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What is Master Data Management? MDM in 2020 and it’s importance

Master data management encompasses the tools and processes used to organize, manage, and integrate data into a single database to create a single source of truth. This term implies that MDM tools create a sole source of information for reference purposes, one which is accurate and most reliable. MDM carries out its function through a couple of ways, which includes the elimination of repeated sequences in accumulated data, removal of invalid data entered, and creation of systems that prevent the incorporation of questionable or erroneous data into the system. The concept of master data management is arcane to an extent and to fully understand what it entails, one would first have to follow the meaning of the term “master data”- For a company to run effectively and for them to also keep track of progress, they keep records that include suppliers, clientele information, products, dates of purchase of items, staff profile, and accounts. These records standup to be what we call the master data. In the course of the running of the company or firm, mistakes occur in entering of data and because data needed for the running of a company gets dispersed across the various departments ingrained in the company, an erroneous entry of data that gets fixed might not be dealt with in the same way with other database held by the different departments, and so you see a case where one company has multiple versions of a single database that do not seem to match in any way. This problem is mostly the reason for MDM as it has carved out to be a way to solve this problem by checking the validity of data and merging all the databases available into one that would serve as a single point of reference throughout the entirety of the firm. In other words, it ensures that an organization or a firm does not use various versions of a single database for its operations because this could cause a significant redundancy in the progress of such an organization.


A case study- An insurance company with erroneous databases could end up overcompensating a client; it goes without saying that if cases like this continue to occur, the company will go bankrupt in no time.

Where can I use MDM?

There are a plethora of situations where MDM serves its purposes, as it’s possibilities are indeed limitless. Apart from the prime objective of organizing data, data management sees use in various case scenarios.

  • Data warehousing: Data Management aids in the collection and management of data from multiple sources in a strategic way to provide compelling business insight in a process called data warehousing. Data warehousing cannot be without data management because it needs MDM for the collection and analyzing of meaningful data before it becomes represented as business intelligence reports. MDM has been able to convert data into information that can easily be understood. Thanks to various modifications, MDM has been able to cut down the time between the collection of data and analyzing product data in a bid to cause speedy processes in data management as well as data warehousing.
  • Data Analytics: Analysis of data is imperative in data processing; this is because, without proper analyzing of data, it is pointless and without use. Master data management is used in data analytics as it helps to cleanse and transform data into information. MDM helps to organize data into a format or pattern that makes analysis notably easier. The master data management exists in a way that enables it support the process of data analysis and data mining as well; it is incorporated into the process, removes difficulties, and creates a simplistic style for data analysis.
  • Governance: This is perhaps the most practical use of data management in the modern world. Thanks to democracy, people get a chance to vote for their preferred candidate through the electoral process. With the invent of online voting and with the hassles and challenges faced in collating data or in this case votes, master data management is priceless as it helps organize data and aids accurate collation of votes in a very reliable and convenient way.
  • Data compliance: Due to regulations put in place as regards data security, MDM arises to help several companies adhere to the compliance regulations as meted out by the government. In the process of business transactions and in a bid to sell products, more than often, clients have to submit their personal information to these companies, it would be a breach of trust if this information were to be leaked and so MDM helps to organize clientele information and prevents leaking of sensitive information

Advantages of Using Master Data Management.

  • Improved efficiency: 

The hazards of multiple versions of a single database are, to a great extent, capricious. That it is to say that they can cause the most harm, mainly since we are oblivious to them. All types of companies cannot function properly or much less hope to achieve progress with erroneous product data and the likes of it. MDM offers a management solution where databases are properly scrutinized for errors to ensure that marketing teams and all other departments in an organization work from valid databases and reports, without these, the organization is simply a catastrophe waiting to happen. Easy accessibility to accurate data expedites work processes and thereby increases efficiency.

  • Elimination of questionable data: 

Management solution offered by MDM entails the removal of sparse quality data or erroneous data allowing personnel and staff to work based on the most accurate data

  • Decision making and prioritizing:

Decision-making basis itself on precise information, that is what the MDM provides, reliable information that would foster ethical decision making. It’s essential to always keep in mind that decisions made based on erroneous data always end up in losses for the organization. Decision making and prioritizing go hand in hand, and the MDM is imperative for getting the best out of the duo.

  • Master data edits: 

One of the major issues encountered in editing data contained in multiple records is that a mistake fixed in one version might not get fixed in another version. For example, if the profit margin for online sales in a particular company stays recorded as 20% instead of 25%, this document would no doubt be dispersed to the many departments of the company and so fixing the mistake in a copy held by one of the departments is not an affirmation that it would be dealt with in the same way with the other records kept. However, MDM creates a master database, and so any edit made is easily made to the master database, thereby ensuring that the mistake fixed appears in all copies of the master database.

