What is
MDM?
Definition of Master Data
Master data is the core data of an enterprise that exists independently of specific business transactions and is referenced in business transactions. It builds the foundation for the smooth execution of business processes and well-informed business decisions. Master data represents business objects rather than business transactions and is rarely changed over a long period of time. The following objects are among a company’s most important master data objects:
● Product
● Customer
● Supplier
● Employee
Companies have to be aware that there are several different views on master data. So within one company, the different areas create individual versions of a master data record and the trading partners along the value chain also introduce additional versions. To demonstrate this, the figure below shows that the different versions are stored in multiple systems:
● The customer Jane has (except for her first name) totally different data in the call center and the ERP system.
● The product to be sold has three different part numbers.
● The vendor has two different identification numbers.
So the definition and handling of master data is a task of paramount importance for a company because:
● Master data is needed to make decisions on all company levels.
● Business processes throughout the entire company rely on master data.
● High-quality master data helps to improve the operational efficiency of a company.
● With high-quality master data, costs can be reduced. With a Global Spend Analysis you can negotiate better prices granted from the suppliers.
Master Data Management (MDM)
Master data management (MDM) is a technology that includes the definition of processes and responsibilities for master data maintenance. In case of distributed systems, MDM has to support the synchronization of master data across the enterprise. In addition, MDM has to ensure the availability of master data in good quality. MDM is the sum of all activities, processes and technical mechanisms that are required to achieve these goals.
However, MDM is not only a technology, it also requires joint efforts from different business areas as well as organizational rules and processes. So MDM is an enterprise-wide task that requires the cooperation of a company’s business units which includes policies and responsibilities for managing master data.
MDM as the Foundation of Enterprise SOA
IT landscapes today are quickly moving towards dynamic environments enabled by service-oriented architectures (SOA) where specific master data strategies play an important role. Business processes work successfully within the context of dynamic services only if they are founded on reliable information - that is, consistent master data. Why? Because processes cannot successfully exceed application boundaries if they do not know how key master data should be translated and interpreted in these systems. Prior to shifting to a service-oriented architecture, companies must cleanse their data across system boundaries; otherwise business processes will get stuck on these issues.
SAP NetWeaver Master Data Management (MDM)
SAP NetWeaver MDM fits the above-mentioned description of an MDM solution. It ensures that questions about master data as specified below are answered so that business processes can run smoothly and business decisions are well informed:
SAP NetWeaver MDM offers the capabilities and functions to handle master data according to a company's needs. These capabilities and functions can be used in the following ways:
● SAP NetWeaver MDM is used to aggregate master data from across the entire system landscape (including SAP and non-SAP systems) into a centralized repository of consolidated information. In this context, MDM also acts as a central hub and allows the enrichment of data via third-party integration. The consolidated master data is a prerequisite for sound business operations and reliable company-wide reporting.
● High information quality is ensured by syndicating harmonized master data that is globally relevant to the subscribed applications. In these remote applications, master data can be enriched with locally relevant information.
● A company's quality standards are supported by ensuring the central control of master data, including maintenance and storage. Centrally created master data can be syndicated to remote systems as required using distribution mechanisms.
● In addition to the above mentioned ways, there are many other ways to use SAP NetWeaver MDM. The specific usage depends on the main focus of the task that has to be fulfilled.
More information:
Business Process Example: Successful Marketing Campaign
A correct address is of high importance, especially if the success of your company relies on error-free and smooth communication. If you can ensure that your customer address data is correct prior to launching a marketing campaign, you can save a lot of money by avoiding double shipments and returns. Customers, who do not receive a shipment are dissatisfied, while customers who receive multiple shipments are annoyed. The quality of your marketing campaign has been negatively affected.
SAP NetWeaver MDM gives you the capability to check the quality of the customer data before you start a marketing campaign. You can correct poor address data or identify duplicate customer records. In this way you reduce high shipment costs and increase customer satisfaction. The success of your marketing campaign has improved.
Business Decision Example: Global Spend Analysis
In your company you have different locations with different business systems that are not synchronized. At each location you buy goods from the same vendor. The financial reports do not reflect these expenditures. If you knew the total business volume for this vendor, you could negotiate better prices.
SAP NetWeaver MDM provides consolidated reporting of your expenditures. You transfer the vendor data from your business systems to a single MDM repository. Here you identify the vendors for which there are several master data records. For example, a vendor has the keys 825811, 67396, and 56113 in different business systems. SAP NetWeaver MDM informs you that these 3 keys belong to a single vendor. This is called key mapping. Key mapping enables you to create an accurate report by accumulating the expenditures related to the same vendor (for example in SAP NetWeaver Business Intelligence). With this information you are able to negotiate better prices.