Wednesday, March 10, 2010

Master Data Management - Why is it crucial?

In this article, we would be learning the basics of Master data management; why is it so crucial in any enterprise regardless of its size.
In any presentation or article, it is said that don’t leave more than three points to ponder. So, I will concentrate on 3 main points of my article.

1. WHAT IS MASTER DATA?

Master data is the data which seldom changes, or in some cases never changes. There are various forms of Master data.
For some reason, Master data management has always been a neglected field in most industries. Enterprises have huge amount of data, mainly
• Vendor master data
• Customer master data.
All the Master data exists in various systems, in various forms. A vendor Master data exists in different forms in FICO, SCM, SD. This leads to inconsistency of Data.
Master data is also important to complex supply chains or complex processes and heterogeneous IT Landscape. Earlier, Master Data management was more or less manual. But with the increase in complexity of organizations and processes, it became crucial for the enterprises to become aware of MDM.

2. WHY MDM?

arlier, every application could manage its own data storage. The credit goes out to the silos that exist in the company. When the new systems are introduced, it is necessary to make the Master Data reusable.
The problem starts when there is duplication of data. The master data is not only used in one module.
For ex, the same data is used in SAP SD, FICO, BI, XI etc. Also, with the dynamic nature of Companies having mergers and acquisitions. It becomes exceedingly tough to maintain clean master data without redundancy and discrepancy. This is where Master data management comes into play.
Master data management is highly useful in
1) Master Data consolidation.
2) Maintaining data consistency.
3) Centralized MDM
4) Duplicate checks
5) Historicization of Master Data.
Master data can be implemented centrally in an enterprise, and can also be integrated with BI, XI & other SAP modules. In other words, it has extended integration with SAP NetWeaver. The MDM architecture is clearly explained in the book SAP NetWeaver Master Data Management.

3. CONCEPT BEHIND MDM.

Master data management has a whole new concept to eradicate the problem of duplication and redundancy of data. The problem with the Master data is, each record is not uniquely identified and hence the problem occurs. A simple and effective solution to a complex problem.
Master data management links each Master Data record to a unique No called DUNS no. (Dun & Bradstreet No). D & B has a huge database which contains almost every enterprise in its memory.
Each enterprise, its branch and its acquired companies have unique identities, and the master data records in them are matched with the DUNS No. the entire concept behind MDM implementation is really interesting and for more details, catch the book SAP NetWeaver Master Data Management.
Conclusion
Master Data Management is a key area for any enterprise. Companies can’t afford to take it lightly at any cost. The consequences of data inconsistency can be hazardous to the enterprise, and more importantly on its clients. Hence, Companies should be meticulously involved in the optimization of their Global Master Data, and utilize the solution to be able to implement future development in a cost effective and an efficient manner.