  • Data analysis: As said before, MDM is critical for the efficiency of data analysis in given software. Data management helps in the collation and organizing of data in a manner that makes analysis very easy. In other words, it is perfect for transforming data into information that is easily understood.
  • Flexibility: Another obvious appeal of Master Data Management is it’s flexibility in that it allows for easy editing and updating of data as well. Data backup is a feature quickly found on the MDM. No pain is more significant than losing carefully collated and accurate records, the MDM system allows for the creation of backups to ensure that data is not lost and that it can always get recovered.
  • Accessibility: The problem of low cadre staff accessing files which they have no clearance for has plagued many organizations for decades but MDM offers a type of management solution that gives access only to officials and personnel required to view such data
  • Record linkage: Cases occur where after business dealings with a particular client, the organization loses a record of such transaction, and so the next time such client comes around, they get treated as newcomers, and this shouldn’t be so. MDM keeps a record of client information, business transactions, and every other information associated with a particular client.
  • Accuracy: More than anything, efficiency and reliability are the most sought out traits in data management. An organization cannot function properly without accurate information; it’s easily compared to walking in the dark. MDM scrutinizes data and ensures it’s accuracy before it gets updated to the master database.

Who needs MDM?

Master Data Management serves a variety of different purposes to every company, particularly companies that deal with a high rate of distribution of data, companies with extensive product catalog, and companies that are usually involved in significant scale acquisition of companies.

  • Financial companies: Data to an extent is mostly figures, and more than most, commercial companies deal with numbers daily so much so that they require a system that can help them collate their data and organize them in an easily retrievable way. The financial companies span across a whole lot of other companies that include the insurance companies and the banking industry. As a result, commercial companies cannot function effectively or even survive without the help of the Master Data Management system.
  • Logistics: The logistics industry is one that undergoes a great deal of pressure in their day to day affairs due to needing to maximize profit and efficiency despite the problem of high demands to meet delivery timelines, keeping of clientele information, updating of the product catalog and so on. They require a great deal of efficiency for the smooth running of their processes, and that is what MDM offers, it collects information on clientele, product data, sales channels, point of delivery, the timeline of delivery, delivery specifications and locations, and incorporates them into a single channel.
  • Health care: Due to the influx of patients into hospitals and with the rate at which epidemics usually occurs, there arises a need to collate data accurately for future references. MDM for years has been helpful in  healthcare as it has provided hospitals with the much-needed record linkage required to treat patients. Patients’ details and treatment history are organized and safeguarded for whenever they are once again needed. Also, for cases of epidemics where research on the illness is required, statistical analysis is usually carried out with the help of MDM.

What are the main features of MDM?

  • Security:

With the increment of hackers, it becomes much more imperative for the protection of data from falling into the wrong hands. A useful MDM contains  features and attributes that allow them to encrypt data that require passwords before information contained in them can be accessed. MDM eliminates invasion of privacy and keeps data confidential

  • Data enrichment:

One of the most prominent features of MDM is it’s data enrichment quality in that it cross-links thousands of data and continuously updates the information contained in it. Apart from the updates it offers, it also cleanses data by merging repeated sequences and the removal of incorrect entries. MDM enriches data and organizes it in a pattern that sees the transformation into information. More than this, MDM uses data collected to identify brand new opportunities in business, thereby driving the market to its full potential and maximizing profit. MDM enriches data and creates and simplifies knowledge.

  • Flexibility: 

The flexibility of MDM is indeed outstanding as it allows for easy removal and addition of information when necessary. It ensures that mistakes fixed on the master database reflect in the same way in its replicas without a single deviation from the original master database. It also ensures that data validations of any kind get implemented.

  • Integration: 

The ability of a data management system to incorporate other data processing techniques into it is what makes it stand out. MDM can integrate data compliance, data warehousing, and data analytics into its various processes to ensure that it serves a variety of purposes for its users. MDM also allows for the incorporation of new domains into its system.

  • Keeping track: 

Master Data Management systems are also able to keep track of data entered into them, and it builds algorithms to track the source of data as well as the validity of the source. Also, it keeps records of changes made on the system.

  • Optimization of machines: A lot of companies and organizations experience significant setbacks and are unable to properly harness human resources due to the lack of technical know-how on the operation of these machines as well as lack of sufficient information on the processes of these machines. The world has evolved past the age of manual labor; services are now carried out and simplified with the use of devices. MDM collates and transforms data needed to work these machines to their full potential.

Apart from the features listed, MDM can be said to have three significant features

Business capabilities:

  • Governance: One of the highlights of MDM,  particularly in organizations, is that it can transfer sensitive data contained in the master database during changes in leadership to new personnel or people who have permission to access such data.
  • Security: This point sees continuous exploration as it is a crucial feature of MDM that encrypts data and aids recovery of data after a disaster or inevitable mishaps.

