All You Need To Know About Master Data Governance

Melike Aykose

Master data governance is today’s trending topic. Organizations have realized that master data is the basis of effective business processes and business intelligence. Therefore, they have started to include master data governance initiatives as a part of their strategic plans.

First, let’s understand what master data is.

What is master data?

Across the globe, people speak more than 6,500 different languages. If someone speaks a language that you don’t understand, then obviously, communication possibility is very limited.

This is the same for organizations. Imagine an organization where each line of business, system, and location has its own master data. How could they come up with a single version of truth?

Let’s paraphrase it in a simpler way: Master data is the common language of an organization!

According to Gartner, “Master data is the consistent and uniform set of identifiers and extended attributes that describes the core entities of the enterprise, including customers, prospects, citizens, suppliers, sites, hierarchies, and chart of accounts.”

According to Wikipedia, “Master data represents the business objects that contain the most valuable, agreed-upon information shared across an organization.”

Nowadays, most C-level executives have a master data–related initiative on their agenda. Their initial starting point is mostly technology-driven. But master data governance takes much more than that. It should be a holistic approach that requires changes in your strategy, organization, and processes as well as technology.

Let’s take a deeper look.

Essentials of effective and sustainable master data governance

1. Why: strategy

Master data governance is an ongoing journey that goes hand-in-hand with your corporate vision and strategies. It requires regular review and adaptation according to an organization’s broader strategy. Whether an organization targets new mergers and acquisitions, centralization of business functions, investment in new industries, new territories, new technologies, it always has an impact on master data governance.

Act with a strategy. You may “think big but act small” or “think big and act big” – but always have a strategy!

2. What: content

First things first: Know your data. Understand what you have in hand before dealing with it.

  • Assess your data quality – don’t forget: Rubbish in, rubbish out.
  • Cleanse, correct, complete, enrich.
  • Write your own Data Handbook where you describe your data model.
  • Differentiate global vs. local data.
  • Build rules for your data – both technical and business guidelines.
  • Make sure that all stakeholders are informed about your data guidelines.

3. Who: organization

Data is one of an organization’s most precious assets. There are accountants to manage your money and HR professionals to manage your people – why not people to manage your data? Recently, many companies have started building Centers of Excellence for master data governance and hiring chief data officers, data stewards, data analytics professionals, and so on. This is a good starting point.

It doesn’t matter whether you have a centralized, decentralized, or hybrid structure; always define a master data governance organization with:

  • Clear roles and responsibilities
  • Well-defined reporting lines
  • Detailed responsible, accountable, consulted, and informed (RACI) matrices for each master data domain

A common practice is to centralize the master data governance organization for shared business functions like accounting, purchasing, or human resources.

4. Where: technology

You need a single integrated technology platform to govern your data processes, manage your data lifecycle, monitor your data, and ensure data quality and uniqueness.

Master data governance on different platforms will bring additional integration and maintenance efforts and will probably harm the single-version-of-truth mission.

Imagine the chaos: You have multiple platforms where there are different versions of the same master data and don’t know which one is the valid, up-to-date version.

5. How: governance

Master data governance is like a living and developing organism within your organization. Watch it grow in a controlled and healthy way.

  • Define KPIs and standards to monitor your data.
  • Continuously evaluate how your data grows and evolves.
  • Take action to make it better.
  • Align it with corporate vision and strategy.
  • Always secure top-management sponsorship and support.

After you build your master data governance model based on the principles defined above, you can start enjoying the benefits.

Benefits of master data governance

Let’s explain it briefly:

1. It is your filter.

It ensures that no duplicate or redundant data is created and maintained in your organization.

2. It is your maestro.

It guides you through the master data processes. When a master data request is made (creation, change, blockage, etc.) based on the defined processes and authorizations, it automatically orchestrates the workflow and makes sure that it is completed successfully.

3. It is your editor.

Grammar defines the set of rules and derivations about how to use language. Effective master data governance makes sure that your data is defined and generated according to regulatory, industrial, and organizational rules and standards.

It also continuously monitors data quality and shows defects.

4. It is your translator.

Some organizations are like the United Nations, comprising many entities speaking different languages. An organization that’s grown over the years through mergers and acquisitions consists of different companies, systems, locations, and cultures. It is like different people calling the same FC Barcelona team Barcelona, or Barça, or Messi’s team…

Master data governance, like a simultaneous translator in a UN conference, makes sure that everybody understands each other. It maps master data used in different systems to a central master data model. This way, although the data can be managed centrally, it is serviced to other systems in their own way – that is, their own language.

5. It is your single point of contact.

Whenever there is any action you need to take about your master data – whether it is related to data model, data content, data management processes, data roles, responsibilities, or authorizations – you do it in one platform.

A single version of truth helps you to create validated and meaningful reports.

6. It is your inspector.

It is very important to trace and audit your master data. What data? When? By whom? Current status? This is needed for company, industry, government, and external regulatory compliance. Master data governance ensures a visible audit trail throughout the master data lifecycle.

In conclusion, master data is the basis of an organization’s business processes. The better your master data is governed, the better your business processes and the healthier your organization. Take good care of your master data: It requires clearly defined and published guidelines, a well-established organization, a single technology platform, continuous monitoring, and strong management sponsorship.

For more on this topic, please read “Evolving Your Data Strategy In The Experience Economy.”

Melike Aykose

About Melike Aykose

Melike Aykose is a Principal Business Transformation Consultant at SAP. Her aim is to become the trusted advisor of her customers during their digital transformation journey. Melike helps them answer why, how, what, and when to transform questions. Management of complex projects and programs, creation of innovation road maps, definition of improvement areas and value propositions, design of target operating models are among the services she delivers. Before joining SAP, Melike spent over 18 years of her professional career with several large organizations, covering different senior consulting and management roles.