Wondering how will master data management benefit your business before you sign off an MDM plan?
Written for decision-makers, this guide provides a comprehensive breakdown of the core benefits of MDM, categorized into three key areas: business & operations, data infrastructure, and organizational efficiency.
Let’s jump right in.
..But First, Practicing Caution
If you read all the articles, advice, and whitepapers available on Master Data Management (MDM) benefits, you’ll find that most of them paint a positive, rosy picture of a successful MDM strategy. But reality is way different. We’re not going to lead you into believing that the benefits of master data management far outweigh the risks or the chances of failure. Truth is, master data management is only beneficial if the MDM system implementation is done right.
It is one thing to see an MDM solution on paper and quite another to implement the master data management process. Usually, you’ll end up with an abandoned MDM project out of sheer frustration over the increasing cost, wide scope of work, and the incessant need to keep up with rapidly changing data needs.
So before you give a go-ahead on that MDM strategy, we urge you to consult with an MDM expert (who can understand your business objective, challenges, and expected outcomes with MDM), and truly assess & identify if the MDM strategy presented by your team highlights benefits relevant to your business and organizational structure.
Related: 2022 Master Data Management Guide
Before discussing the benefits of MDM, it is important to address some common questions that decision-makers always ask. Hopefully, this will help give you a holistic view of the importance of MDM in your organization.
What is the Value of Master Data Management?
Collecting, recording, storing, and holding on to data is no longer enough.
You could have a huge data infrastructure but if that data doesn’t paint a reliable picture of your customers, products, or business outcomes, it is not usable.
The value of master data management lies in the fact that it offers a framework for the management of your data and provides your teams with the ability to get a 360-degree view of your data.
When you’re competing with data, you need access to reliable data. And that’s what an MDM implementation gets you – data that can be reliable for business.
Why is Master Data Management Important in an Organization?
To understand why master data management is important in an organization, you need to know what master data is and what value it holds.
Master data is the most valuable information your company holds. It’s the record of your customers, products, partners, and the very heart and soul of your business.
But therein lies the rub.
Companies have records scattered across dozens of data sources. For example, you could have customer data streaming in from the internet, from store sales points, from vendors, and partners, from mail campaigns, and so on. While this data is invaluable, it is unsorted, unstructured (or semi-structured) raw data that needs to go through a transformation process in order to become, ‘master data.’
This master data should show you answers to critical questions like:
- Which customers are the same person?
- Which of the customers belong to a household data set? (members of the same family)
- Which of the duplicate customer’s email address (work email/personal email) to use?
- Which of the customer’s phone numbers are to be used?
- What kind of services, products, or campaigns must be relevant for this customer?
- What is the lifetime value of this customer?
All these questions need to get resolved so you can get a consistent customer profile for strategic business decisions downstream – and – you can only answer these questions if your data is sorted, which is why you need an MDM strategy. It is in literal terms, the management of valuable information using technologies that can clean, dedupe, match, and sort your data so your teams can get access to data for decision-making in real-time.
What Does Good Master Data Management Entail?
We mentioned how bad MDM plans can derail all your efforts, leading to project abandonment. But then what is good data management and how do you ensure success?
Here’s a quick breakdown.
|Good Master Data Management||Bad Master Data Management|
|Follows and implements data quality standards as a priority. Data must be complete, accurate, consistent, duplicate-free, clean, and usable before it can be turned into ‘master data.’||Does not prioritize data quality matters. They are swept under the rug or ignored in a bid to chase a grander picture of systems, technologies, trends, and massive rehauls.|
|Including only data that is directly tied to business outcomes and processes that affect the organization.||Including data blindly such as reference data (such as the zip code of an office branch) in the fear of losing out on data.|
|Starts out small and grows in scope over time. It needs time, money, and patience to implement.||Starts out with a bang and hurrying through the process to meet unrealistic timelines and demands.|
|Clarity on what is expected out of the implementation. KPIs are defined and 360-degree views are created to support defined business objectives.||Unclear goals, with unrealistic KPIs and implementation that do not take into consideration key business outcomes and objectives.|
|Tools are selected to ensure clean and consistent data over the long run, and not for short-term cleanups.||Tools are selected based on brand value instead of on needs. Most are selected for one-time efforts.|
|Eliminating silos, reducing manual errors, and organizing data for consistency and quality.||Restricting MDM to the IT department, neglecting manual errors, and continuing to operate with scattered & cluttered data.|
Good master data management focuses on solving data problems, addresses issues with data quality, and teams work in collaboration based on realistic timelines.
Bad master data management focuses too much on technologies, and has vague timelines, with teams working in silos.
What are the Key Components of the Master Data Management Framework?
