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Data is the lifeblood of business, 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 is mismanaged, and the role of the business stakeholder in master data management (MDM).

The first key: what is reference data?

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

In this example, the basic data is in bold:

buyer’s name at Society placed an order for 20 SKU XXXXX MM-DD-YYYY and was billed $10,000.

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

In this example, the transactional data is in bold:

Name of the buyer in the company placed an order for 20 from SKU XXXXX the MM-DD-YYYY and was billed $10,000.

Consistent with the examples above, analytical data would be data that has been aggregated in order to identify patterns and trends of interest. For example, analytics data can include average order sizes for the company, seasonality of purchases, regions where purchases average over a certain dollar amount, and more.


Because master data is critical to many business processes and related IT systems, it needs to be managed and standardized, so that it can be used seamlessly by an organization’s IT processes. It must also be governed in accordance with risk management and regulatory compliance requirements.

Customer, employee, or patient data may be master data, and privacy regulations such as the General Data Protection Regulation (GDPR) and the Health Insurance Portability and Accountability Act (HIPAA) require the governance and management of this data. Data about a company’s assets and locations can be master data and will be required to comply with risk management policies.

Master data management requires cross-functional collaboration within an organization, and business stakeholders need to be part of those efforts.

The second key: what can happen if master data is not well managed?

If master data is the most important aspect of your business, mismanaging it has far-reaching consequences.

Challenges that arise with poorly managed master data include:

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


  • Inaccuracies in reports and analyses. Although systems that contain master data generally do not have transactional data details, they do contain the attributes used by business intelligence and analytics tools to properly aggregate and analyze the data. An organization cannot trust the data used to make decisions or make accurate predictions without well-managed master data.
  • Risk of Non-Compliance and Penalties. 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 can’t quickly meet the requirements of regulations like GDPR or the California Consumer Privacy Act (CCPA).
  • Resilience gaps and lack of agility. Having a well-managed and reliable master data set enables your organization to respond quickly during unprecedented times. Business processes run with less friction, analytics can be trusted for quick pivots, and greater resilience helps turn risks into opportunities.

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

The third key: your role, as a business actor, in Master Data Management

To turn data into valuable insights, your organization needs your expertise in the insights that matter most, not only to the current state of the business, but also to drive innovation and optimization for the future. This future state may require an agreement on master data changes. Who better than economic actors to defend the “new names” that can help support and measure growth?

Additionally, business stakeholders have a line of sight to regulatory compliance risk that can change with new legislation and new markets. It’s no wonder industry analysts are recommending organizations consider MDM as a technology-enabled business initiative and encouraging business leaders to make their IT partners understand the needs of robust MDM.

MDM goes 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 be sure to lead the conversation on what is needed to enable even more data-driven decision making. MDM is essential to enable digital transformation, and business stakeholders need to lead the conversation.

About the Author: Lori Witzel is Research Director for Data Management and Analytics at TIBCO. She develops and shares insights on improving business outcomes through digital transformation, human-centric artificial intelligence, and data literacy. By providing advice to business people on topical issues such as AI regulation, trust and transparency, and sustainability, she helps clients 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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