Demystifying MDM - Master Data Management
There are multiple divisions or domains in an enterprise such as Invoicing, Marketing, Sales, Finance, Human Resources, Procurement, Manufacturing, Supply Chain and so forth.
Each of these domains typically uses one or more IT systems and applications to record their transactions.
Transaction volumes vary from a few hundred data records each day to a few million data records each day.
To complicate things further, the different IT systems are not integrated or designed to share data with each other or update one another in real time. They function as independent data silos.
If the day to day transactional data is not captured accurately and managed efficiently, it can lead to some serious troubles for the business.
For example: There is a customer, SARAH WALKER, who purchases a laptop computer from SMART COMPUTE INC.
Information about the same customer is entered by three different IT systems in three different ways as illustrated below.
Each of these domains typically uses one or more IT systems and applications to record their transactions.
Transaction volumes vary from a few hundred data records each day to a few million data records each day.
To complicate things further, the different IT systems are not integrated or designed to share data with each other or update one another in real time. They function as independent data silos.
If the day to day transactional data is not captured accurately and managed efficiently, it can lead to some serious troubles for the business.
For example: There is a customer, SARAH WALKER, who purchases a laptop computer from SMART COMPUTE INC.
Information about the same customer is entered by three different IT systems in three different ways as illustrated below.
As evidenced above, there is no uniformity in how each division captures information about the customer.
This raises some serious doubts, problems, and questions:
This is reason enough for enterprises to ensure they Manage their Master data by implementing MDM.
Let's illustrate this with the same example:
The laptop computer purchased online by Sarah Waters of Manhattan was instead delivered to Sarah Walker, also of Manhattan.
From the business' perspective,
This raises some serious doubts, problems, and questions:
- Are Sarah Walker and Sarah Waters the same customer?
- Or is Ann Walker the same as Sarah Ann?
- How is she related to Judy Walker also from NY - 12046?
- Is she her daughter, mother, sister or totally unrelated?
- Is 100 Main Street, the same as 100 East Main Street?
This is reason enough for enterprises to ensure they Manage their Master data by implementing MDM.
Let's illustrate this with the same example:
The laptop computer purchased online by Sarah Waters of Manhattan was instead delivered to Sarah Walker, also of Manhattan.
From the business' perspective,
What actually happened |
Impact on Business |
|
1 |
Initial delivery truck /fuel surcharge |
Increased Cost |
2 |
Sarah Walker is unhappy that her laptop did not reach her on time |
Poor customer satisfaction |
3 |
Sarah Waters is upset about being Invoiced for an item she didn't purchase in the first place; it's unlikely that she will return to SMART COMPUTE INC. in the future |
Poor customer retention |
4 |
The cost of re- routing the laptop to the right customer |
Increased cost |
5 |
The wasted time of a customer service representative who works to resolve this mistake |
Inefficient business operations |
6 |
The lost time of the truck driver was wasted |
Increased cost |
7 |
Smart Compute INC.'s Billing department and Invoicing department are wasting their time and effort trying to reconcile the wrong Invoice and re-issue the Invoice to the right customer |
Delay in closing books |
8 |
Since the business does not really know their customer Sarah Walker, they are unable to target her household for future demographic specific marketing campaigns |
Missed opportunity for cross sell, upsell, bundling |
Master Data Management (MDM) is a concept designed to avoid business scenarios such as the one illustrated above.
MDM leverages the information asset of an enterprise and packages it in a way that the enterprise stands to gain from it,
by reducing costs, increasing efficiency, improving cross sell and upsell opportunities, providing enterprises with better customer insights, and so forth.
MDM leverages the information asset of an enterprise and packages it in a way that the enterprise stands to gain from it,
by reducing costs, increasing efficiency, improving cross sell and upsell opportunities, providing enterprises with better customer insights, and so forth.
Business Perspective
MDM is a strategic and foundational initiative to support mission critical business operations by offering uniform and
trusted data across the enterprise. It enables enterprises to decrease costs, increase efficiency in operations,
improve customer satisfaction, increase customer retention, allow targeted marketing campaigns to capitalize on
upsell, cross sell and bundling options, ensure compliance with government and other regulatory authorities and so forth.
MDM is a strategic and foundational initiative to support mission critical business operations by offering uniform and
trusted data across the enterprise. It enables enterprises to decrease costs, increase efficiency in operations,
improve customer satisfaction, increase customer retention, allow targeted marketing campaigns to capitalize on
upsell, cross sell and bundling options, ensure compliance with government and other regulatory authorities and so forth.
- MDM empowers business in making correct decisions based on accurate data
- MDM improves business operation by ensuring availability of uniform, trusted data across the enterprise.
