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January 27, 2022

3 Keys to Understanding Master Data Management for Business Leaders, CMOs, and COOs

Lori Witzel


The lifeblood of business is data, and business stakeholders need at least a basic understanding of how their IT teams use and manage that data. There are three keys to understanding master data: what it is, what can happen if it’s badly managed, and the business stakeholder’s role in master data management (MDM).

The First Key: What Is Master Data?

Master data is the core data that is absolutely essential for operations within your enterprise, division, or department. Think of master data as the nouns representing key elements of your business.

In this example, the master data is in bold:

Buyer Name at Company placed an order for 20 of SKU XXXXX on MM-DD-YYYY and has been invoiced $10000.

Other types of data that are important for business leaders are transactional data and analytical data.

In this example, the transactional data is in bold:

Buyer Name at Company placed an order for 20 of SKU XXXXX on MM-DD-YYYY and has been invoiced $10000.

In line with the above examples, analytical data would be data that has been aggregated in order to identify patterns and trends of interest. For example, analytical data may comprise average order sizes for the company, seasonality of purchases, the regions where purchases are on average more than a certain dollar amount, and so on.


Because master data is key for many business processes and related IT systems, it needs to be managed and standardized, so it can be used seamlessly by IT processes across an organization. It also needs to be governed in line with risk management and regulatory compliance needs.

Customer, employee, or patient data may be master data, and privacy regulations like General Data Protection Regulation (GDPR) and Health Insurance Portability and Accountability Act (HIPAA) require governance and management of that data. Data about a business’s assets and locations may be master data, and will be needed to meet risk management policies.

Managing master data requires cross-functional collaboration across an organization, and business stakeholders must be part of those efforts.

The Second Key: What Can Happen If Master Data Is Not Well Managed?

If master data represents the most important aspects of your business, there are far-reaching consequences for it being poorly managed.

Challenges that arise with mismanaged master data include:

  • Business process inefficiencies. Master data redundancies and inconsistencies are not uncommon, but can lead to friction in the business processes that rely on master data. For example, if a customer account is part of the master data in a Customer Relationship Management (CRM) application, and there are separate master data for a customer account in your organization’s Enterprise Resource Planning (ERP) application, changes to one set of master data will increase the risk of errors that can lead to incorrect billing and unhappy customers.


  • Reporting and analytics inaccuracies. While the systems that hold master data don’t usually have transactional data details, they hold the attributes used by business intelligence and analytics tools to properly aggregate and analyze the data. An organization can’t trust the data used to drive decisions or make accurate forecasts without well-managed master data.
  • Compliance risk and fines. Proper master data management and governance can help reduce risk. For example, if you don’t have a unified approach to customer data across your business, you cannot respond quickly to the demands of regulations such as GDPR or the California Consumer Privacy Act (CCPA).
  • Resilience gaps and a lack of agility. Having a well-managed, trusted set of master data empowers your organization to respond quickly during unprecedented times. Business processes run with less friction, analytics can be trusted for fast pivots, and greater resilience helps turn risk into opportunities.

Given the importance of a robust, unified approach to MDM, it’s imperative that business stakeholders increase their understanding of their organization’s current approach, and actively participate in MDM projects.

The Third Key: Your Role, as a Business Stakeholder, in Master Data Management

To turn data into valuable insights, your organization needs your expertise in what insights might matter most – not just for the present state of the business, but to drive innovation and optimization for the future. That future state may require agreement on changes to master data. Who better than business stakeholders to advocate for the “new nouns” that can help support and measure growth?

Further, business stakeholders have a line of sight towards regulatory compliance risk that can change depending on new legislation and new markets. It’s no wonder that industry analysts recommend organizations think of MDM as a business initiative enabled by technology, and encourage business leaders to drive the understanding their partners in IT need for robust MDM.

MDM is moving beyond just a traditional IT role. Business leaders need to understand what MDM is, why it matters, and how they have an important role to play in this facet of data management. Schedule time with your data management teams and ensure you are leading the conversation about what is needed to enable even more data-driven decision making. MDM is key to enabling digital transformation, and business stakeholders should lead the conversation.

About the author: Lori Witzel is Director of Research for Data Management and Analytics at TIBCO. She develops and shares perspectives on improving business outcomes through digital transformation, human-centered artificial intelligence, and data literacy. Providing guidance for business people on topical issues such as AI regulation, trust and transparency, and sustainability, she helps customers get more value from data while managing risk. Lori collaborates with partners and others within and beyond TIBCO as part of TIBCO’s global thought leadership team.

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Master Data Management: Three Paths to Creating a Successful, Low-Risk Program

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Governing Consumer Data to Improve Quality and Enforce Privacy