Thanks to master data management, there is now a more efficient way of storing and presenting data. Eliminating costly losses has enabled businesses today to focus on marketing and operational strategy activities. This is a critical advantage especially because of major mergers and acquisitions taking place in the corporate world.
- In the previous decade, Gartner forecast that worldwide master data management (MDM) software revenue would reach $1.9 billion by 2012.
- There was a 21% increase in revenue generated from 2011 to 2012.
- The market grew to $3.2 billion by 2015.
How Does Master Data Management Benefits A Business Overall?
Every standard organization has departments and units set up for the effective functioning of the corporate entity. These sub-levels have various categories of teams designed to achieve specific goals for each department.
A few of these teams include the marketing team, the sales team, the information technology team as well as the research and development team. All these teams interact with the customer either directly or indirectly.
In the course of interaction with the customer, the teams must gather and maintain data collated from the customer. This vital data is to enable that functional unit discharges its duties effectively. The downside of this process is that redundancy is inevitable, due to data repetition and unused data lying fallow.
One of the benefits of master data management is that it removes the data redundancy. It also ensures the data is in a single central location.
Master Data Edits
The process of hosting and maintaining records from many sources by various organs of a company is very challenging. This is because data changes or data updates take place in isolation within a particular departmental unit separate from the others.
Unfortunately, what this results in is data discrepancy within the same organization, as changes or updates made do not reflect across the board. Functional unit heads depend on data to make business decisions, however, such data must be credible.
Business decisions made based on faulty or inaccurate data could have catastrophic consequences for a business. This could be as bad as revenue loss to the tune of millions for the company.
The only way to avoid this danger is to have credible, accurate and updated data records. Master data management addresses this by affecting a general edit that reflects at every single point.
Useful and Effective Data Analysis
You cannot over-emphasize the importance and integrity of data records in an organization. Data that is to be credible must accurate, explicit and up to date. This is because the quality of business decisions made is a direct reflection of the quality of the data presented.
Inaccurate analysis carried out on inaccurate data will give out wrong results that will not be useful and will prove ineffective. The solution or the way out of this undesirable outcome is master data management.
One of the key benefits of implementing master data management on your data records is a useful and effective data analysis.
Key Data Goes In
One of the major challenges businesses face today is the issue of information overload. There is so much data gathered from various sources by several departments for differing reasons.
Usually, the large volume of data collated has to do with the tasks and goals of individual departments. The executive arm of the company, which is the most powerful decision-making organ and final authority, determines company policy.
In order to do this, the middle management cadre must brief the executive. The managers involved in this exercise must support their positions using verifiable data. What this means is that the huge volume of data must be filtered or streamlined. Master data management makes this possible by yielding only data that is useful and relevant.
Business operations are part of the vital processes that make up the smooth running of an organization. However, business operations require information if they are to be both effective and efficient.
In order for a business to function properly, the data gotten from the various functional units must not only have a verifiable source but must also prove to be authentic.
Benefits of Master data management helps you as a business manager coordinate all your data sources into one key node.
Therefore, since personnel in charge go to great lengths to ensure the key data node is credible, master data management becomes the company’s global authoritative data source.
One of the key issues about data is its integrity. Companies rely heavily on data to make daily business decisions. These business decisions often have monumental consequences. This is because the decisions often determine if an organization will make a profit or a loss.
It can determine if there will be a rise in revenue or a drop in revenue. In addition to this, some of the data collated also captures details about competitors. This is important because it helps an organization carry out an accurate SWOT (strengths, weaknesses, opportunities, threats) analysis.
The competition falls under the threats grouping because success by a competitor results in that competitor capturing a larger chunk of the market share. What this means is increased revenue for the competitor and decreased revenue for your company.
Therefore, the integrity of the data must not be in doubt. A key characteristic of data integrity is data consistency. What master data management does is to ensure your data is consistent. If your data is consistent, it means it is reliable, it enhances the rate at which work progresses within your department and even company-wide.
Business today goes on virtually at the speed of light, in the sense that, information is generated rapidly and decisions are taken rapidly. Furthermore, you must also take cognizance of the fact that the world is now a global village.
What this means is that by virtue of the internet businesspersons can now interact across localities, countries, regions, and continents. A vast majority of these business interactions take place without the people ever getting to meet each other physically.
Another factor in business that has weighed in on transactions is the proliferation of multiple business platforms. In the past business took place via physical meetings set up between interested parties, but the arena is now different.
Several platforms are now available and have been set up for business purposes. These include the physical space, cyberspace, and the cloud. Benefits of Master data management guarantees data availability across all these platforms.
Several data management techniques exist. The sole purpose of these mechanisms is the efficient and effective management of data. Corporate bodies the world over invest heavily in data.
This is because credible data is virtually the lifeblood of modern-day businesses. Any company that lacks data cannot have the required perspective it needs to make accurate business decisions.