Every master data management plan must define a framework – that is, the steps needed to treat, transform, and manage organizational data.
Note that an MDM framework can vary according to different business requirements. There is no one-size cookie cutter.
However, if we were to generalize, an MDM framework basically consists of:
1 . Initiate a Discovery Process: Before investment in tools or technologies takes place, it’s important to initiate a discovery phase. You will have to scan your entire data landscape to identify to understand the scope of the challenge. The discovery should help you prioritize data types, identify common data quality errors, and whether disparate data sources are affecting your team’s ability to deliver results.
2. Form a Central Repository: After the discovery, your team will have to decide how to organize data sources and connect data distributed across all applications – from ERP to CRMs – to a central repository. This step will help you get a consolidated view of your data.
3. Prepare & Clean Data: Now that all disparate data sources are connected, the data needs to be profiled for errors and cleansed according to defined standards. Data inaccuracies is the leading cause of MDM failure, therefore effective cleaning is critical to make the master data accurate, reliable, and usable.
4. Data Match to Remove Duplicates: If third-party data sources are connected to the organization’s original data source, then this step is necessary to ensure there are no duplicates. Data matching is done by advanced fuzzy matching tools that are able to identify errors from non-exact phrases and delivers near-similar matches as potential duplicates.
5. Merge to Build a Golden Record: Duplicates are then merged into a single version called the golden record which holds the ‘consolidated’ view your team would need to create accurate reports. During this phase, your data teams will have to resolve any uncertainty around the data manually.
6. Building Relevance: At this point the MDM is near ready for use, however, to be able to offer a truly 360-degree view, it has to be related to data points from other domains – such as information from marketing, sales, production, or employee systems.
7. Security & Delivery: Master data is business-critical information and must be guarded from unauthorized access. Database security experts will define security policies to safeguard the master data. Once security is implemented, the MDM is now ready to be used as the ultimate source of accurate, reliable, transformed data.
The benefits to master data management can only be experienced if the process is carried out within a defined framework, following a disciplined project management strategy. If the MDM implementation is not well-defined with unaddressed bottlenecks (whether potential or actual), you’ll end up with more problems than you started out with.
Key Benefits of Master Data Management
There are dozens of benefits to an MDM implementation – from insights and analytics to efficiency and revenue generation.
Here’s a breakdown of what you can get from an MDM implementation across five key categories in business.
1. Business Operations & Activities
An MDM strategy is no longer a silo activity that only benefits the IT department. As businesses now need data to survive, MDM affects key business operations. For instance, without a data management framework in place, your business is at risk of failing compliance regulations resulting in punitive penalties. A master data management initiative, therefore, helps the business in:
Sanctions Screening Compliance: Businesses need access to updated data to prevent accidentally trading with individuals and entities on the global sanctions list. This is the #1 benefit for businesses to take up MDM seriously.
Related: Read how to prepare your data for sanctions screening.
Increased Revenue: With better insights through clean, transformed, and accurate data, your revenue and profitability increase multi-fold.
Better Risk Management: With data that gives you a complete overview of your products, customer insights and market trends, you can avoid business risks – based on accurate predictive analysis.
Make Effective Strategic Decisions: Let the data guide you in launching new products or investing in innovations.
Accurate Reports: Poor data leads to poor insights, which leads to poor reporting. The consequences? Disastrous decisions that could have easily been avoided. A common example of inaccurate reports are finance and sales predictions.
Additional benefits of MDM for business include:
Optimize supply chain with accurate information on inventory, product returns, and out-of-stock items across the supply chain.
Improve customer satisfaction with loyalty programs, personalized services, and tailoring products to your customers’ specific wants.
Accelerate innovation using MDM as the source of information at every stage of your new product development lifecycle.
Your master data is critical to the success of your business. Improving its consistency, accuracy, and accessibility has a visibly positive impact on multiple areas of your business.
2. improve data processes
Master data management in itself is part of a data management strategy that attempts to organize, manage, and make your data infrastructure more effective and efficient. Some of the top benefits of implementing an MDM strategy for the organization’s data infrastructure include:
As your business expands, you will need to track and communicate with new customers. Do you want to be the third person from your company, to ask the same new customer for his contact information? Once someone in the organization enters the customer contact data, according to business requirements, you do not need to reenter that customer again; even if that person has talked with a different salesperson, the IT help desk, or Human Resources.
Improved Data Enhancement
Customer information change over time. For example, some people buy a second home and live at two different addresses. Instead of updating a customer’s contact by creating another record or repeating some information, a well-designed MDM simplifies the update to single master data records.
