Master Data Management (MDM) is a relatively new term for an issue that has been worrying organizations for years: the need to obtain and distribute consistent data through different systems, databases and departmental applications, overcoming technological and organizational barriers to obtain a unified data view across the company and even, by extension, its business environment (suppliers, partners, affiliates, etc.).
Although the problem is not new, MDM has very quickly become the main strategic focus for many organizations worldwide, as shown by the increasing number of papers issued about this subject, organizations and technology suppliers that work in it and analyst studies done on this new discipline. Proof of the way it has burst onto the scene is that, according to IDC, the MDM market is set to generate $10.4 billion in turnover around the world in 2009 and to grow at a rate of 14% per year—the only market to experience such fast growth in either the software or services area.
However, MDM is not a trendy acronym of the type that crop up now and then in technology circles, but a true change of paradigm that is here to stay and which will impact the way of approaching strategic initiatives over the coming years. In fact, the main motivations for adopting MDM involve improving a firm’s knowledge about its customers and how to retain them, unified management of the business risk, compliance with regulations, the integration of processes derived from mergers and acquisitions and the improvement of sales effectiveness, among other imperatives of today’s businesses. MDM can be defined as the discipline that makes it possible to manage master data within an organization (customers, suppliers, assets, products, etc.) in order to create a single reliable reference source that keeps quality and consistent data updated. MDM makes it possible to create a complete, updated and unified view on master data at any time throughout the data’s life cycle.
When we refer to customers, the master data per excellence in most organizations, we talk about Customer Data Integration (CDI), while when we refer to products, we talk about Product Information Management (PIM).
MDM is a basic principle that goes beyond simple data integration and standardization to obtain a true source of confidence in data, which can then be used to improve decision-making, operational efficiency and customer satisfaction and to generate new sources of income and profit, among other business and technology advantages. The main revolution involved with MDM is that data can be decoupled from applications to be syntactically and semantically brought into line with a centralized reference hub for distribution as a service to the initial applications or to applications other than the ones where the data originated. They can also be used to supply data warehouses for business intelligence or other analytical or transactional environments.
Because of this principle of “data as a service”, MDM is also linked to another strategy, i.e., SOA (Service-Oriented Architecture). Experts consider MDM to be a necessary step before tackling a SOA, given that one of the challenges still remaining for SOA is the need to firstly resolve data inconsistencies.
With MDM we remove data from their “black box” to place them at the management frontline and go even a step further strategically, using them to define policies, standards and processes that determine data use, development and management at the corporate level in what is known as Data Governance. Of course, as with most important projects, MDM requires a commitment from management and collaboration between the business and technology departments. This will certainly involve important challenges for organizations, as organizational and policy-based barriers are often even harder to break down than technological ones.
The time has come to consider data as a strategic corporate asset. As such, as with any other financial asset, it should be managed to stop it from deteriorating. Increasing the value of data will unquestionably increase the value of your business. In fact, to paraphrase the endearing character Buzz Lightyear from the film Toy Story, MDM will take us toward a truly comprehensive view of data and beyond!