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Author Vadim
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MDM – Master Data Management

More often among IT-professionals and business users of informational systems sounds the abbreviation MDM. Like any popular term, MDM is overloaded — in different contexts it has a different meaning.

In the process of the company development, several informational systems of completely different directions are often implemented one by one - accounting, customer relationship management, warehouse management, etc. 
In the era of digital transformation, it is essential to bring together all business-critical master data to use a single version of the truth and the most comprehensive information across all departments of the organization.

Informational systems live and develop independently to that point when a need to look at all the accumulated data as a whole arises. At this point, the data volumes have already reached a critical point and it turns out that it is not possible to compare data in disparate systems manually. At the same time, the use of contradictory and inaccurate data leads to management errors, and duplicates and irrelevant data to erroneous business decisions.

The classic solution of managing relationships problem between IT-systems of the enterprise is the Master Data Management system.

MDM (Master Data Management) - the system of master data management that manages the critical data of an organization. It is intended for centralization of master data management and provides functional systems (CRM, ERP, WMS, TMS, etc.) with consistent and complete data that is needed for reporting, business functions, etc. In other words, MDM performs service providing the function for collection, centralized storage and dissemination of master data information.

The objectives of MDM are to provide master data generation processes (collecting data from external sources, improving their quality through cleaning and enrichment, searching and combining duplicates, etc.), as well as their distribution for further use in other informational systems.

Benefits of MDM system:

  • the creation of a single information space
  • distribution of entered or corrected data across all business applications
  • adding information from other systems about customer/product 
  • identification and linking of information about the same customers/products in different systems
  • search for potential duplicates, germination count, duplicate removal,
  • standardizing of accounts

Methods of use 

Methods of using MDM determine what the MDM system will be used for in the enterprise. In other words, who will be the consumer of master data (of course, there can be several).

There are three main methods of use:

  1. Analytical
    The analytical usage method supports business processes and applications that use master data primarily for business performance analysis, provide the necessary reports, and perform analytical functions.
  2. Operational
    The operational method of use allows you to gather, edit and use master data in the process of performing business transactions (operations) and serves to support the semantic consistency of master data in the framework of these operations within all operational applications.
  3. Collaborative
    The collective usage method allows you to create master entities in cases where you want to interact collectively between different groups of users during the creation process. Such an agreement usually has a complicated "branching" business processes, consisting of a variety of automatic and manual tasks.

MDM is used to reconcile data from different informational systems and to create a consistent view of customers, vendors, partners, products, services, or accounts. Their implementation improves the efficiency of business processes and applications and lays the foundation for the transition to a service-oriented architecture (SOA). MDM systems not only perform centralized operations with data but also control its creation, access, management and analysis.

MDM enables you to highlight features that are common to all systems and applications, supporting different ways of master data processing and use. The system allows users to fully manage data related to different areas of activity, having a different structure and different ways of use. At the same time, not only the data itself but also its processing functions become centralized.

Regardless of structured or unstructured your data is, it is located in the cloud or locally, it should be reliable. It is only possible to make the right decisions for business growth if you are sure that key initiatives and processes are based on high-quality, relevant and reliable data.

The efficiency of the MDM system depends on the execution of several activities: from identifying sources of master data conversion and normalization, searches for errors in data and correct them. Then, the prepared data can be combined and saved into a database and subsequently transferred to the master data consumers.

MDM implementation is especially important for companies that expand their business through mergers and acquisitions. In this case, each of the combined companies has its own data warehouse, which leads to duplication of information systems and the absence of unified data.
As a rule, most large companies implement different versions of MDM, when manual consolidation of reference information and reporting becomes impossible, and the introduction of any new system forces to change the regulations and coding, only increasing chaos.

Integration of MDM system will not be able to solve all the problems at once, however, as practice shows MDM is the best business solution in such cases.