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

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).

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.

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.

Master data management software helps consolidate and manage records.

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.

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.