Master Data: Business Asset or Cash-flow Burner?

This week I visited a company where the executives were heavily discussing the merits of master data management. Their dispute started out with the fact that it took the company 3 weeks to add a new customer. And this was caused by master data (MD). I asked some questions like: What is master data management, why does it help you, and how are you going to earn money with it. Let me share my experience with you.

Master data management is defined as management of multiple and competing definitions on data. Data can be customer, product, location, asset, contract and the like.

In the seventies (last century) Information Engineering had the data object "subject area". A subject area contained all information regarding one subject: Definitions, as well as instances (occurrences: the actual customer data). Master Data (MD) is something like a subject area, and therefore not entirely new to the business and IT world.

Subject areas were introduced to be able to manage information as a corporate asset. This implies of course that it needs a business goal, a business case, and requirements. This results in a Return On Investment (ROI). So the discussion can be focused on 3 points:

  1. Definitions
  2. Business case
  3. Business requirements

Well, for a definition of MD see the start of this blog. The business case should come from business process improvement. Having everywhere anytime the same customer information around benefits sales, marketing, finance, and service delivery departments. It enables one customer view, and also one solution view, one asset view, and more. It enables to manage business assets, such as customers, from a higher, more strategic perspective. And it enables business process improvement: How fast can a customer address change mitigate through our systems. Is that one month, covering all systems, or is it one minute.

And it costs money if you have multiple copies of the same data. Even worse: What when there are differences between the data. The only way to find out the answer is to call the customer and double check. Duplicate data leads to error prone business processes. Those are not cheap either.

Business requirements are not so easy. Aspects to be defined in an SMART way are:

  • Data governance of MD: support and ownership
  • Business process: work-flow and triggers
  • Data distribution facilities and replication mechanism: one master source for the data, and zero or more slaves
  • Version management
  • Implementation aspects: corporate-wide including subsidiaries, cross divisional, or the most important unit first

Would I invest in MD? Definitely! But only from a strategic viewpoint: I want to learn from my customers, and I want my business performance a little better than my competition!

And you? How do you regard MD? Let us share our views, and gain a better understanding of how to improve our business!

This blog is part of a series on Information and Data Governance:

  1. Data Governance for Dummies: Part 1 (Business Requirements)
  2. Data Governance for Dummies: Part 2 (The Replica Data Security Solution)
  3. Master Data: Business Asset or Cash-flow Burner? (this blog)
  4. How to beat the Master Data implementation challenge?
  5. Master Data Management and Information Modeling: End or Means
  6. Information Governance Solves the Challenges of IT Governance and Data Governance! Or?
  7. Reduce Complexity and Rise Your EBIT!

Results2Match has a strong vision on successful business management solutions and result driven implementations.

This blog is written by Hans Lodder. Hans is a very experienced management consultant and interim manager. You can contact Hans by email.


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