Common MDM Pitfalls and How to Steer Clear of Them
Over the past decades, the significance of data for successful day-to-day business operations has witnessed a surge. Simply put, data has become the backbone of business enterprises irrespective of their industry, size, and expertise.
Data and the derived insights are essential in conceptualizing, planning and executing every strategic business initiative and daily operations.
Businesses, whether they are local or global, comprise of numerous functional units and have data specific to each of these functions. Data is usually spread across various applications and systems such as ERP or CMS.
Due to this distributed nature of data, it has become highly complicated for the leadership teams to make sense of the scattered data. In addition to this, there are other challenges of data fragmentation, duplication as well as data stagnation; data stagnation is the situation where the data across multiple systems fail to stay updated in real-time.
With the rise of distributed data, keeping data accurate, consistent and synchronized becomes a major challenge.
According to an Experian research study, 89% of executives cite inaccurate data to be hindering their customer experience delivery process and ultimately their overall business growth perspective. Here comes the role of Master Data Management.
Before we understand the nuances of master data management, let’s first be clear on the basics of what is master data.
What is Master Data?
According to Gartner, master data can be defined as the consistent and uniform set of identifiers and extended attributes that describe the key entities of an enterprise such as customers, prospects, suppliers, and hierarchies and chart of accounts.
To simplify this further, master data is the key indicator of a business’s processes. Master data management is the process of creating a uniform set of data on enterprise entities.
MDM plays a substantial role in improving data quality by ensuring that the data pertaining to entities remain accurate, consistent across systems and applications as well as update.
Now that we have understood what master data is, let’s understand why global businesses must realize the significance of managing master data and take requisite action for smoother execution.
Significance of Master Data Management (MDM)
Unified View of Business Operations
As businesses scale and their functional scopes multifold, it becomes critical to manage the data scattered across the entire enterprise. With multiple and different versions of data, having a unified view of business operations and to gauge the performance becomes a challenge.
However, Master Data Management enables businesses to have a clear perspective on the day-to-day operations and performance KPIs.
Data Authenticity & Governance
Maintaining and tracking version history of data is often a major challenge for businesses that can severely impact the authenticity of business processes.
At the same time, businesses also struggle with maintaining data integrity and security as they often lack collaborative authorization of data. However, with MDM systems in place, these pain points can be overcome.
Though businesses are aware of the essentials, MDM programs are yet to be a complete success.
Common MDM Pitfalls
Here, we have elaborated on some of the common MDM pitfalls that businesses must be aware of and plan to steer clear of them.
- As we have pointed out earlier in this article, master data is a set of unified identifiers and attributes of business entities. As multiple businesses are responsible for and benefits from this master data set, deriving on a consensus on common master data standards is one of the biggest hurdles business encounters. MDM efforts can lose momentum and get bogged down if the concerned stakeholders fail to agree on data formatting.
- The second major obstacle to the successful MDM execution is project scoping as situations might arise wherein there are deviations in the scope of the planned work due to unanticipated changes during the implementation phase.
- In the scenarios of mergers and acquisitions, MDM plays a pivotal role in streamlining data integration, reducing incompatibilities and optimizing operational efficiency. However, the challenge of reaching consensus on master data among business units can be even greater afterward.
- The growing use of big data systems can also complicate the MDM process by adding new forms of unstructured and semi-structured data stored in a variety of platforms.
MDM Best Practices
The success of an MDM program relies on efficient collaboration among all the stakeholders involved in the process. MDM essentially is a combination of people and processes rather than a mere technology-aided solution.
To ensure the success of an MDM program, it’s important to involve business executives and users, especially if master data will be managed centrally and updated in operational systems by an MDM hub. Stakeholders must have a say in decisions on how master data should be structured and policies for implementing changes to it in systems.
The concerned business units and analytics teams should get training on the MDM process and the purposes behind it before the program is actually rolled-out. Today, numerous organizations have created MDM centers of excellence (CoEs) to establish and then manage their programs in an effort to avoid bottlenecks and associated pitfalls.
Businesses must follow these approaches to steer clear of the common MDM pitfalls:
- Framework identification
- Leverage the chosen framework to connect the benefits of MDM
- Let the stakeholders chalk out the priorities and validate the KPIs
- Continuous update on the MDM framework, policies and processes
Master data management is not a completely new concept as it budded from previously separate methodologies focused on business entity-specific data consolidation, in particular, customer data integration (CDI) and product information management (PIM). MDM is an effort to unify CDI and PIM.
Vinculum’s Vin MDM is a multi-domain master data management solution that synchronizes business systems to keep the master data clean and consistent across the organization.
It helps businesses derive actionable insights from the data to adapt to ever-changing market conditions and explore new possibilities for boosting business growth and ROI. Request a demo or connect with Vinculum experts today!
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