Information management capabilities

  • Intelligence: MDM is used to transform data from complex figures into information comprehended quickly.
  • Analytics: Besides transforming complex data into distinct elements, MDM also has the quality of creating business reports from data provided. Put, MDM transforms data into intelligence reports

Data management capabilities.

The data management capabilities of the MDM are elaborate, to say in the least.

  • Organization: The organizational features of MDM are indeed amazing, it picks elements of data that are related even in the most minute of ways and creates cross-linkages between them to ensure that whenever the need for such data arises, seeking it out never constitutes a problem. With the help of MDM, organizations and companies can carve out a new pattern of organizing data in the most convenient way possible 
  • Accessibility: Data than cannot be easily accessed constitutes a problem and creates a stymie in work processes. As a result, we see ineffective decision making and various other consequences directly attributed to the difficulty in attaining data required for certain operations, but MDM solves it all; it ensures that data is easily accessed by people who have the clearance granted to them to view such data. With MDM, personnel do not have to worry about the horrors of finding files dated centuries back; it’s simplified.

When does one need MDM?

  • Inconsistent data values:

Cases of inconsistent data values usually arise due to inadequate methods of record-keeping, and while MDM is not solely for record-keeping, it is the perfect solution for this problem as it scrutinized data collected and takes appropriate steps into creating a single master database with consistent, accurate and reliable values.

  • Security issues: 

Companies and organizations that usually fall prey to the ploys of hackers who regularly access their sensitive data need MDM. With the help of encryption codes, MDM can prevent Intruders from gaining access to data; it also gives alerts on intrusion attempts made at certain times.

  • Scattered pieces of data: 

For an organization to run effectively, clientele data, product data should be cross-linked; in cases where data of this Calibre is scattered around, it makes it difficult for the organization to run its operations smoothly. MDM links data together and connects than in a way that allows it to be easily accessible

  • Data analysis: 

Data analysis comprises the transformation of data into information that could serve a variety of purposes like a business report, for example. The key to successful data analysis or data mining is data management, particularly Master Data Management. Data is incomplete until it undergoes processing, and processing is put together more conveniently with the help of MDM.

Is MDM same as DAM?

DAM stands for Digital Asset Management. MDM and DAM both have organizational abilities in that they can organize elements of a particular system into easily accessible patterns; they are both flexible and help to eradicate the vulnerability of information stored in them. They have a whole lot of similarities between them, they are a necessary part of an organization or a company and have excellent organizational abilities with easy accessibility, particularly convenient for people who have clearance to access contents in them.

Despite the plethora of similarities between the duo, they are not the same. DAM, as the name implies, focuses on digital assets that include video files, images, and digital files. It fosters the creation of data that aids the storage, management, tracking, distribution, and organization of digital assets. It sees so many uses in the modern world include production management and brand management system as well.

MDM, as explained previously, is mostly focused on raw data, it could transform it into information by aiding data analysis, but it focuses on the natural form of data that it organizes, manages, stores, and configures to serve many other purposes.

While the functions of MDM and DAM are the same, they base their services on two distinct elements, and while these elements may share some similarities, they are not the same. For more information,

Is MDM same as PIM?

PIM stands for Product information management, and it deals with the management of information associated with business transactions. Put, it manages information related to supply, demand, and distribution of products. Here, product data serves to share information with trading partners. MDM and PIM are interrelated, but they are not the same because while PIM focuses on Management and organization od data related to products, MDM organizes data that cuts across every area. The scope of MDM is limitless as it holds and manages data for an extensive range of elements, while PIM is limited to data product data.

I already have an eCommerce system, do I require MDM?

First off, the answer is yes. An eCommerce system refers to the sale and purchase of products over the internet, the concept of eCommerce has taken trading to a whole new level and has been able to achieve the aim of bringing the products closer to the people and providing ease and comfort while shopping

An e-commerce system cannot run as effectively as it should without an MDM; this is because product data, supplier data, reference data, and asset data must get organized and managed correctly to avoid situations that arise due to lack of a sound management system. The effects of this lack are enormous so much so that if we started now, it would take quite a while before we would be through with listing out the hazards. Apart from the organization and management of data, there are so many other features MDM has to offer.


Master data management is, and would always be an indispensable tool in companies and organizations that hope to run effectively and maximize profits over time. No system comes without its challenges, and MDM is no different in this regard. However, what you should keep in mind is that MDM promises a lot of benefits and is also the key to get rid of challenges faced during data collection and processing.

Related: Product Information Management in 2020: PIM Uses, Benefits and PIM Software

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Alf Alferez
Alf Alferez
Dedicated writer with a strong track record of developing customer loyalty and managing general office operations. Enjoy being a part of a company where my skills and creative ideas will benefit the overall productivity of the organization. I have a strong desire to work in helping make the world a better place. Please reach out to me on

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