The Business Value of Master Data Management
Businesses, both small and big, have a lot of data associated with many aspects of the operation. Inefficient data management practices lags business growth due to unreliable data being provided thus limiting its potential to make key decisions based on insights and anticipate any future changes. Data management has evolved to being one of the key management aspects of any business. In a business, data changes over time: acquisitions and corrections are being made in multiple entry points for products, customers, employees, vendors, and so on. Master data management (MDM) stores all the data in a single system and synchronizes data acquisitioned from several source systems and provides most accurate, timely and relevant version of truth about essential business entities.
Implementation of MDM ensures that a singular version of truth is maintained for all data thus reducing redundancies. In addition, using MDM to focus on critical data subsets ensures that business decisions based on them will have accuracy and reliability. Some of the questions that support business decisions based on data are:
• What business opportunity/problem are we trying to solve?
• What questions do we need to answer to solve the problem?
• What data do we need to answer the questions?
• What data is important for to maximize profitability?
• What data do we have?
• How can data help differentiate us in the market?
Such decisions based on unreliable data will inhibit business growth and profitability by creating inefficiencies in supply chain, sales, marketing efforts, and customer loyalty among others. Making effective decisions based on data gathered and analyzed; monitoring the results and refining when necessary will enable competitive operation and achievement of organizational goals.
MDM employed in an organization in addition to reducing data errors, increases reporting accuracy, improves product and brand management and provides advantages of data driven decisions. Businesses that are evolving as silos have each department focusing on specific problem. A well governed MDM system will ensure that each department will have a more holistic perspective focusing on overall organizational goals. Incorporation of MDM practices will increase profitability of a business because each data entity relating to the business will be taken into account to measure business performance and make key decisions that determine the prospects of the business success.