Master Data Management: Extracting Value from Your Most Important Intangible Asset
Increased attention to master data management can lead to quantifiable increases in business value.
Seth Halpern of SAP shows you how to get the most from your data.
- By Seth Halpern
- May 1, 2007
In a 2006 best practices survey of the Americas’ SAP Users’ Group, 93 percent of respondents experienced data management issues during their most recent projects. And data management was identified as the root cause of problems in process improvement projects. Part of the problem stems from the fact that many organizations believe they are already using master data. But the reality is that they are operating within the confines of disconnected silos of data—the information contained in multiple systems, applications, and spreadsheets. Once master data is generated and trapped in silos, inaccurate and inconsistent information is perpetuated throughout the organization—and beyond. This creates an incomplete view of the business and limits your ability to aggregate and distribute data, which hampers even the most carefully planned and executed initiatives. Achieving master data consistency for all systems within a distributed IT environment has traditionally proven difficult.
An organization’s primary data entities generally include customers, products, employees, and suppliers. As the volume of data in any or all of these grows, the importance and complexity of managing the data increases. For example, wholesale distribution companies may sell hundreds of thousands or even millions of different products. Maintaining accurate data on each of these products, SKUs, and components across the inventory is challenging enough, but imagine the problems across suppliers, customers, and third parties when naming conventions are inconsistent.
Effective MDM offers a number of benefits to a wide range of companies—particularly those with large volumes of data used for a variety of purposes by multiple organizations. They include operational efficiencies, enhanced revenue opportunities, better insight into business operations, and tighter compliance with regulatory requirements—helping avoid fines, internal misbehavior, and the potential for losses in shareholder value. In virtually every respect, increased attention to master data management can lead to quantifiable increases in business value.
Market and operating incentives, combined with the advent of innovative technology, make a compelling case for deploying a master data management program. This is especially apparent when you consider the potential for improvement across all business processes.
Overcoming Barriers to MDM Excellence
To achieve effective master data management and improve operating performance, you must adopt a solution that addresses the following three elements:
Master data consolidation: Matching, normalizing, cleansing, and storing master data imported from client systems. The principal activities of master data consolidation are:
- Identifying identical or similar objects spread across local systems
- Building consolidated master data
- Providing ID mapping for unified, company-wide analytics and reporting
Master data harmonization ensures that master data is synchronized across heterogeneous system landscapes. Extending the scope of master data consolidation, harmonization also encompasses the distribution of consolidated, globally relevant information, and the enrichment of client application systems with locally relevant information.
Central master data management speaks to the maintenance and storage of master data and the development of distribution mechanisms for delivering master data to the systems that need it. This activity differs from master data harmonization in that master data is created centrally using a rich client. You can then interactively distribute information to clients as required.
The ideal solution integrates seamlessly with your organization’s existing infrastructure and those of your partners. Additionally, the solution is intelligent enough to ensure ongoing harmony of accurate and up-to-date information from disparate sources and is readily accessible to ensure it supports the needs of the entire business ecosystem.
Leading-edge technology helps you streamline and improve the aggregation of master data from disparate sources. The ideal solution manages the entire process, including deduplication and normalization, ID mapping, matching and merging, staging, change tracking, interactive data-quality analysis, and ad hoc consolidation. You can then analyze consolidated data using a business intelligence solution. Ideally users experience near-real-time search performance, with multiple search mechanisms with every dimension interlinked. You should be able to search an entire repository easily with any item or group of items, and partial strings and equivalents should be indexed to increase positive results. Performance should be measured in milliseconds—even when managing repositories containing millions of records.
The Case for Master Data Management
Ultimately, master data management, when done correctly, enables reliable cross-system, enterprisewide business processes and analytics, ensuring that everyone involved in the process has access to the same information and knowledge. A solution that enables the consolidation of master data, as well as the availability and free flow of consistent data across system boundaries, offers the most promising opportunity for improving business processes and a decisive competitive advantage.
Learn more: www.sap.com/usa/platform/netweaver/components/mdm/index.epx
Seth is the senior principal of value engineering at SAP.