In the last post, we looked into what is meant by Master Data. Now I will talk about the why it is so important to have a robust Master Data Management (MDM) program in today’s competitive business landscape.
Let us first look at the main driving force behind organizations embracing MDM programs. As the title suggests, very often in medium to large enterprises, different business units or different business systems manage data in silos. This means that the same entities may exist in multiple systems in different formats, with different data elements and different domains. The data in each silo is often, at best, incomplete, inconsistent–and at worst, inaccurate. A common example of this can be found in customer data that may exist in various systems such as sales/CRM, fulfillment, billing etc.–however, each with different keys and attributes. In such cases, an organization may not be able to tie all interactions with this customer due to differences in the data across systems. This can lead to many problems from lost sales to bad customer service.
Well-orchestrated MDM programs can yield significant ROI, by improving everyone’s understanding and insight into the entire business, enabling across the board improvements in many areas such as:
Better executive visibility and decisions
Bringing together core data translates to better reporting and analytics. This gives senior management better visibility into operations and they can make informed decisions. A customer relationship that could not be tracked completely earlier can be easily identified through all its interactions post an MDM program. This increased visibility also lets management respond to market trends quickly.
Manufacturing operations excellence
A company that has a high manufacturing capacity may see much lower production due to manufacturing bottlenecks caused by bad supplier or parts data. Bringing together the parts and supplier data across the organization can increase throughput by enabling sourcing of alternate parts and alternate suppliers when required.
A corporation that has disparate divisions or product lines, with sales staff aligned to those divisions or products can achieve significant cross-sell and up-sell opportunities by having a unified product and customer catalog. This allows the entire sales force to zero down on other opportunities at their clients or find new clients.
Reduced general operating costs
A good MDM solution invariably leads to better data quality (as such good data quality is a prerequisite to an MDM program). This can lead to cost savings, as errors in shipping (due to wrong or bad addresses) or manufacturing (due to inaccurate specifications of parts) can be reduced.
Better customer service
Having better customer master data leads to better customer service. All of us, at some point or another, have experienced either our names being misspelled or have been pitched products that are inappropriate based on our gender or age. Even worse is being offered products that the customer already has at teaser rates. This can lead to unhappy customers and wasted marketing budgets. Additionally, good customer and product master data can lead to better customer service on both inbound and outbound contact channels. When this centralized customer data is available, the contact can be tailored based on what is known about that particular customer.
Improved coordination with partners
Inaccuracies and inconsistencies in the data across various systems can cause problems in the value chain across the spectrum. This can lead to all your upstream (suppliers, other vendors) and downstream (trading partners, customers) interactions being prone to errors and causing these valuable partners to either shun your business or pass on the higher costs to you.
Enhanced regulatory compliance
The fact that MDM process involves cleaning up the data and removing redundant and inaccurate core business data across the organization, helps in making sure any reporting done in order to comply with regulations is likely to produce the same answer across the enterprise in case of audits.
Risk management support
Having timely, accurate and secure Master data about your business helps you minimize your risk profile and improves the success of your mitigation strategies.
In the next post we will look into the ‘how’; i.e. how to successfully implement a Master Data Management program.