Easier To Use
Customers want to have a consistent and coordinated experience. With a useful MDM, you have a single view of each customer and all that person’s interactions. So, you don’t have to guess whether someone else in your organization has contacted a customer before or if you have the correct contact information. Data becomes much more usable through a Master Data Management system.
Efficient Data Storage
As you do more business transactions with your customers and add new ones, the amount of data grows exponentially. This reality increases costs to store and maintain records, even if you have most of your data in the cloud.
Well architected Master Data Management keeps only the essential data. Not only does this save storage space, but you also don’t need to check data integrity for and verify the contents of as many records.
Enable Data Disposal
At some point, you will no longer want to keep information about your customer. You only need to remove one customer record using good MDM. MDM provides a single master record per customer that you can remove. You don’t need to wade through your system for every instance of the same customer.
Data Quality Management
You need customer information in good condition, accurate, complete, consistent, and valid or good quality. Well architected and applied Master Data Management puts technical constraints on modifying a customer record, preventing duplicate or incomplete entries from occurring in subsequent business processes.
Also, master data keeps its data quality level throughout a system no matter which person or department in your organization updates or works with customer data.
Improved Data Integration
If MDM had a superpower, it would be data integration. This MDM strength means that customer data can flow easily between the cloud or on-site, or between different database systems.
As companies increase the number of data platforms and turn to new technologies, good MDM makes data migration easier. Even if you do not integrate customer data, now, you probably will.
High-Quality Data Governance
The power of customer data comes with its trust and availability. Companies do Data Governance to achieve both by securing information, protecting privacy, and granting access so workers can do their jobs.
Good MDM serves data governance. It allows you to easily set permissions across an organization to secure or reach different customers. You only need to set the accessibility once, and that covers any system with that customer data.
Better Data Compliance
Since the passage of the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA), data compliance has remained front and center to avoid fines and a negative reputation. MDM, when applied well, makes it easier to show compliance.
With MDM, you can point to one record, assuring auditors that you can handle a customer’s request to delete contact data. Also, you can more easily show you know what customer information you have and where you keep it.
Good MDM improves transaction efficiencies and reduces business transaction costs as a by-product of the other nine benefits listed above. MDM provides a structure that coordinates data throughout the organization and presents each customer entity’s single view, eliminating redundancies.
Related Reading: Data Management Vs Data Governance
3. Organizational Level Benefits
Master data management together with efficient data architecture and infrastructure contributes various benefits to an organization’s efficiency and success. Some of the key benefits at an organizational level include:
Reduce Redundant & Unnecessary Workload: Several departments in an organization work with and require the same set of master data. When the MDM is the go-to repository for the organization’s data, your teams don’t end up wasting time on treating data in silos.
For example, customer service doesn’t have to wait for sales to find out why a customer is sending an angry remark on social media or marketing doesn’t have to rely on sales to get an overview of the customer’s purchases. MDM not only reduces workload but also stops redundancy from causing delays and bottlenecks in operations.
Single Source of Truth for All Employees: Master data management provides a single source of truth to support business processes and decisions. With an efficient MDM process, employees can access updated, high-quality data whenever they need the data to support their operations. The reduced dependency on other departments and teams improves output and enables employees to do their job better, and faster.
Increases Agility: MDM plays a direct role in improving & increasing agility. In an age, where efficiency can make or break a business, you cannot afford a linear model anymore. People and processes are required to be agile, but if they don’t have access to reliable data, innovation, ideas, and outcomes may be stalled.
Master data management isn’t a technology as much as it is a discipline focused on improving processes leading to better outcomes. The benefit of MDM isn’t technological – it’s organizational.
And Lastly, the Infamous Question – Is MDM Dead?
No. MDM is not dead, but the reason this question is asked so often is that historically, MDM has always been considered a back-end hub that had little to do with businesses. Today though, MDM has a business focus. MDM is not the past or the future. It is the NOW.
many a business swears by their MDM system as a valuable tool, shared and used among many organizational processes. A Valuates Report projected the MDM marketplace to grow to 17880 million USD.
So, a useful MDM is worth its weight in gold.
Related Products: WinPure Master Data Management
Gartner, a respected analytics firm, states that businesses will inevitably need MDM and consider its complexity and cost. This is where you’d need a technology that can help you achieve MDM goals and experience its benefits without wasting precious time and resources.
WinPure Master Data Management gives you a more straightforward tool to prepare and clean customer information with the data quality you want in your MDM. That kind of flexibility will transform messy data to match your precise business requirements from the start.
Moreover, with our consultants, you and your team will be getting the help and guidance they need every step of the way to make sure the MDM process is a success.
Learn more about the WinPure MDMD tool in the video below.
We’d love to speak to your MDM team and see how we can help them achieve their goals!