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Why Your Master Data Management Needs Data Governance

Authors Photo Precisely Editor | November 8, 2021

In recent years there has been a growing awareness among organizations around their data and the role it plays in the success or failure of their most critical business functions. This shift in mindset along with the evolution of cloud technologies has formed the basis of change in technology budgets from a concentration on hardware and infrastructure purchases to one that leverages technology and services that make the best use of corporate data assets. In line with this has been the rise in popularity of Master Data Management systems (MDM). Used in the management of critical shared data domains such as security master, product master, or client master, MDM, when properly implemented, can form the cornerstone of an organization’s Enterprise Data Management (EDM) strategy.

MDM – Not the silver bullet

The goal of MDM is to identify, validate, and resolve data issues as close to source as possible, while creating a “Gold Copy” master dataset for downstream systems and services to consume. MDM provides many benefits and, when implemented correctly, can ensure consistency, completeness, and accuracy of core shared data sets. But MDM is not the silver bullet of data quality for the enterprise. At its core, MDM manages just a single area of the data universe namely, business entities. If we look a little deeper into an organization’s data use, we find that many business and technology functions rely on a mixture of operational data, reference data, metadata, and audit information in addition to the aforementioned master data, with the quality of each being of equal importance. MDM does a commendable job of ensuring the shared master data is managed correctly and is fit for purpose, however MDM does not represent a full Data Governance or EDM program. Quality is only part of the data equation, whereas organizations need a broader view and transparency into the data they plan on using for critical decisions, and this is something that MDM systems are not well positioned to provide. In addition to mastering data, the following capabilities need to be addressed:

  • Definition: What does the term mean? Are there any other names (synonyms), phrases or abbreviations that this term is known by. Is the term calculated or licensed?
  • Data classification and retention policies: Data may be classified many ways based on both internal and external policies. These can further drive usage rights, disclosure, and disclaimers.
  • Original source: Where did the data come from? Are there multiple sources? Are there any sourcing / priority rules when creating the gold record? What is the authoritative source for a particular set of data? Can it be overwritten?
  • Search: What data is available and from where? Is it shared? Which business functions are using which set(s) of data?
  • Collaboration: How can people become more knowledgeable about and around organizational data? How can they contribute their expertise?
  • Enterprise data quality: How trustworthy are the various types of data in use? Is there a pattern or trend to the various domains of data?
  • Operating models: It’s fair to say that the data won’t manage itself, there needs to be policies, procedures, and resources applied to ensure the operations and drive quality, security, access rights, sourcing, and the proper use of data throughout the organization.
  • Responsibilities: Probably the most contentious area and the one where most companies struggle is where the accountability lies. Assigning people to roles is one component, but what are the expectations? How do we establish models of interaction and measure effort of staff navigating through the cultural, political, and personality land mines to ensure the optimal use of an organizations’ resources and their data?

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MDM’s myopic focus makes it impossible to address these areas across the organizations’ broader spectrum of data, and highlights the key differentiators and importance of Data Governance to the organization.

“MDM Without governance…is just data integration!” – Aaron Zornes [1]

Proper governance sits on top of MDM, data movement or data warehouses for that matter, and ensures that the data is understood by the business from a definitional, sourcing, quality, and accountability perspectives. When embarking on large scale data driven initiatives, especially ones that bring large cultural and operational changes, it’s imperative that data governance is established early and incorporated into every phase of the project. Data projects that neglect data governance run the risk of delivering a technical masterpiece, that is both impractical and too complex for the business to understand or utilize. Integrated Data Governance can also ensure the business backing and active participation in initiatives that are often perceived by the business as a technology exercise owned and operated by IT.

master data management

“Through 2016, only 33 percent of organizations that initiate an MDM program will succeed in demonstrating the value of information governance.” – Gartner [2]

This astonishing statistic from Gartner solidifies the fact that business participation in many MDM programs is lacking and that business fails to understand, embrace or value these multi-million dollar investments in MDM. Review any statistics on failed or underachieving MDM projects and all will most likely point to a lack of data governance incorporation to manage the people, processes, and most importantly the data needed to succeed.

“The data governance, prioritization, people and process aspects of implementing an MDM solution will likely derail the project before the technology fails.” – Wang and Karel [3]

The value of a business glossary

The establishment of a data governance framework, operating, and reporting models are a great first step for organizations to manage their data. In much the same manner as organizations inventory their other corporate assets with HR and finance systems, the data assets need to be properly defined, inventoried, managed, and ultimately opened to collaboration. Organizations typically start this process with internal solutions leveraging spreadsheets, SharePoint, or some other homegrown solution. The challenge with these solutions arise as more and various types of data assets need to be populated, as well as the ability to track lineage, workflow, impact analysis, or collaboration capabilities for the various data governance roles. In the end, the glossary becomes the glue that ties the data governance capability into the MDM project, ensuring business participation, accepted business term definition, and assigned and documented accountabilities for the governance of the mastered domains.

Knowing up front MDM’s capabilities and especially its limitations can help an organization to incorporate solutions that provide a full 360° view, understanding and transparency into their corporate data assets.

To learn more about how a comprehensive enterprise data governance solution can help you solve the organizational data quality challenges, read our whitepaper A Roadmap for Data Governance.


[1] Zones, A MDM software vendors struggling with data governance, Tech Target, July 2012

[2] Gartner Says Master Data Management Is Critical to Achieving Effective Information Governance.

[3] Thomas Wailgum, Master Data Management: Companies Struggle to Find the Truth in Massive Data Flows, CIO, 2008