Master Data Management — Part 1: What is it?

This is Part 1 of our mini series 'Master Data Management — What It Is and Why You Need It'

As important as master data management (MDM) is to your organization, we admit it's not the most approachable topic — it's full of complexities and in some cases, jargon that is used simply to make us IT types feel a bit smart.

At its core though, MDM is fundamental to any organization that wants to run smoothly today and plan for tomorrow by organizing all of its data neatly and uniformly in one place.

We're here to help de-mystify MDM for you — so here's a quick overview of what MDM is, why it should be important to you, and the ultimate goal of getting it right.

What is Master Data Management — Really?

Almost every definition of MDM you'll find comes from someone deep in the trenches of tech, immersed in their own data-rich world. So it's no wonder some are a little lost when they start talking about "technology-enabled disciplines" and "semantic consistency and accountability."

So let's take the liberty of making a metaphor here with coffee. Yes, coffee. Just like data, coffee is crucial to not just your productivity, but the productivity of your entire organization. Everybody makes coffee, consumes coffee, and wants to know where the coffee is.

If for some reason your coffee was moved or thrown out, or if someone opened a new packet of coffee without telling the others, your ability to know the types of coffees and how to quantify them would be compromised. In this state of disarray, your coffee-related decision-making would be far from optimal.

MDM is essentially making sure there is one big packet of coffee for the whole organization, and every single person knows where it is, how much there is, and its exact status at all times. There are no duplicate, hidden, or expired packets to hinder your productivity.

In the real world, master data covers a range of critical information, that depends on the organization:
​

• People such as customers, suppliers, employees
• Locations such as countries, cities, sales territories, office locations
• Physical entities such as products, material
• Logical entities such as departments, project roles, brands
• Reference data such as codes, currencies, statuses

So in simple terms, MDM is a methodology to create and use a single source of data within an organization. Master data falls into two general categories, operational master data, and analytical master data.

Operational MDM

Operational master data is the data that your organization needs to run smoothly. This includes data about people, locations, products, and other important information. While this data is essential to the day-to-day running of an organization, only applying operational MDM may lead to inconsistencies in analytics and reports within an organization.

Analytical MDM

Analytical MDM is the process of making sure that all of the data in your company is clean, consistent, and correct. This is done by getting data from different sources and making sure it matches up with the information that has been collected in the master database.

Both operational and analytical master data have their pros and cons, so most organizations will undertake a hybrid approach of the two.

In Part 2 and 3 of our MDM series you'll learn, what the many benefits of MDM are and how you can achieve the ultimate goal of MDM: creating a Single Source of Truth.

Read more:
Part 2: Why Is MDM Important? 
​Part 3: How to Achieve the Ultimate Goal of MDM