In 2022, the stakes are high. Master data management is the need of the hour. How will it benefit your business? Here’s everything you need to know about the benefits of MDM.
This guide is written for decision-makers where we categorize MDM benefits into three core areas: business & operations, data infrastructure, and organizational efficiency.
….But First, Busting Some MDM Myths
If you read the articles, advice, and whitepapers available on Master Data Management (MDM) benefits, you’ll find most of them paint a positive, rosy picture. But reality is different. Most MDM initiatives fail mid-way. We’re not going to lead you into believing otherwise.
It is one thing to see an MDM strategy on paper and quite another to implement the process. Usually, businesses abandoned an MDM project out of sheer frustration; costs and scope of work creep up, talent hiring and retention become a challenge, all the while trying to keep up with a demanding business landscape.
If you’re implementing an MDM initiative for the first time, we recommend bringing on board a master data management consultant who can assess your business conditions, review your objectives, understand your challenges, and create an effective MDM strategy to help you get started.
Related: 2022 Master Data Management Guide
Before highlighting MDM benefits, here are a few questions decision-makers mostly ask when deciding on a master data management strategy.
What is the Value of Master Data Management?
Collecting, recording, storing, and holding on to data is no longer enough.
You can have huge data infrastructures to hold terabytes of data, but all that is meaningless if it’s outdated, incomplete, inaccessible, and simply unusable. That’s why MDM is so important in today’s age when businesses are competing with each other on data points!
In order to stay competitive, you need to fix bad data, automate redundant data processes, use your data team’s time wisely, and have access to reliable records – all of which needs to be done in real-time, not months or years into the future. Your competitive advantage is the “NOW.” And that’s where the value of MDM lies.
Master data management gives your business users accurate, reliable, complete, 360-degree view of your data that can be used for insights, analytics, and business intelligence.
An MDM implementation gets you data that is fit for purpose, ready for use, and can be a reliable source of information for your teams.
Why is Master Data Management Important in an Organization?
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.’
Once transformed, this data can provide 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 addresses (work email/personal email) to use?
- Which of the customer’s demographic details are updated or relevant?
- What kind of services, products, or campaigns must be relevant for this customer?
- What is the lifetime value of this customer?
All these questions (and more) 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 able to deliver meaning. 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?
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, addressing data quality issues, and team collaboration.
Bad master data management focuses on technology & infrastructure, does not address quality issues, and limits data management to siloed teams.
Related: Top Master Data Management Solutions
What are the Key Components of the Master Data Management Framework?
Every master data management plan must define a framework – a series of steps 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 . Discovery Process: Before investing in tools or technologies, it’s important to initiate a discovery phase. This includes scanning the data landscape to identify and understand the scope of the challenge. The discovery should help you prioritize data types, identify common data quality errors, and whether disparate data sources will affect MDM timelines and cause bottlenecks.
2. 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. Data Prep: Now that all disparate data sources are connected, the data needs to be profiled for errors and cleansed according to defined standards. Data inaccuracies are the leading cause of MDM failure, therefore effective cleaning is critical to make the master data accurate, reliable, and usable.
4. Data Deduplication: 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. Golden Records: 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.
6. Relevance: At this point the MDM is near ready for use, however, to be able to offer a truly 360-degree view, it must be connected to business departments such as marketing, sales, production, or employee systems.
7. Security & Delivery: Master data is business-critical information and must be guarded against 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.
Master data management can only be a successful initiative if the process is carried out within a defined framework, following a disciplined project management strategy. If the MDM implementation is not well-defined and bottlenecks are ignored (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 is part of a wider 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:
Optimizing Data Collection
Data problems start from the collection point. Whether it’s a website form, a ticket, or a manual entry by a company representative, the data collection process must be designed to reduce human errors. For example, website forms perform better if the user simply selects fields instead of typing in information. This reduces the chances of errors and ensures complete data.
Improved Data Enhancement
Customer information change over time. For example, a customer may have two different residential 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 your customers and their interactions with your company, including their complaints, billing data, and so on. This coordinated view will help your customer service teams resolve problems faster.
Efficient Data Storage
Data lakes are a favorite for many businesses, but data storage offers no value if the data isn’t fit for purpose. In fact, it’s costing you more to store unusable data. According to a SeaGate report, only 32% of data available to enterprises is put to work. The remaining 68% is unleveraged. MDM can facilitate better data storage controls.
Enable Data Disposal
At some point, you will no longer want to keep old and outdated records. MDM provides a single master record per customer which allows businesses to safely dispose off old & irrelevant records.
Data Quality Management
You need customer information in good condition, accurate, complete, consistent, and valid or good quality. 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.
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 to an organization’s efficiency and success. It helps:
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, marketing teams don’t have to rely on IT to get an overview of the customer’s journey with the company. 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.
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!