The emerging field of “master data management” is simply how to deal with data that needs to be shared between different computer systems, data such as products or customers. So, four years after the big rationalization of IT systems in the late 1990s, how many different computer systems does a large company have? One subsidiary of a large energy company, after putting in every module of SAP, still had 175 interfaces to other systems. A CIO of a large multinational admitted to having 650 different installed enterprise applications at a recent conference.

According to a survey by Tower Group, companies maintain master data separately in at least 11 or more source systems. The picture is actually even more complex than this, since large companies rarely have just one instance of an Enterprise Resource Planning (ERP) or Customer Relationship Management (CRM) system. It is not unusual for global companies to have 50 or more separate ERP instances, each of which will have a slightly different implementation from the next. So how exactly do the codes for “customer” and “product” get managed across this panoply of systems?

The short answer is: with difficulty. The management of what is becoming known as “master data”, that is, things such as products, channels, locations, customers, organizational units (as distinct from the business transactions themselves), is a giant headache. This inconsistency makes it hard to analyze business performance, but can cause many operational problems also, for example, duplication of product lines. Most organizations are slaves rather than masters of their corporate data today.

Shell Lubricants was an interesting case in point. They had a broadly decentralized structure and had made acquisitions such as Pennzoil, itself with an extensive product line, and had in total 30,000 packed product combinations. When they wished to globalize their business processes, and also move more sales to the web, it was clear that they would need to improve the management of the master data in this area, such as product codes, formulations, and brand names. Over the years local subsidiaries had created many local variations of products to suit local markets (a lubricant formula that works well in the steamy heat of Vietnam may not flourish in a Norwegian winter and vice versa), but it was likely that not all these product variations were necessary. However standardization to one universal set of master data was entirely impractical, as the costs of modifying the codes, safety sheets, packaging and brand data embedded in dozens of ERP and other operational systems would be huge.