Insights into Master Data Management

Master Data Management (MDM) is quickly coming to the forefront of the IT project pipeline for almost every corporation. One question that must be asked is: Is Master Data Management simply a new buzzword for the consistency of specific, standard corporate information, or is it truly a new concept on how an organization should approach and manage their critical information? As companies look to invest in such a potentially broad, risky, and significant corporate initiative, SEI would like to offer our insights on the business case, various approaches, and potential challenges to engaging in such an effort. Over the next several SEI Quarterly Communications we will be presenting articles to help our clients navigate the challenges to an organizational Master Data Management implementation and assst in maximizing the business value for their organization.

Through 2010, 70 percent of Fortune 1000 organizations will apply MDM programs to ensure the accuracy and integrity of commonly shared business information for compliance, operational efficiency and competitive differentiation purposes. – Gartner

With such a significant investment by corporations to implement MDM programs, we should look to explore this topic in further detail. Before we get too far, we should probably ground everyone on a few basic concepts and definitions. Master data can simply be defined as the specific categories of information required by an organization to appropriately manage their relationships, for example: Customers, Suppliers, Products, and Partners. Master Data Management would then be the practices, processes, and associated technologies of providing the Business Enterprise with the capability to define and link this master data in a secure and high quality manner. Organizations create, assimilate, store, maintain, and use a variety of different types of data and information. MDM is then the process of centralizing and managing this core reference data (master data) that is needed to uniquely define key objects within an organization. These master data objects typically do not change frequently and are often referenced by users, business processes, systems, business applications, application services, and trading partners by their key identifiers.

Organizations continue to increase automation and collaboration with better business process management and increased Service-Oriented Architecture (SOA) adoption, spanning the entire enterprise. Universal and persistent access to accurate, up-to-date data has emerged as a major obstacle. Each area or department of the company typically has developed processes, applications, tools, and techniques to create, store, and maintain its own master data to serve its own needs. Though it provides them with an effective control mechanism over establishing consistent semantics within, it hinders the seamless flow of a single, consolidated view of information across the organization. As companies grow, these disparate silos of data become more difficult to manage and integrate. Accordingly, there is a growing acknowledgement that this approach does not provide for a good long-term strategy. This is where MDM steps in. To further understand this concept, let’s look at how an MDM solution would fit into a corporate technical infrastructure in the figure below:

Primary Master Data Categories

Customers, Suppliers, Products, Partners, Employees, Location, Region, Organization chart, Territory Chart of Accounts

Data Categories
Source: DM Direct Special Report By Abhay Singhal and Sreedhar Srikant

The above diagram highlights the integration with operational and analytical systems, but there are obviously various approaches to tactical implementation; we will explore these approaches and associated technologies in our next article. In general, implementing an MDM solution focuses on easy access to a single, consolidated view of information that is interpreted uniformly across all boundaries. A well-formed and executed MDM strategy is aligned with the organizational information management objectives and is perceived to be at the heart of true enterprise-wide business process and application integration.