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Articles
Adopting Master Data Management Over Conventional Methods
Atul Patel
Atul Patel is the SAP MDM BD Manager for APA, based in Singapore. He is responsible for showcasing SAP MDM’s ability to provide a single version of the truth for customer, product, employee, supplier, or user-defined data objects as part of SAP NetWeaver. Atul has over 13 years experience in the software industry, all of which have been spent in key technology and enterprise applications software vendors in Presales, Business Development and Delivery/Project Management roles. Atul has a wealth of knowledge in Applistructure and is a thought leader in the emerging market of Master Data Management solutions.
Adopting Master Data Management Over Conventional Methods
Master data management is still a mystery for many. This article aims to clear the air by explaining what is master data management, the challenges and drawbacks associated with it, and why this is of strategic importance to CIOs.
Introduction
The subject of master data management has been around since the early days of computing. Over the last couple decades, however, it has largely been ignored by the industry, as they focused on sorting transactional data. This resulted in customers having to spend a large portion of their dollars for automated Enterprise Resource Planning (ERP) systems that store data in a relational database, while ignoring master data management. Now, however, owing to the increased pressure for corporate transparency, accountability and performance on an enterprise-wide basis, companies are beginning to look at master data management as an ideal solution for their worries.
What is Master Data?
Master data exists in every database throughout the enterprise, in the form of customer records, product records, supplier records, employee records, and so on. A simple way to define master data is as follows: any kind of reference data that you consider strategically important to the company can be considered master data. For example, if you are looking at improving customer service levels across the enterprise, then all the reference data associated with the customer (such as who is the customer, what did they buy, what are the contract terms they have with the company) would be considered master data. Such data helps businesses go a long way in improving customer service levels across the enterprise.
In other words, master data describes the key areas of your business. For example, customer master data would include the name, address, phone number and such, while product master data would include information such as product attributes and list price, and supplier master data would include parent entity, address and parts offered. This information is replicated over and over again in different systems, where errors can creep in and distort accuracy. Without a system for managing data, the situation could turn chaotic.
Why Master Data Management is Important
Cost is an important factor considering today’s management requirements of disparate and often disjointed master data. Integration and maintenance costs can result from sheer data volumes, inaccuracies and redundancies, as well as the effort required to provide all needed information as per master data object while ignoring over- and under-inventories. Similarly, significant costs are associated with unreliable reports, duplicate data and insufficient master data information, unsatisfactory information for procurement processes, and the high costs involved in generating consolidated reports.
Such situations warrant a solution that aggregates product information management, customer data integration, supplier data management and employee data, to provide a one-stop access point for all information needs.
Master Data Challenges
In the case of sales opportunites, lack of customer insight means you may not target each account with the right offer. In the purchasing department, you may miss opportunities to reduce procurement costs, owing to the inability to understand from whom and which products you buy worldwide, and also because the same suppliers and products may be classified in different categories [as they come from different sources], thus preventing easy comparison. Figure 1 shows the master data challenges faced by various departments in an organisation.
The challenge for organisations is to align business roles with the responsibility for maintaining specific master data domains, with IT providing the technical support for the underlying data resources and data models.
What to Look For in a Master Data Management Solution
Master Data Management consists of a variety of sub-solution areas such as Customer Data Integration (CDI) and Product Information Management (PIM). The key is also to align with enterprise investments and integrate pre-built applications like Customer Relationship Management (CRM), Service Resolution Management (SRM), Supply Chain Management (SCM) and Product Lifecycle Management (PLM) into the organisation, to enable better master data management. Other technology infrastructure components such as ETL (Extract, Transform Load) and Enterprise Application Integration (EAI) are also important as they fulfill the objective of being able to access relevant data, at the right place and at the right time.
Conclusion
Firstly, master data management problems should be addressed holistically. Companies should identify a platform that provides a solution to all its master data management issues. It is not advisable to use one set of solutions to organise a particular master data domain (customer, for instance), while looking at another solution for another domain (products, for instance). It is highly beneficial to leverage a single master data management platform to manage all sorts of master data. These benefits will range from the lowered costs of managing a single platform, to being able to reuse the manpower that had been previously devoted to managing copious amounts of data.
Secondly, you must evaluate how master data management solutions integrate with existing systems. Intuitive, native integration of the new and existing systems will result in long-term benefits for the business.
Thirdly, you must not underestimate the fact that implementing master data management solutions will change the way you do business. It is important to invest in proper data governance policies and procedures to enable efficient business processes. Further, it is advisable to establish a dedicated master data cell that looks into the process changes needed to implement master data management solutions.
