What Is Master Data Management in Simple Words?

The world generates nearly 2.5 quintillion bytes of data each day. The number is so large it is almost meaningless. However, the data that makes up that number is not. The information may be an email changing a meeting location or the latest financial statements. Both examples have value, but they are not equal. Financial statements have more value as they are essential to business operations. They are part of what is called Master Data.

What Is Master Data?

Master data refers to information that organizations consider crucial to their operations. Master data examples include customers, employees, and third-party vendors who are essential to business. It is not the same as transactional or analytical data, which results from actions that may use master data. Suppose Company A releases a new product B at a purchase price of $1,000.

When customer M (an example of master data) purchases product B (another example of master data), Company A generates an invoice, which is considered transactional data and not part of a company's master data. After six months, Company A wants an analysis of product B sales. Transactional data is analyzed, and a report is generated, which is considered analytical information.

Master data can be divided into three broad categories:

• People

• Product

• Places

Domains that extend or refine these categories can be created.

In addition to people, master data can include product information. Documentation, user manuals, and specifications are examples of product information. Places are locations where work happens, whether it's an office building, a factory floor, or an online store.

Given the scope of what may be considered master data, many organizations look to management tools to help organize, manage, and secure their data. Most of the tools fall under the Master Data Management (MDM) umbrella.

What Is Master Data Management in Simple Words?

Gartner's definition of master data management is far from simple, but it does contain the key aspects of an MDM solution. It states that

MDM is a technology-enabled discipline in which business and IT work together to ensure the uniformity, accuracy, stewardship, semantic consistency, and accountability of the enterprise’s official shared master data assets. Master data is the consistent and uniform set of identifiers and extended attributes that describe the core entities of the enterprise, including customers, prospects, citizens, suppliers, sites, hierarchies, and charts of accounts.

So, what is a master data management process in simple words?

An MDM is a set of technologies that centralize a company's essential data into a single source of truth. Companies create a master data management framework that establishes domains and uniform identifiers for their core data. The framework ensures the following:

• Master data categories are defined and consistently applied.

• Data is accurate and consistent before placing it in an MDM for easy search and retrieval.

• Data is protected against unauthorized access and unapproved modifications.

• Any changes to the system or data must be recorded for accountability.

MDM is a shared responsibility requiring IT to assist with a technology-enabled tool.

What Are the Key Benefits of Master Data Management?

Any data management system's goal is to centralize information for improved control. Whether it's master data or product information management, the software is designed to create, use, and reuse digital assets. While MDM solutions may include product information as part of their master data domains, product information management (PIM) tools are explicitly created for product and product-related digital assets.

With a PIM, companies can accomplish the following:

• Centralizes product information and product-related digital assets in one location.

• Ensures data consistency and accuracy across all delivery channels.

• Establishes product data owners who are responsible for updating information.

• Shortens the time-to-market for creating and managing sales and marketing materials.

• Reduces the use of inaccurate data in external and internal materials.

PIM solutions like Lumavate incorporate digital asset management (DAM) tools to manage product information and images. The combined capabilities make it easy for non-technical users to create materials with visual and informational impact.

What Is an Example of an MDM?

Managing data is big business. The global enterprise data management market is expected to reach $122.9 billion in 2025 at a compound annual growth rate of 9.5 percent. A growing market means an influx of master data management vendors. Large companies like IBM, Microsoft, Oracle, and SAP offer master data management tools. However, most tools are designed for enterprise-level implementation with complex data domains.

Informatica MDM is a master data management example that includes cloud access for data governance. It competes with some of the top master data management tools, such as Relito's Connected Data Platform. Many enterprise-level MDMs expect customers to attend training classes or watch videos online.

Every company needs software for information management, but not every company needs an MDM. SMEs can achieve similar results with Product Lifecycle, Customer Relationship, and Product Information management tools. Integrating these information management tools can create a single source of truth for people, places, and products.

Regardless of the information management tools, organizations should look at master data management best practices as they build their data repositories. For example, they should:

• Establish a single source of truth for each domain or category.

• Establish access control parameters.

• Monitor user activity.

• Set security policies.

• Create a data governance strategy.

• Practice continuous improvement methods.

Selecting the right tools for your organization is the first step in managing your data. If you have limited resources, a highly technical solution with lengthy delivery times may not be the right solution. If you have a robust CRM solution, adding a PLM and PIM may be all that is necessary to begin leveraging data to a competitive advantage.

Lumavate's Product Information Management (PIM) functionality is part of its Product Experience Management (PXM) Platform. With built-in digital asset management (DAM) capabilities, manufacturers can create digital experiences from a digital experience platform. Non-technical staff can use the platform to create robust digital experiences.

Lumavate's PIM offering enables companies of all sizes to create and maintain a single source of truth for their products, including information on pricing, SKUs, specifications, how-to videos, and troubleshooting guides. Why not schedule a demo to see how to put your data to work?