In business, master data management refers to the various processes, regulations, standards, policies, techniques, and tools that allow an organization to manage its critical data. Critical data may include the following:
- Reference data. Reference data refers to business parameters for transactions and dimensions for analysis.
- Analytical data. Analytical data allows businesses to make decisions.
In the field of computing, a master data management tool might be used to support the management of master data. This tool carries out operations such as removing duplicate entries, standardizing data (also known as mass maintenance), and incorporating rules which get rid of any data that may be flawed, allowing for an authoritative source of master data.
The need for master data stems from the segmentation of a business unit and its product lines. The same customer can potentially be serviced by various product lines, which means that repetitive data ends up in the system regarding the customer. In addition, having an authoritative single source for the account and product is also required in this process.
The process of master data management has the goal of providing the processes and tools that are needed for collecting, assessing, auditing and providing distribution for the data to all parts of an organization. This ensures a certain high standard of consistency and gives control when it comes to the application of this data and its uses in helping members of an organization make decisions.
Issues in Master Data Management
At the simplest level, master data management is a tool used to ensure that organizations do not use multiple versions of the same data in different fields of operations. This is most likely to occur in large organizations, such as banks. An example of ineffective master data management is a scenario that involves a customer at a bank. The customer has just taken out a mortgage. The bank begins to send solicitations for a mortgage to that customer, seemingly unaware of the fact that the customer already has a mortgage.
It’s a simple problem. The customer data being used by the marketing division of the bank has not been updated or integrated with data from the client services devision of the bank. The two groups do not communicate, which means that they are oblivious that an existing customer is being treated as a potential sales lead instead of a valued and trusted customer. The risk is that eventually, the customer will get fed up receiving notices that clearly don’t apply to his or her situation, potentially lowering his or her opinion of the bank and jeopardizing the established relationship. Master data management ensures that all the data pertaining to the customer is stored and analyzed and available for each department.
Big Data
Big data refers to large data sets that may be analyzed using computer and statistical programs. These data sets help to reveal trends, patterns, and associations that give insight into human behavior or interactions. This data helps a business or organization make day-to-day decisions, both small and large. Big data allows a business to act strategically, armed with knowledge about how their potential customers behave. In the case of the bank, big data would help the marketing department accurately target a customer who has a mortgage.