The concept of Master Data Management at its core feels like a very simple one. If you ask ay business leader if they want their data in one easy to access location, then the answer is always yes! However, keeping your data in one easy to access spot is not always as easy as it may seem.
First, let’s define exactly what does the term master data mean? This is usually used to describe information in a business system that is the backbone of the system and isn’t transactional based data. This master data will feed information into those transactions.
Examples of Master Data:
- Product Information
- Bills of Material and related Production information
- Supplier information
- Customer Information
If Master Data is so straightforward, then why does managing it become such a hassle in most cases? For one, there is often multiple systems involved, especially when it comes to Customer data and it can be a challenge to synchronize those systems. For example, customer data may reside in your ERP (Enterprise Resource Planning) system, in your CRM (Customer Relationship Management) system and potentially on your website as well. Often one of those three systems will be identified as the system of record and becomes the “master” to the other systems. But other times organizations will try to synchronize all the data and can end up with a mess.
One of the other issues with managing Master Data is it often requires a deep understanding of the information to appropriately administer it. Like in the example of product and production information, that data requires someone who knows a lot about the product and manufacturing process to setup and maintain that information. If just anyone tries to manage that data all of the sudden you have inaccurate information and your costing can be wrong, pricing can be wrong, and you may lose visibility into what your profit margins are.
So with all this complexity around the management of master data, what can your organization do to make certain that your data is clean and up to date?
- Create a Master Data Management strategy
- While seemingly simple, coming up with a standardized strategy for managing your data is critical to the success of keeping it organized and clean. As a company it is critical to identify what pieces of information are important and should be mandatory when creating new data. This is going to be things specific to your industry and specific to how you need to later report on information. For example, if you need to break down sales by the SIC code of your customer base, then you need to have a spot to put this data in your system and enforce its entry when new data is entered. Knowing what data you need and then enforcing the entry of that data is the first step in effectively managing your data.
- Identify the system of record
- When dealing with multiple disparate systems it is important to identify which one of those systems should maintain the data and then feed the other systems. Which system should be the master system really depends on the nature of your business. If you are a manufacturing company and the majority of your sales are business to business, then the ERP system is usually the best spot to maintain customer information. However, if you are predominately an e-commerce business then it will make more sense to maintain the data on the web side and sync back to the ERP. So there isn’t one catch all answer, but it is important to map all of this out as a business.
- Create and maintain standards for managing data
- The biggest challenge in maintaining master data is keeping the integrity of the data as time passes and people change positions and different people become responsible for managing the data. When initially creating your master data strategy an important part of implementing that strategy is going to be to create written standard operating procedures for keeping that information up to date. It’s one thing to get clean data initially but it is another to keep that data clean moving forward.
While there are many other nuances to managing your data, the most important part is to have a plan, execute that plan and then stick to that plan.