Last, but not the least, it is important to ensure your business follows the best practices of business process applications. This will go a long way in reducing the time required to include new data management procedures into the existing framework, thus maximizing the business benefits offered by a successfully implemented master data management solution.
Master data management is still a mystery for many. This article aims to clear the air by explaining what is master data management, the challenges and drawbacks associated with it, and why this is of strategic importance to CIOs.
Introduction
The subject of master data management has been around since the early days of computing. Over the last couple decades, however, it has largely been ignored by the industry, as they focused on sorting transactional data. This resulted in customers having to spend a large portion of their dollars for automated Enterprise Resource Planning (ERP) systems that store data in a relational database, while ignoring master data management. Now, however, owing to the increased pressure for corporate transparency, accountability and performance on an enterprise-wide basis, companies are beginning to look at master data management as an ideal solution for their worries.
What is Master Data?
Master data exists in every database throughout the enterprise, in the form of customer records, product records, supplier records, employee records, and so on. A simple way to define master data is as follows: any kind of reference data that you consider strategically important to the company can be considered master data. For example, if you are looking at improving customer service levels across the enterprise, then all the reference data associated with the customer (such as who is the customer, what did they buy, what are the contract terms they have with the company) would be considered master data. Such data helps businesses go a long way in improving customer service levels across the enterprise.
In other words, master data describes the key areas of your business. For example, customer master data would include the name, address, phone number and such, while product master data would include information such as product attributes and list price, and supplier master data would include parent entity, address and parts offered. This information is replicated over and over again in different systems, where errors can creep in and distort accuracy. Without a system for managing data, the situation could turn chaotic.
Why Master Data Management is Important
Cost is an important factor considering today’s management requirements of disparate and often disjointed master data. Integration and maintenance costs can result from sheer data volumes, inaccuracies and redundancies, as well as the effort required to provide all needed information as per master data object while ignoring over- and under-inventories. Similarly, significant costs are associated with unreliable reports, duplicate data and insufficient master data information, unsatisfactory information for procurement processes, and the high costs involved in generating consolidated reports.
Such situations warrant a solution that aggregates product information management, customer data integration, supplier data management and employee data, to provide a one-stop access point for all information needs.
Master Data Challenges
In the case of sales opportunites, lack of customer insight means you may not target each account with the right offer. In the purchasing department, you may miss opportunities to reduce procurement costs, owing to the inability to understand from whom and which products you buy worldwide, and also because the same suppliers and products may be classified in different categories [as they come from different sources], thus preventing easy comparison. Figure 1 shows the master data challenges faced by various departments in an organisation.
The challenge for organisations is to align business roles with the responsibility for maintaining specific master data domains, with IT providing the technical support for the underlying data resources and data models.
What to Look For in a Master Data Management Solution
Master Data Management consists of a variety of sub-solution areas such as Customer Data Integration (CDI) and Product Information Management (PIM). The key is also to align with enterprise investments and integrate pre-built applications like Customer Relationship Management (CRM), Service Resolution Management (SRM), Supply Chain Management (SCM) and Product Lifecycle Management (PLM) into the organisation, to enable better master data management. Other technology infrastructure components such as ETL (Extract, Transform Load) and Enterprise Application Integration (EAI) are also important as they fulfill the objective of being able to access relevant data, at the right place and at the right time.
Conclusion
Firstly, master data management problems should be addressed holistically. Companies should identify a platform that provides a solution to all its master data management issues. It is not advisable to use one set of solutions to organise a particular master data domain (customer, for instance), while looking at another solution for another domain (products, for instance). It is highly beneficial to leverage a single master data management platform to manage all sorts of master data. These benefits will range from the lowered costs of managing a single platform, to being able to reuse the manpower that had been previously devoted to managing copious amounts of data.
Secondly, you must evaluate how master data management solutions integrate with existing systems. Intuitive, native integration of the new and existing systems will result in long-term benefits for the business.
Thirdly, you must not underestimate the fact that implementing master data management solutions will change the way you do business. It is important to invest in proper data governance policies and procedures to enable efficient business processes. Further, it is advisable to establish a dedicated master data cell that looks into the process changes needed to implement master data management solutions.
Last, but not the least, it is important to ensure your business follows the best practices of business process applications. This will go a long way in reducing the time required to include new data management procedures into the existing framework, thus maximizing the business benefits offered by a successfully implemented master data management solution.
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