The Importance of Master Data

Why is MASTER DATA so important to your organisation?

 

Simply googling what Master Data is or means, can have you tied up for hours if not days sifting through many definitions and interpretations.  Master data is the core data that is essential to the operation of a business or business unit, i.e., customers, suppliers, products, prices, costs and services.  The same Master Data is often used across a variety of software platforms and systems within an organisation to help manage day to day as well as strategic business activities.

The kinds of information used as master data can & will vary from industry to industry & from organisation to organisation within the same industry.

Organisations spend a lot of time, money & resource to purchase & implement new systems such as ERP, MRP, DRP, Scheduling, Route Planning etc. to improve the delivery of core business activities.  Yet many neglect the cleansing & managing of master data either prior to going-live or post implementation.  Clean master data is data that is accurate, up to date, maintained and properly structured within any system.  (Note: this also goes for those who ustilise spreadsheet solutions for their business activities.)

Using any system with unclean master data undermines not only implementation but the ongoing use of the given system in a variety of ways:

 

  1. Maintaining and utilising Data only gets harder to utilise the longer it is left.
    The more unclean / out of date your master data will leads to processes outside of any core system being utilised to get a result of some description.  This then becomes the norm and core system is not used / trusted as it should be.
  2. Development of standalone systems
    Whilst in itself not necessarily an issue, the development of systems outside of the core systems lead to a number of exposures.

    ♦Who checks / responsible for the Master Data in this system?

    What happens if the main users / developers leave the organisation? – You’re potentially exposed!

    ♦How can they integrate with other core business systems?

  3. Unclean / inaccurate data leads to ineffective use of the system
    Benefits of any integrated core system is the way data transactions are linked.  These links make using, navigating and getting desired results from the system far easier & more effective.  If master data is not what it should be, then users spend longer than they need to, to perform their core role.  It may also create extra work!  For example, if you invoice a customer incorrectly, this could create the need for credits or debits and slow down payments.  If wrong product is issued to another part of the business or the customer – then returns need to happen and be processed – the list can go on and on…………..
  4. Reporting Inaccuracies’
    This is self explanatory at the top level – we have all heard the saying “crap in crap out” or variations of……
    We must also consider that management at all levels will rely on outputs to determine what happens today, tomorrow, next week, next quarter, next year and so on.  Thus poor data leads to poor information leads to poor decision making & thus……….
    Poor reporting then will create the need / want to develop standalone systems (point 2), thus trust is lost, resources are poorly utilised and so on.
    NOTE: Whilst the maintenance of Master Data is key to effective reporting, it must be noted that effective spec’s for reports need to be written in the first place.  Else Data dropped into e.g. Excel and manipulated to greater or less degrees, thus more work, wasted resource, opportunity for error etc etc.  Most systems these days have powerful reporting mechanisms & if reports are specified correctly & maintained regularly, this will greatly reduce the opportunity for error / mis-reporting.

Therefore, more work done on the front end of any implementation project to organise & cleanse master data.  Then having a robust process in place to maintain & review.  Thus the more functional, accurate & effective your system will be.

Comments

Leave a Reply