What Is a Master Data Management System?

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by Lumavate | Last Updated: Feb 18, 2024

Many large organizations find it challenging to manage their ever-increasing database effectively. To address this problem, companies have employed innovative software solutions called Master Data Management (MDM) systems to coordinate diverse data from multiple source systems into a more unified and cohesive form that can be easily handled: master data. This master data provides a more centralized view of the organization’s data entities to drive efficient data control, leading to an overall increase in the efficiency of business operations. Before we delve into MDM systems, let’s explore what master data entails.

What Is Master Data?

Master data is an essential type of data that is kept to help with the management of databases in MDM systems. It encompasses information consistently utilized and referenced during database management, forming an essential part of everyday business operations. With this standardized and unified data format, organizations can rectify duplicate customer records, redundant information, and mismatched data, granting users access to comprehensive business data without the need to manually enter disparate data entities.

It is important to note that master data extends beyond transactional data. For instance, while the quantity of a product purchased in a specific transaction constitutes transactional data, the broader product and customer details are part of the master data. Master data examples in master data management systems include:

What Is a Master Data Management System?

Many organizations rely on data processing systems and analytics software to organize their business data. For the majority of companies, comprehensive data management can be efficiently handled through specialized solutions like Product Information Management (PIM) tools, Customer Relationship Management (CRM) software, and Product Lifecycle Management (PLM) platforms, which typically offer sufficient functionality for managing core business data. However, as the organization grows, so does its need for a more elaborate system to handle its master data. This is where Master Data Management systems come in.

An MDM tool is a software solution designed to facilitate managing master data entities within an organization. It acts as a centralized hub where master data is defined, stored, maintained, and synchronized across various systems, applications, and business processes. Sometimes, these tools often integrate with various third-party software systems that help store large amounts of master data. Popular master data management examples include Microsoft, Informatica MDM, PiLog, TIBCO EBx, Profisee, and Pimcore.

What Is the Purpose of an MDM System?

MDM solutions help various departments and applications within a company by consolidating the entirety of the data offerings into a singular source. Below are several benefits of Master Data Management:

1. Enhanced Data Quality

By streamlining data and removing erroneous entities, MDM applications allow users to operate with current and higher-quality data, enhancing their usability. Also, when master data is stored in various locations and formats, there is overall decreased efficiency because inconsistent data entities impede the efficiency of processes that depend on master data. MDM ensures uniformity and consistency across all data, ensuring the effectiveness of business processes.

2. Single Source of Truth

Decentralized data applications often suffer from redundancy, leading to confusion and errors not only in the master data process but also in other dependent business processes. MDM establishes a single data source, eliminating data duplication and thereby enhancing business process efficiency.

3. Enhanced Data Compliance

With data regulations and policies tightening efficient data storage and management are imperative for businesses handling data. MDM reduces the likelihood of security breaches and regulatory non-compliance, thereby mitigating potential penalties and reputational damage

4. Improved Data Accuracy

MDM rectifies duplication and inconsistencies in data, mitigating the risk of data inaccuracy. Given the ripple effect discrepancies in master data can have on various business areas, ensuring accuracy at the master data level is crucial. MDM also structures data appropriately, averting confusion during data retrieval.

5. Informed Decision Making

MDM provides a comprehensive view and better control over the organization's data, enabling informed decision-making. Access to updated, quality data assists managers in formulating effective strategies that benefit leadership, senior management, and middle management.

6. Facilitates Easy Data Edits:

Without MDM, data recorded in multiple locations results in isolated changes and significant data inconsistency. MDM ensures that changes made to master data reflect across all relevant data destinations.

7. Security Management

MDM allows companies to restrict access to master data changes to specific individuals, safeguarding data from misuse and ensuring consistency across the organization.

What Is an Example of an MDM?

There is a wide array of Master Data Management companies producing quality Master Data Management tools for your organization to choose from. Some of these Master Data Management example companies include Stibo Systems, Informatica, PiLog MDRM, and many others. Additionally, some Product Information Management solutions, like Pimcore and Syndigo, also incorporate MDM functionality.

It's important to note that MDM platforms are not required for every company. Typically, only the largest enterprises with highly intricate data requirements should contemplate implementing an MDM solution. For most companies, specialized solutions such as Product Information Management tools, Customer Relationship Management systems, and Product Lifecycle Management platforms offer enough functionality to manage their data efficiently.

Top 10 Master Data Management Tools

As a bonus, here is our top 10 MDM tools list:

  1. Stibo Systems Multidomain MDM

  2. Informatica MDM

  3. PiLog MDRM


  5. Profisee

  6. SAP NetWeaver MDM

  7. IBM

  8. Reltio

  9. Oracle

  10. Microsoft

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