What is Master Data Management (MDM) | SAP information (2023)

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SAP Master Data Management

What is Master Data Management (MDM)?

What is Master Data Management (MDM) | SAP information (1)

MDM is the process of creating and maintaining a master record for every person, place, and thing in the enterprise.

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Most companies now use hundreds of different applications and systems like ERP, HCM and CRM that serve different departments. Because so many people interact with the data in these systems, it's easy to isolate, duplicate, stale, and even conflict with data. And as everyone knows, bad data leads to bad decisions. To meet the need for up-to-date and accurate information, even with the proliferation of data sources, companies are turning to Master Data Management (MDM).

Definition of master data management

Master data management is the process of creating and maintaining a master record – or version of the truth – for every person, place and thing in your business. With MDM, organizations gain reliable, up-to-date visibility into key data that can be shared across the enterprise and used for better reporting, decision-making and process efficiency.

After all, what is master data?

Master data or master data is all the data needed to run a business. It describes people (customers, employees and suppliers), places (offices and locations) and things (products and assets). Master data typically represents only a small percentage of all business data, but it is some of the most complex and valuable data in an organization.

Examples of master data or master data are:

  • Basic customer data:as the name suggests, customer master data includes all the basic data you need to do business with customers, from contact details to purchase history and payment terms. Master data management for this domain includes data cleansing and standardization acrossERP,CRMI have a system.

    For example, the name and address of the same customer can exist in both the ERP and the CRM, but they can be entered in two different ways, for example, Amerikastraat 10, 5232 BE, 5232b and Amerikastraat 10 or Amerikastr. 10, 5232BE. MDM reconciles these differences and provides a unique view of each customer that can be used to personalize marketing campaigns, deliver better experiences, and much more.In some organizations, primary customer data also includes employee, patient, and vendor data.

  • vendor master data:Vendor master data includes vendor accounts, contracts, policies, pricing, and more. It is at the heart of all major sourcing activities, from planning and sourcing to contracting and purchasing. Clean, reliable supplier master data is essential for answering questions about supplier spending, pricing, or performance, such as:
  • Basic location data:the main attributes related to the physical location of branches, offices, distribution centers and stores are in the organization's location data. When combined with other data domains, this information can help you make location-based decisions, such as determining the right product mix for a particular business or store.
  • Basic product data:Product master data management includes attributes such as product number, category, price, features, bills of materials, and all other necessary data points. Utilizing various sales, marketing, supply chain and product lifecycle processes, this data must be reliable and accurate.
  • Asset master data:master data about the company's fixed and intangible assets, such as inventories, equipment and brands. They typically include attributes such as depreciation parameters and values, asset classes, lease information, etc. Inaccurate asset master data can lead to poorer asset utilization and management. For example, equipment master data is used in predictive maintenance processes; therefore, if they are incorrect, so are the predictions.

Why is master data management so important?

Master data management not only helps an organization make good decisions and answer important questions, it also offers many other benefits. Here are just a few:

  • Fewer errors and unnecessary elementsdata in many applications. If the same information, for example customer data, is inconsistently entered by different teams, MDM will combine and reconcile the duplicates.
  • Better insight into data-driven analysis and decisions. The saying “garbage in, garbage out” applies here. If the data for analysis is not accurate, neither will the results.
  • Streamlined business processes and increased efficiency.Consistent, high-quality master data can be used to accelerate and automate end-to-end business scenarios such as source-to-pay and project-to-work.
  • Greater transparency and compliancedata protection and other regulations. For example, the GDPR gives people more control over how their information is collected, managed and shared. Without MDM, records can be fragmented across weapons silos, making compliance difficult.
  • Support for mergers and acquisitions thanks to the streamlined process of combining and reconciling multiple data assets.

Data is essential to digital business processes and master data is the foundation on which all other data depends. Organizations with accurate and consistent master data are in a better position to succeed.

What is Master Data Management (MDM) | SAP information (2)

Master data management software helps consolidate and manage records.

How it works: MDM structure and processes

The master data management framework ensures that all information is accurate and semantically consistent. It consists of two parts: creating the initial master record and maintaining it.

  • Create a master data record: This process starts with identifying the databases and applications that contain the data to be included in the master record. Then all attributes or characteristics (such as product color, size and items) are defined. Finally, the data is reconciled, reconciled for inconsistencies and aggregated if multiple records exist.
  • Keep your master data: This process cleans, transforms, and integrates new data as it is added to the master list to ensure consistency and quality of records. Some master data management solutions can automate and speed up many aspects of this process.

Please note that master data management processes must be implemented in accordance withthe organization's rules and policies for managing data. They define how all company data should be stored, managed and protected and by whom – including master data.

What is Master Data Management (MDM) | SAP information (3)

See cloud data management

SAP Master Data Governance manages, consolidates and manages data quality.

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Best practices for an effective master data management strategy

A modern master data strategy includes tools, technologies and best practices that ensure all stakeholders have confidence in the quality of data-driven insights and the speed with which those insights can be applied.

Here are some ways to create a winning strategy:

  • Create a data management structureif you haven't already. As mentioned earlier, MDM activities must be conducted and enforced in accordance with data governance guidelines to ensure data governance and compliance.
  • use-oartificial intelligence (AI)Cmachine learning. Some vendors offer MDM software and tools that take advantage of these capabilities to automate the process of verifying the accuracy of new data, matching it to current records, and combining it.
  • Manage multiple domains in one instance. You can find solutions that focus on managing just one domain, such as customer master data or product master data. However, the best software is able to integrate and manage all the company's domains in a single system, often in the cloud. This helps reduce costs, increase staff productivity, and support flexible use cases.
  • Manage master data in the cloud.Cloud platforms can help increase productivity and efficiency by allowing you to combine, compare, blend and clean data across applications quickly, easily and at scale. They also include robust security and automatic updates.
  • Integrate master data management and data management. Combining a single source of master data with centralized data management in a single solution makes it easy to enforce policy and compliance, as well as define, validate and monitor business rules and master data attributes.

Master data management is an ongoing effort, not a one-time project. As your organization grows, the amount of data also increases. However, with cloud-based technology, tools and intelligent workflows, these MDM processes become much more efficient.

What is Master Data Management (MDM) | SAP information (4)

Manage your data the right way

Simplify master data management and control with one powerful solution.

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Master Data Management - FAQ

data managementrefers to the comprehensive processes related to collecting, organizing and accessing all of the organization's data. Master data management is a subset focused on key business units and their characteristics: details about customers, suppliers, products, assets, and more.

data managementit is a set of practices, policies and rules to ensure that data is consistent, reliable, compatible and not misused. The governance structure creates the organizational structure and designates the people responsible for the security of certain types of data. Data management and master data management are complementary: data management policies are added to master data (and all other data in the company).

Master data management focuses on creating and maintaining master data across an enterprise. It includes the process of enhancing, merging, and deduplicating to improve data quality. Master data integration, on the other hand, is designed to migrate and unify master data (regardless of quality) so that it can be fully visualized across all applications. The master data integration layer enables end-to-end process integration, provides business applications with a consistent view of data, and ultimately reduces the cost and effort of sharing data.

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