A company’s data stockpile has to undergo several operations and procedures. A business does this exercise in order to maintain its data integrity. This activity covers data usage access lists, data availability, and data maintenance as well as data storage. Data flexibility is far greater in master data management than for others.
A company’s data repository is part of the key assets a company possesses. Therefore, there is a need for a high level of security. Hackers can find their way into a company’s infrastructure and steal valuable data records.
The data records could include and cover anything ranging from sales figures, units of production records, personnel records (which would be an invasion of their privacy), and market surveys as well as designs for upcoming prototypes.
In the process, and usually, to cover up their tracks hackers tend to introduce worms and viruses into the system. This often results in the corruption of vital data or outright data loss.
Central administration of resources in master data management makes it much simpler for you to back up your data.
Increased Usability and Business Efficiency
Data management software is vital for the smooth and successful running of a business. Therefore, it is important to design it to be as user-friendly as possible.
All the various departments of a business concern, its teams as well as all cadres must find the master data management benefits package easy to use and deploy.
Every business wants to operate in the most efficient way possible and all companies want to be as effective as they can be in their service delivery.
Benefits of Master data management creates the possibility of attaining this objective by making data easier to use thereby enhancing business operations.
Access Based on Roles
One of the benefits of master data management is the capability and versatility of the software package. It is possible for you as the administrator to set permissions on the system.
What this means, is that master data management empowers you to manage company data in a very big way. You can confer certain privileges and rights on company personnel based on cadre, management status, level of responsibility and functional role.
Consequently, you can grant or deny access to certain individuals depending on their clearance level within the company. The upside of this is that only information specific to the personnel’s job role is provided thereby enhancing the security of the system as a whole.
The goal of any organization is to become more efficient therefore; you have to eliminate waste and losses. The goal of hackers and rogue entities, on the other hand, is to corrupt and steal data.
This results in data not just been corrupted but also sometimes being inaccessible. Such data is useless to the organization and represents a loss of man-hours put in managing the data as well as a loss of revenue.
Data integrity must always be maintained as it is a key requirement, which enables personnel to get their work done. Consequently, you must remove corrupted data. Master data management purges your data pool of such thereby enhancing productivity and improving efficiency.
Eliminate Poor Quality Data
If the data you have in storage is obsolete, inaccurate and unverifiable, it is of poor quality. You cannot base business decisions on unreliable data because that would result in flawed decisions. Furthermore, the company revenue would lose revenue, which is undesirable.
Therefore, the only way to avoid this is to ensure your data is of good quality in terms of reliability. What master data management does is to pool all your data banks into one central location. This central location is accessible to all relevant parties, which are the company’s functional units.
However, in order for this to become workable and meet up to the required standards of quality, you must work on the data. One of the benefits of Master data management is to first secures your storage, updates it and purges it of poor-quality data.
The entire concept behind master data management is the centralization, security, and storage of data banks. The outcome of having better quality data is of better quality decision making. The functional units depend on the central pool as a final authoritative source.
This central storage is accessible whenever resources are required with access granted based on privilege levels. One of the benefits of master data management is that you can take advantage of pooled resources from other business units within the organization.
The result of this is that you have better comprehension and an improved grasp of what your solution offerings would look like. The insight gained from marketing surveys carried out by the marketing team can be of immense benefit to the sales team. The outcome is improved decision-making.
Superior Regulatory Compliance
Every industry in the modern business world has a regulatory body, which is an organ of the government. This government agency has the power of oversight, regulation as well as a sanction in case of companies that contravene the law.
In the same vein, all duly registered organizational entities have certain standards imposed on them by the regulatory body to which they must adhere. These cover the purchase of operational licenses, payment of dues and observances of strict operating standards.
Creating, organizing and maintaining a centralized pool of data brings a unique advantage to the business. You can easily track your level of compliance with the regulatory standards defined for your industry. It is relatively easy for you to meet up with and keep to expiry dates before the renewal of licenses etc.
In a corporate organization, several business relationships exist between the customer and the various departmental teams of the company. A few of such relationships include the customer – sales team relationship, the customer – marketing team relationship, the customer – support team relationships, and the customer – customer care team relationship.
These are all strategic customer relationships, which must be cultivated and maintained. The reason why it should be is that without customers no business can make sales, without sales there is no revenue and without revenue, there is no profit. Any business that does not make a profit will eventually die off.
All these strategic customer relationships generate valuable data. It is important to secure the data obtained in a central pool after collation. This location is accessible to the various arms of a company on demand.
What master data management(1) does is to grant you an integrated view of the association that exists between the various strategic customer relationships. This perspective helps to improve the quality of the business decisions that you make.
What are the biggest master data management challenges?
