There is a lot of buzz about Master Data Management (MDM). What exactly is master data? Master data is not definable it varies from one organization to the next. You may have heard it defined as non-transactional data, all the business nouns, data that is shared across the enterprise, reference data etc. They are all correct and they all also have exceptions.
Instead of trying to define exactly what master data is, let us give some examples.
- You are tool manufacturer: You manufacture ½ inch drills. All the data relating to the ½ inch drill is master data (part number, description, color, horse power, price etc.). John Doe buys 3 of those drills. All the information about John Doe (name, address, phone number etc.) is master data. The fact that John Doe purchased 3 drills is transaction data.
- You are a Bank: You make loans. All the data that describes each of the loans is master data (load id, loan type, description, terms etc.). You have loan officers that are responsible for selling and managing these loans. All the data about these loan officers is master data (Name, employee number, position, salary etc.). When the loan officer makes a specific loan to a customer (Jane Doe signs up for a 30 year mortgage), that is a transaction.
- You are a healthcare payer: You sell health insurance. You have many many different types of policies. All the information about these policies is master data. You sell this policy to a customer which is a corporation. All the information about that corporation is master data. The corporation has employees. All the information about each those employees is master data. The employees file claims for care received. These claims are not master data, but are transactions.
Looking at these examples, one thing comes across, master data is that data that describes the entities involved in a transaction. We can define master data as data that gives context to a transaction.