on average more than a certain dollar amount, and so on.
(NicoElNino/Shutterstock)
Because master data is key for many business processes and related IT systems, it needs to be managed and standardized, so it can be used seamlessly by IT processes across an organization. It also needs to be governed in line with risk management and regulatory compliance needs.
Customer, employee, or patient data may be master data, and privacy regulations like General Data Protection Regulation (GDPR) and Health Insurance Portability and Accountability Act (HIPAA) require governance and management of that data. Data about a business’s assets and locations may be master data, and will be needed to meet risk management policies.
Managing master data requires cross-functional collaboration across an organization, and business stakeholders must be part of those efforts.
The Second Key: What Can Happen If Master Data Is Not Well Managed?
If master data represents the most important aspects of your business, there are far-reaching consequences for it being poorly managed.
Challenges that arise with mismanaged master data include:
- Business process inefficiencies. Master data redundancies and inconsistencies are not uncommon, but can lead to friction in the business processes that rely on master data. For example, if a customer account is part of the master data in a Customer Relationship Management (CRM) application, and there are separate master data for a customer account in your organization’s Enterprise Resource Planning (ERP) application, changes to one set of master data will increase the risk of errors that can lead to incorrect billing and unhappy customers.
