Connecting Master Data to ROI

(Originally published as “The DNA of information” in Purchasing b2b magazine, January/February 2013.)

Regardless of the industry, data management is everyone’s business

Believe it or not, no matter what business your company is in, you’re in the data management business.

“No, no, no,” you say, “we manufacture cars, provide financial services, do purchasing…” Regardless of industry sector or job function, or whether it’s the private or public sector, master data is more than just a business process; it’s the information that forms the core of any enterprise. These data components are like the DNA of an organization that help processes, reporting and systems work as effectively as possible. Oddly though, as important a role as it plays, master data is hardly on anyone’s radar and is rarely given a second thought in day-to-day activities.

Simply put, master data is business information used across multiple systems, applications and/or processes. Master data is the information point of reference. The data itself can be structured or unstructured. Structured data encompasses such things as customer, vendor and supplier information, products, asset types and geographic attributes. Unstructured data includes things like customer survey feedback, SEO information and other qualitative (i.e. non-numerical) information. Regardless of whether it’s structured or unstructured, the ultimate goal of master data is to have one single record of truth: one sole repository.

Tapping into this investment and realizing its full potential requires the effective use of a company’s hardware and software as well as its “soft” intellectual property. Hardware includes the assets a company owns such as computers, vehicles, and office locations. Software is the mechanism used to move the data and take action with it: make, sell, transfer and so on. The soft intellectual property is the knowledge that resides within all individuals of the organization. It’s people—not the systems—that define the business rules and help identify data interactions and requirements.

Like DNA, master data has its own lifecycle. One can create, add to and make changes to it. Creation is the most important step. It’s essential to start with quality data, as this is what will form the structure of the master data. All parties contributing to the creation of this initial data need to have a clear understanding of the requirements. Without data standards and a central repository, unnecessary effort will go into process workarounds to bring consistency to fragments of “rogue” data. In the situation of a merger or integration, we’re not creating new data but rather migrating existing data to a new system. If that’s the case, it provides the perfect opportunity to bring this migrated data in line with your company’s data quality standards. By knowing the interrelationships, you can reduce project cycle time, mitigate risk and improve predictability from the beginning.

Too much data?

At times, it might seem that a company has an overabundance of data that’s been collected and surely some can be deleted. No matter how tempting, hold onto this data. There is minimal additional cost to hold a master data component. If a certain characteristic no longer exists or seems relevant instead of deleting it, change its relationship to the rest of the data. As an example, let’s use the ex-spouse. You may not want to look at their picture on your wall day after day important data is missing if you cut them out of the picture. Once deleted, you lose a reference point whose reminder could be beneficial in the future.

We’re often so focused on the task at hand that we see only what’s in front of us. But if we think more broadly and recognize the importance of each data piece we’ll see how it touches almost every joint and turn and interrelates with other data. Know how the different areas of your business will utilize the information for auditing, reporting and analysis. This whole picture view can make a difference and inform important decisions down the road.

Master data and its management probably lie at the tail end of your vast daily, weekly and monthly action items—if it appears at all. It’s like a pebble that finds its way into a runner’s shoe during a marathon. In the beginning and at subsequent marker points during the race it can seem like a nuisance and waste of time to stop and remove it; after all, you can still run and dealing with it will only slow your forward propulsion. But no matter how much training and preparation you’ve done, that pebble will eventually slow you down.

Procurement Professional Tip: Whatever the information you provide (vendor’s address, product specifications or payment terms) place additional attention on the quality of information you’re capturing. You don’t need to be the data architect to play an important role in master data management. Quality data makes a significant difference.

Management Insight: Are information and processes not running as smoothly as you would like? The key to this problem may be your master data. Determine one or two data components that need attention. This active relationship with data changes your organization’s ability to more effectively leverage the investment.

Linda Craig CSCMP, CITT, CHRP, MBA, is the managing partner of RSVP (Retention Strategy Value Partners), a strategic supply change innovation organization. Reach her at Linda@retention.ca.