One of the biggest challenges you face with master data management is stakeholder engagement. It is important and critical for you to involve relevant stakeholders. Most of the time activities that take place in the course of implementation are at the back-end.
This means a lot of work that done is not usually visible to the majority of the other teams. Consequently, personnel sees it as an activity, which falls within the responsibilities of the IT team and outside their sphere of influence.
Therefore, you must embark on an educational process for cross-functional team members of other business units. You must ensure you enlighten them about the benefits of master data management.
If you must adopt, retain and sustain master data management within your organization, you must get the executive to come on-board. This is often a major challenge for administrators.
You need the executive to sponsor and support the asset you have acquired in totality. In order for you to achieve this, you must find a way to convince the executive about the viability of the system.
Furthermore, the executive must also see what benefits the company stands to gain from the utilization of the software. The only way to do this is by putting forth success stories that were direct outcomes of implementing the asset.
In addition to this, you must involve them in the process of integrating master data management software with other CRM systems.
Input of Irrelevant Requirements
Another challenge you may encounter, is the input of irrelevant requirements, into the master data management. In order to get the MDM asset up and running certain parameters must be set up to ensure it functions optimally.
It is important that only relevant requirements that are key attributes of the data be included in the setup. If other irrelevant parameters get in, it would impair the functionality of the system.
Consequently, this would lead to wrong conclusions based on the data, which would result in bad decisions. These may be very difficult and costly to invalidate in the future.
Lack of effective data governance
It is a mistake to assume that master data management alone, as a form of technology is sufficient to drive a company’s business. Actually, the asset will only output maximum yield if it customized to deliver to standards determined by the specific needs of your organization.
What this means is that master data management will not succeed alone purely as a technological solution. It must be simultaneously defined and driven by the business objectives of the company.
This is a major challenge that you will likely encounter. Consequently, there is a critical need for effective data governance.
Getting appropriate tooling in master data management is also a common challenge. It is essential that you get this right from inception. However, you may be wondering how to make the right selection.
What criteria are you to apply in making a selection? What features are you to look out for in a tool? Can you choose just and every tool that comes your way? Some of these kinds of questions may run through your mind.
The following should serve to guide you in making the right choice. First, you must clearly define the requirements of your organization. What are the current needs of the company? What are the future needs of the company? Try to make projections for the future in terms of expansion and growth.
In addition to this, you must closely examine your organizational vision and mission statement. It is imperative you ensure that projections for future needs as well as plans align with your company’s vision and mission statement. Finally, you must define the purpose and goal of the asset you want to acquire.
Master data management requires a master data model. This master data model will require a clear-cut definition. This can be challenging because it may be unclear at inception.
Furthermore, whatever model you finally decide on must address your company’s unique requirements. You will need first-tier master data and first-tier metadata as well as second-tier master data and second-tier metadata.
Then you have to overlay the model you define with all the layers of master data and meta-data obtained. The goal is to simplify the integration process.
Complex current situations
In business, companies plan for growth because it is expected and desirable. Growth means expansion, more personnel, more fixed assets as well as more real estate in terms of land acquisition for branch and regional offices abroad.
Growth also translates to the acquisition of more systems to enhance the running of the business. This automatically means the store of data grows almost exponentially with each system acquired.
However, this situation poses a serious challenge as it creates an overlap of the data. You must find a way to address this challenge because it leads to complications in master data management.
Talent and knowledge
Master data management is critical to the effective operation of today’s modern business systems. It goes beyond just technology, plans, and designs and is so important that it has actually become the lifeblood of business concerns.
Human capital is still the most important resource in an organization because personnel is still the brains behind systems. Furthermore, people with proficiency and capacity are still a key requirement for the business to flourish.
Therefore, the best way forward is to apply human capital to master data management. This will require you to fuse human skills and experience to build the unique kind of system you desire. This means you must assemble a specially handpicked team into a task force uniquely suited for the job.
Setting the standard
It is extremely difficult setting up standards in master data management. This is probably the most difficult challenge associated with it. The standards can only be binding if all the constituent business units of the organization mutually reach an understanding.
The standards to adopt must align with organizational objectives. In addition to that, all business units within the company must be capable of implementing it within the parameters of their departmental goals.
Go back to start
Many administrators have a common difficulty in companies worldwide. The challenge is one of knowing where to start with master data management as well as how to start the implementation.
What you should do is to go back to the drawing board and itemize a procedure to follow. You must ensure your preparations are adequate and you have all the necessary resources in place.
This will serve as your blueprint or guide for implementation. Therefore, establish a point of origin and kick-start the process from there.
Master data management is the epitome of global best practices in the industry. It allows for the implementation of diverse architectures, platforms, and applications.
It is advisable to harness the power of this valuable asset as it reduces your cost overheads appreciably. This is desirable for every business: increase profits and cut costs. Master data management can make that happen for you.