Running head: MASTER DATA MANAGEMENT
Master Data Management: A Boundless Solution for Data Uniformity
Michelle Israel
Abstract
Due to the recent emphasis on regulatory compliance, businesses across various industries are beginning to understand the importance of data quality and its vast effect on a
company’s performance. In many cases, master data is one of the key assets of an
organization, and is often shared across several different applications in a system. The lack of accurate and consistent information has become a strategic barrier at the enterprise level, and creates functional limitations on the applications containing master data. Master Data Management (MDM) is a solution that creates a uniform view of the master data in an organization. This paper explains the concept of MDM, benefits and limitations, and how it can be implemented in a business environment.
Every organization possesses a central system or a collection of software systems that have a list of data shared and used within the company. There are essentially five different types of data in an organization: unstructured, transactional, metadata, hierarchal, and master. The most critical type is the company’s master data. Master data are the
critical nouns of a business and generally fall into four groupings of people, things, places and concepts (Article 3, page 2). Master data is often one of the primary assets of a
company because it is data pertaining to the key business objects in that organization. It can be described by the way it interacts with other data. It can also be described by the way it is created, read, updated, deleted, and searched. The more valuable the data element is to the company, the more likely it is to be considered a master data element. The
identification and management of a company’s master data is an important process that directly affects business practices in an organization.
A common barrier at enterprise level is lack of consistent and accurate data and information. Since many companies frequently undergo distress from dealing with
regulatory compliance and consistent reporting, maintaining a high-quality consistent set of master data for an organization has quickly become a necessity. The systems and processes required to maintain this data is universally identified as Master Data Management.
Master Data Management (MDM) is defined as the technology, tools, and processes required for the creation and maintenance of consistent and accurate lists of a company’s master data (Article 3, page 9). MDM provides an access point to the consistent views of an organizations master data. It is a way to automate all data management and details in a centralized manner so that an organization can focus on their core objectives and business
activities. MDM essentially provides the most trusted and unique version of a company’s master data and standardizes it across all platforms. The primary goal and purpose of Master Data Management is to provide synchronization to the most critical elements of data in a company. It is imperative that master data maintains a high level of quality because master data is often used by multiple applications within a company. An error in master data can cause errors across the board in every application that uses it (Article 9, p 220). For example, an incorrect address in the customer master might result in orders, bills, and marketing material sent to the wrong address. Equally, an incorrect price on a product master could result in a marketing disaster, and an incorrect value in a
prescription master could result in severe illness or death of a customer. For all these reasons, Master Data Management has reached beyond the benefit of adding value to a company, and has become a critical need. Master Data Management will help organizations deliver considerable savings and efficiencies along with revenue growth opportunities.
Components of Master Data Management
The current literature for MDM identifies five fundamental components that should be established during the initial start of an MDM initiative, specifically: master data
structure, master data systems architecture, master data governance, master data
processes, and master data quality (Article7, page 3). These components are encompassed in the main task of master data management in order to establish a complete view of the data for distributed systems (Article 8, page 756).
The first component of a well-rounded approach to MDM is master data structure. Establishment of the master data structure means there should be an agreed upon
understanding of the definition for each data object, and a model in place to identify the relationship between those objects (Article 7, page 3). Consider an organization that has master data spread across several different application systems. Employees and staff must agree on what exactly constitutes a vendor or a partner, and how to resolve any
disagreements that may arise regarding a distinction between those meanings. The component of master data structure helps create a consistent standard and use of master data throughout the entire organization. The second component is described as master data system architecture. The master data system architecture deals with the design of sufficient systems to support each step within the master data object lifecycle which includes the creation, storage, access, archiving, and retirement. This component also addresses master data security aspects like retention and privacy. The third component involves master data governance. Master data governance requires the definition of a clearly communicated mission statement with the assembly of organizational structures that are suitable for the organization (Article 7, page 4). It involves well-defined roles, activities, and responsibilities. The fourth component is characterized as the master data processes. Master data processes describe and prescribe how the primary activities of creating, using, maintaining and archiving master data objects have to be executed (Article 7, page 4). These core master data processes need to be engrained into the daily business processes of an organization. They also outline how communication support and training for MDM have to be conducted.