- Provides business a 360 degree view of key master data like Product, Customer, Contracts etc.
- MDM leverages key business domains such as:
- Customer Relationship Management (CRM)
- Enterprise Resource Planning(ERP)
- Item and Inventory Management
- Order Management
- Supply chain
- Manufacturing
- Human Resource
An Analogy to explain MDM
Imagine there are 10 people in a room. 1 American, 1 Japanese, 1 German, 1 Indian, 1 Chinese, 1 Greek, 1 Italian , 1 Mexican, 1 Ethiopian and 1 French. Assume that each of these people speak and understand only one language - their own. If these ten people are in 1 room and try to communicate with each other in their own language to solve a complex business problem, it would be impossible. Now imagine, you add to this room just 1 INTERPRETER who is a certified language expert in each of these 10 languages. Suddenly, the idea of the 10 foreigners working together to achieve a common goal is very possible and as easy as pie. The Interpreter stands in the middle and translates, orchestrates and moderates the conversation and soon the mission is accomplished. In this analogy - MDM is the certified interpreter and the different IT systems and applications in the various divisions of an enterprise are the 10 foreigners.
The image below illustrates this.
The image below illustrates this.
MDM is a centralized application that delivers pristine enterprise master data.
This enables management to make accurate and quick business decisions based on data they can trust. MDM provides a 360 degree, consolidated view of a customer or product, across an enterprise in real & near-real time to the subscribing systems in support of their business processes. It is backed by governance and rich data services that perform data cleansing, enhancement, cross referencing, matching, de-duplication, hierarchy management, security and synchronization across enterprise applications. MDM provides the foundation for implementing system process flow. Examples of Master data include Customer, Product, Vendor, Employee and so forth.
This enables management to make accurate and quick business decisions based on data they can trust. MDM provides a 360 degree, consolidated view of a customer or product, across an enterprise in real & near-real time to the subscribing systems in support of their business processes. It is backed by governance and rich data services that perform data cleansing, enhancement, cross referencing, matching, de-duplication, hierarchy management, security and synchronization across enterprise applications. MDM provides the foundation for implementing system process flow. Examples of Master data include Customer, Product, Vendor, Employee and so forth.
What is Master Data ?
Master data is defined as the key business data such as customers, products, and suppliers which are critical for day to day operations. Master data is shared across many business domains. Transactional data does not alter Master data definitions, and Transactions such as Order Creation, Invoicing and Billing cannot be performed without master data. The definition of Master data is subjective and each enterprise should be free to define master data depending upon their industry, division, and nature of their operations. For example: Product Number may be considered the master data of a manufacturing enterprise, but to a Service Consulting Firm, Employee Skillset may be their definition of master data.
Why enterprises need MDM: the top reasons
- No single source of truth exists since Master Data is updated by different source applications such as CRM, ERP, Billing and so forth, whereby multiple versions of same data are stored across different silos by different business units.
- Duplicate versions of the same data are stored by enterprises. According to TDWI, data duplication costs enterprises US$ 600 billion annually. In fact 20% to 30% of enterprise data records are duplicates.
- Inconsistent customer and product hierarchy exist - this affects financial reporting, loss in upsell and cross sell opportunities, and derails targeted sales campaigns.
- Inconsistent reporting and analytics results in poor business reports. This affects financial projections and key business decisions.
- Sales and finance data do not reconcile, impacts closure of books, increases risks of violating compliance and missing deadlines.
- Numerous applications perform the same operations across different business units: redundancy, burdened IT infrastructure.
- Cloud MDM avoids the need for multiple powerful and expensive servers with high capital and maintenance cost.
- Compliance and governance rules are unable to be enforced.
- Master data is not secure, data is accessible and editable by anyone.
- Uniform Data standards are unable to be enforced.
- Information management is lacking.
- Unable to use social media analytics and trend about a customer due to bad data.
Types of Data
There are many kinds of data such as:
- Transactional data
- Meta data
- Big data
- Reference Data
- Analytical data
Master data acts as the foundation upon which all the above types of data and their many sub-divisions depend upon.
This is illustrated in the diagram below.
This is illustrated in the diagram below.
Master data is essentially the information asset of an enterprise. Out of all the above kinds of data, master data is the key. It is the foundation without which a business cannot operate. Other types of data depend upon master data. If master data is inaccurate it has a domino effect and taints the data in every domain that it touches. Master data is essentially the information asset of an enterprise. Therefore in order to create and maintain its business edge, a business needs to successfully manage its master data.
About Us
Enterprise Technology Solutions LLC. is a Texas based company, offering cutting edge Master Data Management Solutions through Research, Software Products, Services, and Support. Our flagship product, iClassicMDM™ is ideal for enterprises of all sizes.