Before defining MDM we need to ask following question?
What the business problem we trying to solve, what the business need?
Master Data Management (MDM) refers to the process of creating and managing data that an organization must have as a single master copy, called the master data. Usually, master data can include customers, vendors, employees, and products, but can differ by different industries and even different companies within the same industry.
MDM is important because it offers the enterprise a single version of the truth. Without a clearly defined master data, the enterprise runs the risk of having multiple copies of data that are inconsistent with one another, actually MDM addresses data complexity, data problems and data has a same meaning across all applications (heterogeneous systems) having single version of the truth (single comprehensive view-bridging data across channels, systems and line of business) to avoid any confusions.
It results in increased customer satisfaction, lower operating costs, lower level of missed opportunities, better customer retention, better communication, better management of customer data, drive higher wallet share, improved data governance, supply chain optimization, fewer risks, and compliance for business value and higher revenue for business.
At the heart of the master data management program is the definition of the master data. Therefore, it is essential that we identify who is responsible for defining and enforcing the definition. Due to the importance of master data, a dedicated person or team should be appointed. At the minimum, a data steward should be identified. The responsible party can also be a group -- such as a data governance committee or a data governance council.
We can say MDM is same as reference data or what is the difference between MDM, reference data and metadata?
There is a difference between all 3 of these let me explain you.
Metadata as I’m sure you’re aware is data about data. It describes data but it isn’t generally considered business data. For example, customer metadata would describe the attributes of a customer entity, the datatype and size of the attributes, which programs produce the data, which programs consume the data, what business rules are enforced on the attributes, etc. In a BI environment, derivation, transformations, source system, and last load time are also important. The key thing to understand is that you can know the complete metadata for customers without knowing who a single customer is. Master Data, on the other hand, is the real business data. Customer master data is an authoritative list of customers.
We think of reference data as simple data sets that are typically static, or change very little. Examples are states of the United States, or countries, or currency codes. On the other hand, we think of master data as the subjects of our transactions and analytics, such as customers, parts, suppliers, agreements. Master data sets are not static.
We can differentiate data sets based on whether they are maintained internally (master data) or externally (reference data)?
The USPS maintains the Zip Code data set (reference data), but the enterprise typically maintains the attributes in their customer data set (master data).
MDM is used in banks, financial instructions, government organizations, energy management companies etc…
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