What is Master Data
Master Data sets are subject areas with its set of entities that form the basis of operational transactions. Master Data entities are typically cross-functional within an organization. Examples of Master Data include Item, Product or Material Master, Customer, Vendor, or Counter-Party Master, and Securities Master.

What is Master Data Management
"MDM is a workflow-driven process in which business units and IT collaborate to harmonize, cleanse, publish and protect common information assets that must be shared across the enterprise. MDM ensures the consistency, accuracy, stewardship and accountability for the core information of the enterprise. " Gartner¹

Master Data Management focuses on the data to be managed and the processes surrounding the management of the data. In a typical enterprise, there will be a number of systems that are already generating master data, and the MDM tool needs to cover the various aspects of MDM, including the following:

• Define: Aligning the definition of the master data
• Cleanse: Cleansing the existing master data to create a clean copy (the gold copy)
• Maintain/Govern: Defining the processes to manage the generation of master data (centrally or on-going in various systems)
• Distribute: Distributing the master data to the various applications that need it
• Administer: Extending the master data definitions

The Need for Master Data Management
The need for MDM can be felt across the organization in various business functions. This need can drive the subject areas that are addressed by MDM.

Business-Driven

• Conformance/Auditing
• Single view of customer
• Global data synchronization efforts
• Accurate reporting
• Consolidation after mergers and acquisitions

The need for IT is not just to reduce the inefficiencies and costs but also to improve the support for audit and conformance.

IT-Driven

• Visibility into processes for managing master data to support audit and conformance
• Reduced effort to consolidate information
• Reduced cleansing/mapping of information
• Increased efficiency
• Reduced costs overall

¹Gartner, Inc; "Mastering Master Data Management" by Andrew White, David Newman, Debra Logan, John Radcliffe; 25 January 2006

To further understand the challenges of MDM, click here