According to Gartner, “Master data is the consistent and uniform set of identifiers and extended attributes that describes the core entities of the enterprise including customers, prospects, citizens, suppliers, sites, hierarchies and chart of accounts.”
It is important to differentiate master data from other types of business data:
- Transactional Data: data generated by business applications while supporting daily operations.
- Analytical Data: data created through calculations and analysis of transactional data to provide higher-level insights.
- Master Data: data on the business entities that systems reference to complete transactions. Analytical data is often used to provide a deeper view of master data objects.
The SPACE acronym describes the basic types of master data:
- Suppliers and Vendors
- Products and Services
- Assets, Accounts and Addresses
- Customers and Contracts
- Employees and Contractors
All of these activities rely on the utilization of master data:
- Customers placing an order
- Vendor shipping supplies to the Company
- The Company sending invoices
- The Company shipping goods to stores or Customers
- Employees receiving a paycheck
Categories and Components of Master Data
Categories and respective components provide a broader view of an organization’s master data:
Parties: individuals and organizations, plus all different roles in between: scouts, buyers, vendors, customers, suppliers, and employees.
Products: commodities traded among the parties.
Financial structures: assets, accounts, documents, etc.
Locational concepts: sales territories, branches, office locations.
Master data is generated by several business processes and stored in several separate systems, causing discrepancies between copies of the same record.
Operational systems need consistent information to function without error. Analytical systems require clean and accurate data to return actionable results. Compliance efforts need trusted data for complete and timely reporting.
It is crucial to normalize master data formats, synchronize values, and manage data properly so the teams that need these records execute their business functions based on the same information. Curating and managing master data accurately is key for smoothing out the challenges faced by growing organizations.
Read our blog post Seven Business Challenges Solved by Master Data Management for more details.
