Organizations survive and thrive based on the activities they carry out, and it is com- mon for the most important of those activities to be recorded as transactions. Typical examples range across the breadth of an organization and include:
- Making a sale, invoicing, and receiving
- Creation of a purchase request, conversion to a purchase order, and order placement to a
- Receipt of purchased items, receipt of invoices, and payment to a
- Conversion of raw or component materials into intermediate or finished
- Inventory movements such as receipt of goods, shipments to warehouses, and delivery to customers or points of
- Human Resources activities such as onboarding, annual performance ap- praisals, and
It is normal for management and leadership to keep their eye on these transactional activities since they drive the success or failure of every organization. In that sense transactional activities can be thought of as the engine that moves an organization along, and reporting based on the data produced, transactional data, as the window into how well the organization is performing. Organizations often spend significant sums of money in managing transactional activities and putting in systems to support them, for example ERPs like SAP.
If transactions are the engine that moves an organization forward, master data is the fuel for that engine. With good, high-quality master data the engine runs smooth- ly. Poor, low-quality master data can reduce that engine to bumping along in fits and starts, or even shutting the engine down altogether and crippling organizational per- formance.
Direct to customer sales requires a customer record to first exist. A billing address must be in place before an invoice can be sent. A list of components and instructions for assembly or conversion are necessary before manufacturing can occur. If any of these master data are missing the transactional activity either can’t be carried out at all, or is executed in a workaround fashion that may produce questionable results.
Given the foundational importance of master data one would think it would be a high-priority in every organization, but that is not the case. My experience has been that master data is often seen as a necessitated cost of operation, something that does not add value in the value chain. Entities within an organization that commonly manage their own master data, for example Accounting and Finance, are often fo- cused on the transactional activities that make up their day-to-day and turn an eye to master data only when they have to. All too often master data receives attention only when it is problematic.
Master data does typically become important at an enterprise level when a system implementation or integration occurs because it is seen as critical path to a launch. In this scenario the focus is usually on gathering, cleansing, and loading the master data necessary for a successful go-live. This type of master data work can be intensive and arduous, although automation can help in some cases. What frequently does not hap- pen is putting in place processes, systems, and staff to ensure good master data is en- tered into business systems after a launch.
Organizations should invest in their master data and treat it like a strategic asset, much like they would a valuable facility or piece of equipment. Design and implement processes to deliver high-quality master data through a cradle-to-grave lifecycle, and put in place the systems and staff to enable those processes to function effectively.
Make master data visible in the organization. Let people from staff to leadership know the importance of it, and how it is utilized. Record and report performance is- sues for business transactions due to master data quality, and more importantly when performance is good. Observe performance of master data processes, including qual- ity assessments, and make those visible as well.
Bring governance of master data to life by assigning ownership to managers, and ensure ownership rolls up to leadership. Enable managers and leaders to make deci- sions regarding the gathering and processing of master data, as well as data quality, particularly across organizational boundaries.
Every organization, and typically every part of every organization, faces pressure to keep operating costs down. Hold master data parts of the organization accountable for their performance and operating costs, but avoid pushing so hard on master data costs it damages business transaction performance.
A useful exercise to provide perspective is to develop a valuation for your master data and supporting processes, systems, and staff. What would it cost to replace these, and what would the economic impact be on your organization?
The opportunity is there. Invest in your master data and you can generate a com- petitive advantage. Neglect your master data and you can put your organization at risk and cede competitive advantage to some one else.
