Summary

Ventana Research believes that advancements in information management, such as master data management, can provide a focal point for data quality. Despite the fact that companies have invested significant time and money in analyzing business transactions, the ever-increasing demand on IT to improve information consistency, frequency and relevancy is forcing the re-evaluation of integration and information architectures. Until recently there has been little attention paid to the effective management of master data. This has often resulted in the generation of an inaccurate view of business performance or limited insight into how the business is working. That, in turn, can cause significant loss of sales, and missed opportunities for cost reduction. Now, however, master data management is attracting greater interest because of the growing pressure on businesses to increase transparency, accountability and fiscal data compliance.

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Nowadays businesses are increasingly concerned with achieving better performance and process improvement. This, coupled with a new set of regulatory requirements, is causing executives to refocus on and re-examine their information management strategy. Corporate demand for information is increasing at such a pace that most IT organizations struggle to deliver timely responses to the information requests coming from business units. Often, because of the current disparate state of most companies' information architectures, these requests take months, not days, to satisfy. This has driven business and operational managers to become more involved with understanding and driving new IT investments to overcome these shortfalls. Consequently, many IT organizations are re-examining their existing approaches to data management and to ensuring that the landscape of systems which forms the basis of their information integration process is effectively managed. The old ‘best of breed’ philosophy for BI is losing credibility and many leading organizations are now focusing on and investing in data management solutions that leverage existing investments to ensure high quality data for their business.

Most companies nowadays have some form of ERP system to process their day to day business transactions. The context of these transactions is termed master data (sometimes also referred to as master reference data), and includes information about business objects -- things like products, customers, suppliers, regions, business rules etc. – including associated structures and reporting hierarchies. In the 90’s it was believed that the difficulty of and inability to effectively integrate this data was the direct result of a lack of consistent meta data (definitions of field lengths, formats, types etc.). However, despite heavy investment in BI tools and significant efforts by many companies to improve their meta data management processes and the quality of their data, their efforts have failed to provide a complete solution. This is because having good meta data is only a small part of the solution. It is now recognized that the secret to better performance management and improved business insight lies in improving the quality of the master data on which those applications and processes rely.

Master data is the language of doing business – the business objects, definitions, classifications, and terminology that describe business information as well as the context for recording transaction data. Ventana Research defines master data management as the collection of practices and technologies for providing Business and IT the capability to define enterprise-wide master or reference data that is linked to the business. A master data management warehouse provides a secure environment to store key reference data which can be used to improve data quality and derive critical business information. A key requirement for any such warehouse is that the master data is time stamped to provide an audit trail of which version of the data was used to drive reports and measures.

To be effective in enabling information integration, master data management needs to address the needs of both master data ownership and related maintenance processes and to provide systems support to facilitate the master data life cycle (create, review, publish, update, retire). We have found an increasing number of leading organizations focusing on and investing in master data management to enable them to build on current investments (such as ERP systems) and to deliver high quality data to their business unit managers and staff.

Assessment

Master Data is the language of doing business and it is therefore of key importance to IT and Business alike. The dominant problem with integrating transaction and other business data is poor master data. In order to deliver relevant high quality information to the business fast, IT and business management must create a parallel strategy to significantly improve both the data and information management architectures of their business. Master data management must be embraced and must become the focal point for ensuring data quality and consistency. Ventana Research strongly advises that organizations adopt the growing focus on master data management to provide the foundation of information integration initiatives. Increasing investment in BI tools alone will not solve the data integration problem. Investment in master data management will enable companies to continue to leverage the benefits from their current BI, ERP and data warehousing investments. It is also crucial for organizations planning to comply with regulatory requirements such as Sarbanes-Oxley in the near future. For those organizations exploring the potential of or starting with implementation of Service Oriented Architectures (SOA), effective master data management will be essential since data commonality and consistency lies at the heart of the web services approach.

About the Author

Dr. David Waddington, a Global Research Director at Ventana Research, serves as head of information technology research in Europe, a practice that includes integration management, information management and business intelligence. As former Chief IT Systems Architect for Unilever’s two Food Groups in Europe, David led a team to develop a Master Reference Data Repository, establishing common data standards and data warehousing. He also served as section head of the Linear Programming Group and was a founding member of the IT team that facilitated the move to open systems standards. David has provided advice and assistance to companies including Kalido, BP and Unilever, and has held academic posts at the universities of Oxford and Leicester. He has experience in consumer products, manufacturing and retail and consumer services.