Master Data Management Basics: Transform Your Business
This is part of Solutions Review’s Premium Content Series, a collection of reviews written by industry experts in maturing software categories. In this presentation, Rex Ahlstrom, CTO and Senior Vice President of Growth and Innovation at Syniti, describes the basics of Master Data Management and how technology can help transform your business.
The modern enterprise is made up of multiple systems, each of which stores the data the organization needs to run its operations, such as information about suppliers, customers, products, and services. This is called master data, and it is frequently stored in many places, separate from data in other systems, and changes to one site can take time to show up in other systems. .
This can happen due to natural growth. It could also be the product of a merger or purchase. Whatever the reason, master data management is critical to business performance, regardless of the number of data sources or systems involved. Because data silos generate inconsistent, incorrect, and unreliable data sets, your company‘s business decisions will be based on guesswork. This is definitely a problem.
Missing or poor quality data leads to decisions that can lead to the failure of an initiative or an entire company. This could mean wasted marketing dollars, degraded consumer experiences, reduced compliance, and missed opportunities. Productivity, revenue, and consumer confidence can all suffer from poor data quality.
All of these issues point to the need for master data management.
Benefits of master data management
Master data management, at its most basic level, is about getting data right before it destroys something. Master data management also ensures that a company’s most vital data is based on “one version of the truth”. Master data includes things like vendors, partners, customers, products, vendors, workers, and materials. In most cases, master data is separate from transactional data. To produce, update, delete, and distribute these data elements into critical business systems, master data management uses a set of processes and software tools.
When you begin a master data management journey, your primary goal is to establish a single source of truth for your organization’s most important data and the processes that support it. This involves combining data from marketing, sales, supply chain management, production and any other processes related to the entities listed above and making them available as a single point of reference for all systems and areas of the company.
Here are the benefits of a successful master data management implementation:
- Increased Innovation: The creation of new products is more effective when accurate vendor, vendor, material, and customer data is readily available.
- Reduced time to market: Using real-time data rather than relying on people and tools to deduplicate and manage large pieces of master data dramatically improves time to market for new products.
- Improved customer service: With a personalized and consistent customer experience across all channels, customer loyalty and sales increase.
- Increased revenue: Accurate data ensures the right orders are sent to the right people at the right time.
Getting membership is crucial
Despite all the apparent benefits, many companies continue to struggle with data management. One of the main reasons is that master data management requires significant change management.
Typically, someone in a business will decide to develop a new master data management system, which involves putting in place all the rules and forms for creating, updating, and deleting master data. Then they present the new system to users and tell them: “Here, use this”. But then things come to a halt: users suddenly discover that they don’t have all the necessary information or don’t understand how to interact effectively with the system, which delays effective use of the system.
You will need to put the right processes in place to ensure that data contributors understand how the processes will improve business performance and simplify their day-to-day interactions with key business systems. To properly execute the change management software and processes necessary for success, organizations need engagement with business users to find out how they are doing things now.
Implementing master data management will also require extensive business, IT and executive support. Otherwise, data contributors may object and say “if it ain’t broke, don’t fix it”. Company employees may be content to rely on spreadsheets because that’s what they’re used to and they don’t want to try anything new. This hesitation is often tied to a lack of knowledge about how poor quality data affects virtually every aspect of business – and a lack of understanding of how individuals can help overcome this problem.
The vital role of education
Getting buy-in – and then successful implementation – of master data management requires training. Organizations should help employees understand the significant impact of bad data and the benefits that can be achieved through proper management of master data. This includes knowledge of how it will improve their daily work and how it will benefit the organization as a whole.
Generally, people are unaware of the long-term consequences of incorrect data entry. It’s not that they’re purposely trying to produce bad data; they simply don’t realize how much something seemingly insignificant at the start of a process – for example, a poor description of a material – can have a significant influence on the business and how much it can cost later. The key is to show them how they can contribute to the solution.
Adopt the iterative process
Another point to remember when setting up master data management is that companies should avoid trying to do too much too soon. Organizations want to see immediate gains after its implementation and be able to demonstrate a return on investment as a result. But you can’t expect to completely overhaul the process, roll it out, and have flawless data from there. That’s not how it works. Instead, start by focusing on a component that has a measurable key performance indicator (KPI) and shows improvement quickly. Start by focusing on one aspect at a time, then iterate. Master data management is not a project that should be tackled all at once. It is a process that takes place over time.
It’s worth it
Master data management isn’t a silver bullet, and it certainly isn’t easy. Those who have taken this route, however, can attest to its value. You can be sure that your master data is correct and reliable if you make a continuous effort to orchestrate operations and enforce data quality. It can be challenging to implement master data management across an entire enterprise, but with the right transition steps, it can be done successfully. It should start with stakeholder education and buy-in, recognizing that, like most things, this is an ongoing process rather than a one-time endeavor.