Master Data and Master Data Management Explained


Master Data and Master Data Management Explained

Can Şentürk
2022-12-15 17:11 - 5 minutes

Master data, and mastering this is crucial for businesses. Data can originate from different sources, such as SaaS platforms, websites, third-party entities, etc. A solid data management strategy specific to each department can give companies an edge over competitors.

In this article, we'll delve into the intricacies of master data and examine the art of master data management. This piece will empower you with the information necessary to grasp and execute this idea.

What is master data?

Master data is the fundamental data that is crucial for a company's operation. It includes information about important business entities that provide context for business transactions and operations. Master data can vary both per and within an industry.

To better understand master data, it's important to understand the different forms of data companies collect. Generally, the data captured can be classified into three categories: 

  • Transactional data: This is the data that is generated by various applications during the execution or support of daily business processes. 

  • Analytical data: This type of data is created by calculations or analyses performed on transactional data. 

  • Master data: Master data represents the actual critical business objects on which the transactions are executed, considering the parameters on which data analysis is performed.

Although this may still seem a bit abstract, consider the following example, which utilises various forms of data:

On 15th September 2022, Customer X ordered 5 licenses of Product A for €100. 

In this example, the date (15th September 2022), quantity (5 licenses), and price (€100) are transactional data. The master data in this example are the customer and the product, without which there would be no one to buy the product and no product to be purchased. 

The customer and product information is typically stored in a database as master data.

You might now be wondering, "What about analytical data?" This cannot be extracted from this example. However, it can be done over a longer period. For instance, if the same customer has placed multiple orders, their history can be analysed. Has this customer purchased this product before? Have they purchased other products from us? How many? When? What is the average order value of this product?

Why is master data important?

Master data is vital as the source of truth for organisations that desire to keep their critical data current. Enterprises leverage Master Data Management (MDM), which we will explore later, to establish, preserve and disseminate the master data internally.

Failure to implement MDM could result in numerous difficulties, including data duplication, inconsistencies, suboptimal business procedures, and sudden shifts in the business model. When fresh data becomes available, updating multiple systems could be a laborious process.

Centralised data management across the entire organisation yields long-term benefits. Master data principles help develop a culture driven by data, where staff can make informed decisions based on the most recent and superior information.

Types of master data

There are four distinct types of master data: customers, products, locations, and other miscellaneous data.


This includes not only customers but also all people who qualify. Think of employees, partners, and suppliers.


Products also include services, materials, media, and equipment.


Locations refer to the physical location where work is performed within an organisation. Think of franchises, stores, and branches.


The "other" domain serves as a container for all crucial data that does not fit the aforementioned three categories. It encompasses data regarding accounts, contracts, warranties, finances, etc.

Master data management

Master Data Management (MDM) is a service that includes the technology, tools, and processes necessary to unify and coordinate master data from different sources throughout the business organisation. In other words, it is a technology-based solution for maintaining the official, cross-departmental shared set of master data in a uniform, consistent manner so that it is always credible and accessible.

Effective master data management is necessary to ensure data consistency, completeness, and accuracy within a company and its partners. The tools should ensure clean and consistent data in the long term, not just in the short term.

Master data management depends on good data governance, policies, and standards to maintain data quality during recording and data integrity during record updates. Without this dual focus on policy enforcement during recording and updates, master data will deteriorate over time, reducing the value of insights and the return on investment of MDM implementation.

Are you already the master of your data?

Data is important and can also be used to your advantage if you know what to do with it. Don't know what to do with your data? Do you still have unused data? Do you see opportunities but don't know how to approach them? Our knowledge and expertise will help you further. Contact us without obligation, and let's create something beautiful. 

Frequently Asked Questions
What is master data?

Master data refers to the critical business data that is shared across an organisation, such as customer and product information.

What is master data management?

Master data management is the process of creating, maintaining, and distributing accurate and consistent master data across an organisation, typically through the use of specialised software.

What is master data management used for?

Master data management (MDM) is a strategic approach adopted by organisations to ensure the consistency, accuracy, and reliability of core data, including customer information, product details, and supplier data, across all systems and applications within the enterprise. This enables improved operational efficiency, facilitates better decision-making processes, and ensures compliance with regulatory standards.

What are the three types of master data?

Master data management (MDM) involves managing three primary types of master data: Customer, Product, and Supplier. Customer Data includes customer information, including their names, addresses, contact details, and transaction history. Product Data consists of more information about the organisation's products or services, such as descriptions, specifications, pricing, and inventory levels. Supplier Data includes information related to suppliers, vendors, or partners, such as company details, contracts, performance metrics, and contact information.

What is MDM?

MDM, which stands for Master Data Management, is a comprehensive approach utilised by organisations to maintain a single, accurate, and authoritative source of key data entities. This ensures consistency and integrity across the enterprise. MDM involves implementing processes, technologies, and policies aimed at managing critical data such as customer, product, and supplier information. Its purpose is to enhance operational efficiency, facilitate informed decision-making, and ensure compliance with regulatory requirements.

Can Şentürk
Online Marketeer

As a passionate marketeer at Tuple, I combine my digital marketing expertise with a dedication to ongoing learning and personal growth. My interest in IT drives me to stay up-to-date with the latest technological advancements.

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