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Master Data Management ; Why is it crucial?

I have been following the SDN blogs closely and sometimes, I have not understood the “Hi Fi “technical words. So, I decided to K.I.S.S (keep it short & simple)  in my first ever blog for SDN.

In this article, we would be learning the basics of Master data management; why is it so crucial in any enterprise regardless of its size.In any presentation or article, it is said that don’t leave more than three points to ponder. So, I will concentrate on 3 main points of my article.

1. What is Master data?

Master data is the data which seldom changes, or in some cases never changes. There are various forms of Master data.For some reason, Master data management has always been a neglected field in most industries. Enterprises have huge amount of data, mainly       

1)   Vendor master data

2)   Customer master data.

All the Master data exists in various systems, in various forms. A vendor Master data exists in different forms in FICO, SCM, SD. This leads to inconsistency of Data.Master data is also important to complex supply chains or complex processes and heterogeneous IT Landscape.  Earlier, Master Data management was more or less manual. But with the increase in complexity of organizations and processes, it became crucial for the enterprises to become aware of MDM.

2. Why MDM?

Earlier, every application could manage its own data storage. The credit goes out to the silos that exist in the company. When the new systems are introduced, it is necessary to make the Master Data reusable.The problem starts when there is duplication of data. The master data is not only used in one module.For ex, the same data is used in SAP SD, FICO, BI, XI etc.  Also, with the dynamic nature of Companies having mergers and acquisitions. It becomes exceedingly tough to maintain clean master data without redundancy and discrepancy. This is where Master data management comes into play.

Master data management is highly useful in

1)    Master Data consolidation.

2)    Maintaining data consistency.

3)    Centralized MDM

4)    Duplicate checks

5)    Historicization of Master Data.

Master data can be implemented centrally in an enterprise, and can also be integrated with BI, XI & other SAP modules. In other words, it has extended integration with SAP NetWeaver.  The MDM architecture is clearly explained in the book SAP NetWeaver Master Data Management.

3. Concept behind MDM.

Master data management has a whole new concept to eradicate the problem of duplication and redundancy of data. The problem with the Master data is, each record is not uniquely identified and hence the problem occurs. A simple and effective solution to a complex problem.Master data management links each Master Data record to a unique No called DUNS no.  (Dun & Bradstreet No). D & B has a huge database which contains almost every enterprise in its memory. Each enterprise, its branch and its acquired companies have unique identities, and the master data records in them are matched with the DUNS No. the entire concept behind MDM implementation is really interesting and for more details, catch the book  SAP NetWeaver Master Data Management.


Master Data Management is a key area for any enterprise. Companies can’t afford to take it lightly at any cost. The consequences of data inconsistency can be hazardous to the enterprise, and more importantly on its clients. Hence, Companies should be meticulously involved in the optimization of their Global Master Data, and utilize the solution to be able to implement future development in a cost effective and an efficient manner.

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  • You say “Master data is the data which seldom changes, or in some cases never changes “.

    So let me ask the question – why should master data remain static? Why can’t all the attributes of say a customer or a product change all the time? As long as we have a unique identifier, why do we care of the attributes change frequently or not?

    • Hi Vijay,
      first of all , thanks for reading the post. 🙂
      coming to your question , It is not possible for the master data to change all the time.
      For ex , a company might have various branches in various countries.
      For the branches , the main company is always the same. Hence , this data can never change.
      The situation where there is a merger or acquisition, then there would be a change in the company headquarters.
      Master data management is a concept where we can reduce the redundancy of Master data.
      if the data is dynamic , then i am afraid it becomes
      transactional data.
      Thanks again.  🙂

      • ok – so let me put forward a hypothetical case. My org starts segmenting customers based on buying habits every month. So every month, there is a chance of the segment attribute of customer changing.

        So, according to your answer – I should call segment as transactional data. Now, how does this affect my data model. And what are the implications?

        Why do I need to distinguish between mater data and transaction data depending on the frequency of change? How does this help me?

        • Hi Vijay,

          Certainly frequency of change is one criteria to distinguish master data from transactional data.
          But it is not mandatory that master data never changes, key is master data ‘Seldom Changes’.

          Master Data is that set of data which is used\ fetched during any transaction processing to arrive at result, this data can be in the form of Customers List, Business Rules etc.

          Apart from these criterias other stuff that technically distingusish Master Data is that most of the master data which are very frequently used are buffered. So if you go to technical properties of master data tables you would find some kind of buffering enabled for them.