In this current era of constant, rapid data, organizations that hope to wield information successfully must have a strategy for data management. A well-defined Master Data Management (MDM) strategy establishes the framework for effective data governance and consistency. It ensures the accuracy, consistency, and integrity of critical data entities, and enables data-driven decision-making, streamlines processes, improves customer experiences, and supports regulatory compliance. By implementing a robust MDM strategy, businesses can establish a single source of truth and tap into the full potential of their data assets.

What is Master Data?

Master Data is a collection of data that is accurate, consistent, meaningful, and provides insights critical to the organization’s goals. It is used throughout all departments to ensure efficiency, informed decision-making, and alignment.

Master Data should be accessible to all stakeholders, and easily located and understood. By providing team members with the same, up-to-date, quality data, businesses reduce the risk of errors, miscommunication, misinterpretation, and redundant efforts.

If you’ve ever worked in an organization where you were constantly trying to track down data - and were never certain that the data you were receiving was accurately or consistently collected and analyzed - you can appreciate the significant impact true master data could have on a business’s bottom line.

Consequently, managing master data involves simplifying complex data sets, and combining that information into one centralized source from which organizations can review, analyze, and report. Often this involves integrating different data sources, databases, and other systems.

The Challenges of Managing Master Data

While that all sounds well and good, an overwhelming majority of organizations struggle with even just basic data management. In fact, according to a survey by Gartner, "organizations believe poor data quality to be responsible for an average of $15 million per year in losses." Other businesses may not even realize just how bad their data is. Gartner also found that nearly 60% of those surveyed didn't know how much bad data costs their businesses because they don't measure it in the first place.

And yet the potential of properly leveraged data is profound. Forrester found that "less than 0.5% of all data is ever analyzed and used" and estimates that if a Fortune 1000 business increased its data accessibility by 10%, it would generate more than $65 million in additional net income.

Identifying Master Data

So what qualifies as master data? Typically, master data is information that informs day-to-day business operations for multiple departments and stakeholders. It should be mission-critical information that is utilized over and over again.

This could be as basic as customer contact information. Some other examples of master data include:

Employee data
Product information
Supplier information
Location data

In today’s complex data world, truly useful master data often combines all of this information to give a comprehensive picture. For example, retailers may want to track not just customer contact information, but demographic information and purchasing information, all to determine buying preferences. This is called “multi-domain” MDM.

Best Practices for Managing Master Data

After you’ve identified your master data, you must make sure it’s decent data. A few best practices can help you to accomplish this.

Define Clear Objectives: Align the MDM strategy with the organization's overall goals, ensuring clarity on what needs to be achieved through effective data management.
Establish Data Governance: Implement robust data governance practices to define roles, responsibilities, and policies for managing master data across the organization.
Data Quality Management: Prioritize data quality by implementing data cleansing, validation, and ongoing monitoring processes to ensure accurate and reliable master data.
Technology Enablement: Select appropriate MDM tools and technologies that align with the organization's needs and provide scalability, flexibility, and integration capabilities.

Once you have these best practices in place, stick to them. True data management is an ongoing process, not a one-time initiative.

The Benefits of Master Data Management

There are a multitude of benefits to master data management. Some of them include:

Increased transparency and accountability - when everyone has access to the same data, it’s easier to ensure that stakeholders are in alignment.
Reduction in errors, misunderstandings, and misinterpretations - master data pulls key information into a single source of truth, reducing opportunity for mistakes.
Improved regulatory compliance and security - MDM initiatives can also aid efforts to comply with regulatory mandates, such as the U.S. Health Insurance Portability and Accountability Act, better known as HIPAA, and newer privacy laws, such as the EU’s General Data Protection Regulation (GDPR).
Lowered costs and increased efficiency - consolidating essential info saves time and money, reducing the amount of resources it takes to track and analyze data while equipping decision-makers with critical insights.
Improved customer experiences - better data means a better understanding of what customers want, what’s working and what needs improvement, and what opportunities exist to differentiate your brand from competitors.
Faster implementation and innovation - MDM allows for quicker insights, faster response times, and an improved ability to identify and act on emerging trends.

In Conclusion

A well-defined Master Data Management strategy is fundamental for organizations aiming to achieve data excellence. By implementing best practices, defining clear objectives, establishing robust data governance, and prioritizing data quality, businesses can optimize decision-making, enhance customer experiences, and gain a competitive advantage.

Interested in learning more about how to implement a master data management strategy for your business? Reach out to the team of experts at Object Edge for a free consultation.