Active vs. Reactive Data Management

By Sam Sliman
President, Optimal Solutions Integration, Inc.

Those responsible for master data must weigh the advantages and justify the cost of implementing an active master data management program versus pursuing a casual, reactive (and ostensibly less costly), clean-as-you-go program. The business case for active master data management focuses on key performance indicators (KPIs) that clearly demonstrate value; while examining the cost of out-of-sync master data clarifies the high price of a reactive program.

Active master data management produces the cleanest possible master data and one version of master data truth - and, importantly, keeps it that way. This goes directly to the heart of global data synchronization objectives. Without active and continuous master data maintenance, including the proper workflows and integration, unsynchronized, inconsistent master data can (and will) re-surface at any time.

It’s not clear that a relaxed approach to master data management would be any less expensive than an active one. Periodic reviews and cleansing activities will consume resources – the amount of which will depend on how bad the data gets in between cleansing sessions. The salient issue in developing a business case is: What does out-of-sync master data cost?

Key drivers of costs related to out-of-sync data include:

• Increased help desk volume due to data inconsistencies • Increased stock outs resulting in lost potential sales • Increased purchase order errors that result in incorrect inventory levels • Increased invoicing errors that consume time and effort to rectify • Increased invoicing errors that require write-offs and deductions

On the flip side, the benefits of an active MDM regiment include:

• Improvement in customer service • Improvement in customer loyalty • Improvement in channel relationship management • Improvement in maximizing product and brand management • Improvement in optimized promotions • Improvement in supply chain flexibility • Improvement in supply chain collaboration • Improvement in employee productivity

Some of these metrics can be quantified; others are somewhat intangible but could be approached with an activity-based costing model. As always, a business case based on these KPIs must be customized to an organization’s particular situation.

Perhaps the greatest challenge to an active MDM deployment is getting an organization to make the changes needed to fully leverage MDM’s capabilities – especially where the “data steward” role is concerned. Some companies have data stewards, most don’t. To be sure, an active MDM program necessitates having strict governance processes and rules for how additions, deletions, and updates are initialized, approved and propagated.
In this regard, there are start-up costs for companies if they are not already doing this. When compared to the costs of poorly maintained master data, these costs are justified, particularly when weighed against the many benefits of active MDM.

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