What Is a Master Data Management Tool?

What Is Master Data?

Master data is the core data that is essential for running a business. Though the actual scope of master data can vary among businesses, master data examples generally include customers, prospects, suppliers, sites, company hierarchy, and account charts, with the potential for additional factors depending on the type of business. This data is critical to the health of the company, and it needs to be handled with the utmost importance.

In most cases, master data is owned by a partnership between the business and its IT department. This arrangement exists so that accuracy, uniformity, and data integrity can be maintained at all times. As a result, core business operations like marketing and product information management can run seamlessly at all levels of the company.

It’s important to note that although master data contains information regarding customers and products, master data is not considered to be transactional data. Master data exists at a level above transactions, so that the business as a whole can function.

What Do You Mean By Master Data Management?

Given the significance of master data, it’s clear that businesses need a reliable means to capture and manage this information. Today, this can be accomplished through computer software. A master data management (also known as MDM) solution is a program that centralizes all of the company’s information, providing a single source for all master data across the entire business. Using master data management helps companies to maintain streamlined functionality across all facets of their businesses.

One of the benefits of master data management is that it is the ultimate source of truth, going beyond product and transactional data to provide a full picture of the business operation. However, because of the enormity of the data collected, the initial process of using data governance tools can be a lengthy and comprehensive process. Since master data management comprises the entire enterprise — that is, every individual location facilitated by the company — the implementation of master data management can be a lengthy process.

Because of the extensive list of master data management roles and responsibilities, this solution is not ideal for some businesses. For example, marketing and sales teams may have an easier time implementing and using a product information management (PIM) tool, skipping many of the data governance topics that are not relevant to them.

What Are the Stages of Master Data Management?

Each individual organization will have their own master data management framework that works for their unique situation. However, there is a general master data management process that most businesses utilize for their implementation. These are the typical steps that most companies take as they incorporate MDM software.

• Define master data for your business. What is the core data for your business? What are the elements for decision making that can’t be lived without?

• Identify all sources for this master data. Master data is enterprise-level, so the data sources can be from all sides of the organization. It might even need to be obtained from external sources.

• Document which people (within your business and externally) create, update, and use this master data. Ensure that all aspects of master data are accounted for, and that there are defined processes for updating and utilizing this master data. Again, this may be internal or external.

• Collect and analyze all existing master data to better understand current data structures and major data discrepancies. Compiling master data in its current state will help you not only to account for all of the data sources, but will also highlight gaps in the data collection. Addressing these discrepancies will help you to get the full scope of your master data.

• Appoint master data owners. Assign individuals who will be solely responsible for each aspect of master data. This will create accountability and will help you to identify issues if the master data is incomplete.

• Create and implement a data governance program. Establishing a review process to ensure data integrity will provide a basis for periodic review and quality assurance for all that access this data.

• Establish the master data model for the entire business. When all of the enterprise data is obtained, consider how you’d like your master data to be consumed and utilized by users going forward. The decisions made here will dictate your master data model, which will ultimately inform your software choice.

• Evaluate and choose a master data management solution. Look at the various options on the market and determine which program fits best for the needs of your organization.

• Implement the new master data management solution and the new model. Import your master data into your solution, and begin the processes for keeping that data updated as time elapses.

• Continually review data governance, master data discrepancies, and opportunities for improvement. Devise a system that guarantees data accuracy, both now and in the future. Take extra care to assess the integrity of your master data in the early stages of implementation, so that any issues can be addressed immediately.

What Is a Master Data Management Tool?

Master data management tools enable companies to view all of their essential high-level data across the entire enterprise. Doing this typically requires the master data management system to link up with third-party sources to obtain the full picture of the company’s data. Master data solution implementation also requires businesses to assess the long list of considerations detailed above.

However, most companies don’t need to incorporate MDM platforms. That’s because MDM platforms are intended for very large companies, whose data is complex and hard to aggregate. Additionally, master data management companies require significant buy-in from both the business and IT, neither of which necessarily have the bandwidth to support a large master data system — especially when it’s not needed. The master data management tools list contains items that most businesses won’t ever use.

Instead of buying one of the top 10 master data management tools, small-to-medium businesses should look into solutions like product information management (PIM), customer relationship management (CRM), and product lifecycle management (PLM). These program types have a much smaller scope than what’s on an MDM tools list, making it easier for companies to get what they need. Better yet, they’ll spend less money, spend less time on maintenance, and they’ll get better performance. If your company is too small for an MDM tool, consider a smaller solution like a PIM that may better meet the needs of your business.