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According to Wikipedia, master data “represents the business objects that contain the most valuable, agreed-upon information shared across an organization.” Master data can be almost any kind of data, then, that’s of chief importance to your business.
As a matter of fact, master data is the primary focus of IT, and there is an entire discipline devoted to its study, called Master Data Management. In this article, we discuss why master data is critical to your business success.
Where Master Data Fits into the Scheme of Things
In today’s business world, data of any level is critical to the function of your business. For one thing, it’s your most important corporate asset. Without it, your company might even cease to exist. You use data every moment of every business day, to make decisions that take you toward your goals. Ultimately, data drives your business toward the financial objectives you hold important.
Among the realms of data that your business uses on a daily basis, however, it is master data that is most essential. Master data can be data about customers, vendors, employees, materials, and suppliers. Generally speaking, it does not include transactional data, although this too is important. Moreover, depending on the business, transactional data might be considered master data by some organizations.
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Organizing Your Company’s Data
More than 70 percent of businesses today rely on analytics applications and business intelligence systems. Businesses use these tools in order to establish protocols around the handling of data. Essentially, these practices allow for better performance around data handling. And this is true whether that’s master data or another less critical level of data. Naturally, this also leads to better management of the business itself.
That’s because these practices help your business to establish rules for the stewardship of the data that’s so critical for your company’s continued existence. Above all, you should be seeking to standardize all of your master data information.
Moreover, as you do so, your IT team should also be focusing on cleaning all current data. This will make it easier for you to have a clear picture of all the data. Then you’ll be more easily able to sort out which pieces among all of these pieces are master data and which are not.
Implementing Master Data Management Practices
You’ll find, once you institute data management principles, that it will be immediately easier for you to access the data you need on a moment-by-moment basis. That’s because proper data management includes a series of consistent policies and processes. Moreover, these processes come complete with governance and oversight already built in.
That’s because efficient data management focuses on only a few actionable items. These include key business areas, such as materials, suppliers, customers, and employees.
The Importance of Accuracy and Consistency
However, accuracy and consistency are critical to data management in general and master data management in particular. Done well, data management can drive your business to success. However, if accuracy and consistency are allowed to go by the wayside, things can quickly go awry. Above all, accountability is indispensable.
The Proper Handling of Customer Data
Finally, when it comes to the handling of customer data, keep in mind that a single mistake can be costly. For example, one study showed that as much as 20 percent of direct mail advertising goes to a wrong address. For each piece of misdirected mail, the cost can amount to as much as $1. Multiply that by hundreds of lost pieces of mail, and you’ll quickly see that the financial costs can be enormous.
However, with proper management of all of your data, especially master data, you can avoid many of these problems before they even begin.