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Master Data Management: An Introduction

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This article introduces the concept of Master Data Management (MDM), the discipline to provide an authoritative source of trusted master data. MDM systems enable optimization in business processes such as new product introduction or revenue improvements in cross-sell and up-sell strategies based on high-quality master data.
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As companies struggle to become more agile by implementing information systems that support and facilitate changing business requirements, the management of core information (such as information about customers or products) becomes increasingly important. We call this information master data. In this article, we introduce the basic notions, challenges, and benefits of master data management.


The management of key organizational data has always been important. Knowing who your customers are, what products and services you offer, and what arrangements or accounts you have with your customers and suppliers is fundamental to the operation of most organizations. Whether your organization is a bank, a retailer, or a government agency, a core set of such data is used across the enterprise to open new accounts, introduce new products to the market, and determine what products to offer customers.

This master data is some of the most valuable information that an organization owns. It represents core information about the organization, such as customers, suppliers, products, and accounts, and the relationships between them. Each of these domains of master data represents information that is needed across various business processes, across organizational units, and between operational systems and decision support systems. In essence, master data defines an enterprise.

Master data captures the key things on which all parts of an organization must agree, both in meaning and usage. For example, it's important that all parts of an organization share an understanding of what defines a customer, which customers exist, where customers are located, and what products they have purchased or have been offered. A common understanding is useful to prevent bad things from happening inadvertently (such as a bill being posted to the wrong address), as well as to provide an opportunity for significant business benefits such as improving the ability to sell complementary products to customers.

Master data is important in both operational and analytical environments:

  • Many operational business processes touch master data; for example, introducing a new product to the market, signing up a new supplier, or adding a new phone service to a customer account. All of these processes touch many application systems that must share a core set of information about products, suppliers, and customers. For business processes to execute properly, this master data must be accurate and consistent.
  • Analytical systems have similar requirements. Master data often forms the key dimensions and hierarchies used for reporting and analysis of key business data. Increasingly, analytics is being applied within operational business processes to better monitor and optimize business transactions. Trustworthy data is a fundamental ingredient of meaningful analytics.
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