How Master Data Management works: Challenges and Benefits
Master Data Management (MDM) is best described as recognizing the true business value of data and managing master data sources to create a single source of the truth. This will help you tackle data challenges and provides your organization with business benefits that will enable you to outperform the competition.
Newcomers to Master Data Management (MDM) will notice that describing it usually takes long sentences with many verbs. MDM is the core process to identify, define, collect, manage, categorize, synchronize, merge, repair and enrich master data according to the business needs. It covers the domains of customers, suppliers, locations, products and more. MDM seems to gobble up everything you can possibly do with master data. That’s because in practice, MDM works like a Swiss knife.
The usage of MDM depends on your specific business goals and needs. It can help with manufacturing goals like improving time-to-market and optimizing production and supplier processes. Or marketing goals such as improving user experience, expanding to other channels and extending product offerings. And operational goals like getting rid of data silos, improve data quality and pushing consistent data to all channels. Underlying to all these goals are specific data challenges that MDM seeks to address.
The 7 Master Data Management Challenges
Most organizations are already collecting master data on their customers, products and suppliers, but a considerable number are still struggling with it. A study by Stibo Systems and the Aberdeen Group found 45% of businesses can not locate their master data effectively. That’s creating problems with real business impact. The seven main challenges related to MDM are:
- Data Silos: Multiple versions of data sources used within and outside the organization. Because data is maintained in unconnected (legacy) systems, this leads to duplicates, errors and inefficiency.
- Data Quality: Inconsistent, incomplete and erroneous data used throughout the business and pushed to different channels. Unstructured data can complicate or even block your entry to new channels and marketplaces.
- Data Errors: Resulting from manual entry and low-quality data sources. These end up in all channels ranging from your ERP and CRM to catalogues and the webshop. Your team collaboration, customer service, product returns and communication suffer as a result.
- Data Syndication: Lack of control of what data is being pushed to what channel, resulting in product data that may differ per retailer or partner.
- Loss of Trust: In data, not knowing which elements of your data are outdated or incorrect. Throughout the lifecycle of products, traceability is low.
- Customer Experience: Inconsistent customer interactions due to a lack of complete and consistent master data. Creating an omnichannel experience is impossible.
- Lack of Data Governance: Without a centralized system for data, data governance is next to impossible. This prevents your organization from fully meeting regulatory compliance and safety regulations.
These challenges are all linked to the lack of a central repository that builds and shares a single version of the truth. When there is only one master data record used throughout your organization and continuously optimized in terms of accuracy, traceability and consistency, these challenges will shrink. That’s exactly what Master Data Management (MDM) does.
How MDM Solves Your Data Challenges
From the challenges, it’s clear that low-quality data negatively impacts the business on many levels and in many processes. Because it’s not just your product data for your webshop. Master data comprises every piece of information that serves to identify customers, suppliers, products, locations and any other asset of the organization. So, mastering your data with MDM unlocks your company’s full potential that goes beyond solving operational challenges. MDM makes strategic business goals feasible, accelerates innovation and generates business value. MDM does this by:
- Eliminating data silos and connecting data from customers, products, suppliers and assets;
- Creating a single source of the truth of your data;
- Increasing data quality and reducing data errors. As a result, risks are mitigated; and mitigate risks;
- Onboarding, consolidating and cleansing disconnected data;
- Easily maintaining your data, reducing manual work and saving resources and time;
- Improving collaboration and flexibility between internal and external users;
- Improving business processes and operational efficiency.
To create the business case for MDM inside your organization, it’s key to translate these MDM features into clear business benefits.
The Five Business Benefits of Master Data Governance
The following five benefits drive MDM adoption today:
- Improve data quality and lower costs. You can effectively consolidate, cleanse, enhance and govern data using MDM. If records need editing, updating or deleting, MDM changes the relevant golden record for the amendment to be reflected everywhere. In administrative savings alone, a study from Aberdeen Group found MDM can cut labor costs by 67%. But if your data isn’t timely, accurate or consolidated across departments, the costs associated with data maintenance run rampant. In addition, it can lead to frustration on the customer side and breakdown in the supply chain.
- Launch new products faster. With 25% of total revenue and profits across industries coming from successful new product launches, time to market matters. MDM improves efficiency throughout the entire product and supply chain. You can effectively onboard, cleanse and enrich every aspect of product information while sharing, publishing and syndicating it across all critical enterprise channels. You can efficiently set product deadlines, establish milestones and handle change orders in seconds. Manufacturers, suppliers and engineers receive accurate updates on product detail changes. Everyone, from shipping to receiving, has real-time access to product specifications as they’re updated. A customer survey by Stibo Systems reported that 58% of organizations using their MDM solution reduced their TTM from months-to-weeks and 36% went from weeks-to-days.
- Deliver exceptional customer experiences. Gain a complete and reliable view of customers to supply premier personalization and customer-centric targeting. MDM fuels marketing and sales strategies by giving enterprises a precise data foundation for segmentation and more. If you collect customer data from several sources, you have several variations of the same record or two different records for the same person. An MDM solution de-duplicates customer records to avoid personalization mistakes like sending email to the wrong person or calling customers about matters already resolved.
- Deliver outstanding service. All of your relevant departments see the customer information at a glance and your online chat/telephone support staff discuss the customer’s problem with confidence by viewing data instantly. Additionally, customer support data is automatically shared and viewable with departments in sales, marketing and other functions. For instance, if a customer is transferred to another department, they won’t have to answer the same questions again. According to Accenture, knowing a customer’s purchase history makes them 65% more likely to choose you.
- Achieve regulation and compliance. MDM helps meet various regulations from regulatory organizations like the EFSA (European Food Safety Authority) for food safety and privacy laws like the General Data Protection Regulation (GDPR). That’s because customer, location and other information are accessed, deleted or edited from a single point. The GDPR creates some specific challenges for organizations:
- The scope of coverage: the definition of personal data now includes general details as well as possible items like photographs and social media content.
- Right to be forgotten: customers can ask for their personal data to be deleted when it’s no longer required for its original purpose.
- Guaranteed data portability: customers can request their personal data be transferred to competitors.
Outperform the Competition
In the age of information, mastering your data is the key to providing relevance and value. This makes your decisions become data-driven, your customer experiences going omnichannel and personalized and customers will be happier doing business with your organization. With MDM managing your master data, you can leap ahead of the competition with a performance that’s better, faster and more consistent.
To read more about Master Data Management, you can go to our dedicated page with more in-depth content.
Freeing Your Siloed Data
Improve data quality and reduce your data-related costs: the value of Master Data Management
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