The phrase ‘Master Data Management’ sounds very ‘techy’ and complicated, but in simple terms it just refers to the management of your master data files. You may have a master data management system in-place already and not realize it. Even the most simple customer management systems can be considered master data management (MDM) – as long as all the necessary information is recorded and can be extracted from the same system.
By now, you are probably starting to realize how crucial a good data management system is. Think about what a nightmare it would be if your customer orders and returns were not handled in the same system. Sure, you would easily be able to figure out your overall net income minus returns, but imagine how hard it would be to deliver great customer service; and what about tracking inventory or product performance?
The best master data management systems offer you a way to form (and regulate) business rules and controls based on the data stored within them. Once you understand the methodology, the benefits of a Master Data Management method become obvious. These systems can help prevent fraud or critical business errors, but most importantly, an effective MDM program can help your company run more smoothly and efficiently.
It is important for small companies to be setup with a good data management system, but for large corporations, it is absolutely crucial. This is because larger companies tend to handle more, and more complicated, information.
When dealing with data management for large corporations, the biggest challenge comes when companies merge (or if one acquires another). Most likely, each will have its own MDM and the two will have to be merged. Normally, this problem is anticipated ahead of time and a database administrator is brought on to help with the merge. His job will be to remove duplication that has occurred as a result of the merger. However, because of the dependency of each company on their master data files (often they cannot run efficiently even for a day without them), usually the database administrator will only be able to complete a partial merge. Though merging databases can be tricky, it is not unusual for a large corporation to want to acquire a smaller company for the sole purpose of obtaining their customer database.
Most master data systems contain a few separate lists that are shared by several applications. You may have a Product (or Item) Master, a Customer Master, and an Account Master. It is important to properly manage these lists within MDM so as to avoid errors. Such errors may be leaving your company open to billing, shipping, and customer service headaches. Let’s not even think about the harm an error in an accounting file could cause. You could miss a billing cycle, or worse, have to pay a government-imposed fine for incorrect tax reporting. So, now that you know what master data management is, do you know if your company’s MDM is keeping you safe?