- Introduction
- The Master Data Challenge
- Advantages of Master Data Management
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The Master Data Challenge
Management of master data is not new. Most organizations have systems to store and retrieve the master data that is critical to their business. Unfortunately, many information systems have become increasingly complex in response to the pressures of growth, business changes, and technology changes. Multiple (often redundant) stores of master data can be found throughout many enterprises. For example, it's not unusual to find more than a dozen different (and often inconsistent) repositories of customer data within an organization.
It has become increasingly difficult for organizations to identify, maintain, and use an authoritative set of master data in a consistent way across the enterprise. This situation leads to several consequences. Perhaps the most fundamental issue is the quandary of users and applications: Where should they go to find and use accurate data? Is there an authoritative source that can be trusted? Without an authoritative source of master data, business processes can become more complex as information from multiple systems needs to be assembled. Implementing decision support systems can also be tricky without sources for trusted master data.
A second consequence is architectural brittleness—making a small change in one system can have a significant impact on many other systems. Analyzing the scope and cost of a potential change across a complex web of interconnected systems can be difficult. This difficulty is significant, because changes frequently are required to support new business requirements, support mergers and acquisitions, and integrate new applications. Indeed, this architectural brittleness significantly impacts the organization's ability to evolve and change according to market pressures. Supporting the growth of a business in terms of operational throughput or geographical distribution yields similar issues. Distributing master data through large clusters of computers requires careful design to manage the synchronization of the master data.
Another issue is IT cost. Redundant data requires redundant storage, as well as the communications and computational infrastructure to maintain it.
The business consequences are perhaps even more significant. When master data is spread across multiple systems in an unmanaged way, there may be multiple competing views of master data: different customer lists, lists of suppliers, or product definitions. Without a complete and authoritative set of master information, it's difficult for enterprises to optimize their relationships with customers and suppliers across different product lines; it's also difficult to introduce new products to the market rapidly, or to relate sales performance to product categories. For example, we've worked with large enterprises in which customers in one business unit were suppliers in another—consolidating customers and suppliers into a common master data repository allows the businesses to negotiate favorable contracts more effectively.