Understanding Master Data Management (MDM)
- By Ashwin Dedhia
Globalization. Intense governmental and regulatory scrutiny. Overwhelming competitive pressures. New technology advances. Today’s companies operate in a fiercely competitive, global marketplace where transaction speeds are measured in fractions of a second and continual change is the only sure thing. Further, ever increasing pressures to take advantage of the synergies and economies of scale generated by mergers and acquisitions have created a host of new management problems that were unheard of even 15 years ago.
Business data is the single most valuable asset an organization possesses. Not all data, but the core reference data that describes the fundamental dimensions of your business—your products, your pricing and contracts, your customers and your suppliers. Collectively known as master data, it is the information that drives critical business decision making. Yet for all of its value, problems with master data plague businesses daily, whether caused by incomplete data, incorrect data, inconsistent data or simply inaccessible data. So what is Master Data Management (MDM)? Master Data
Management is a process that spans all organizational business processes and application systems. It can provide the ability to create, store, maintain, exchange, and synchronize a consistent, accurate, and timely “system of record” for the core master data elements across disparate systems. It also can provide the ability to more efficiently make and manage changes to master data as the needs of the business change. Master data management (MDM) also is the directive to collect and clean this essential business data, and to make it accessible to all data producers and consumers—not just within the enterprise, but throughout the value chain.
What is Master Data and Why is it Important to Management?
Master data is data that is shared across systems (such as lists or hierarchies of customers, suppliers, accounts, or organizational units) and is used to classify and define transactional data. For example, a company may record the transaction of selling Product A to Customer X on 1/1/06 for $100. Taken as a whole, this is a single piece of transaction data. However, embedded in the transaction are various elements of master data like - Product A and Customer X - that help define the transaction and can be used to “slice and dice” the data for reporting purposes.
Master data is driven by business changes, for example a company adds a new product line; in contrast, transaction data is a record of business events, such as the actual sales of the new product line. Master data is required both for transactional systems that run business operations as well as reporting and analytics systems that provide information about the business.
Master data management (MDM) is not a new problem. But the management of shared data (such as organizational, customer, product, supplier lists and hierarchies) is receiving renewed attention in the marketplace. New technology solutions are appearing as master data, reference data, or hierarchy management.
The benefits an MDM solution can provide are directly dependent on the extensibility of its data model. Master data in a large organization can become exceedingly complex. Because every department looks at this data and uses it in a different way, the data model must be able to reflect these differences in order to offer effective business support.
Master Data Management (MDM) goes a step beyond On Demand Business data warehousing by creating authoritative sources of common reference data that can be used throughout organizational operations. The types of data targeted for this include data elements such as customer, product, and inventory. Enterprises often choose this common data because it is accessed frequently across many applications, and the consistency of the data is very important to the business. Creating these master data stores improves the consistency and reliability of information for everyone and allows new development efforts to reuse proven standard access mechanisms rather than recreate them.
View MDM as a lifestyle change rather than a crash diet
The path to master data management is unlike previous technology initiatives. While technology is a key enabler for MDM, it is only one piece of a larger picture. MDM is not a project with software that gets installed and then used.
It is an entire paradigm shift in how a business views, values and manages its core business data.
Posted on May 26th, 2008 by Ashwin Dedhia
Filed under: Emerging Trends
This article is good. You are correct that MDM is emerging trend in the DW and MI market. SAP coming up with SSA, microsoft aquiring zoomix, all shows the same signs. But in fact data management landscape in its own is very complex. Not just an MDM, but the basic lifecycle like identify sources, extraction, profiling, analysis, classifiction, enrichment and then data management, governance, SOX compliance everything comes in to picture. In fact one of my blog http://manageyourdata.blogspot.com I am discussing more about profiling and its approach. Once you are correct in basics, MDM is a way to go.