The core of most Master Data Management (MDM) solutions is a master data hub. MDM solutions as those appearing in analyst reports revolves around a store for master data that is a new different place than where master data usually are. That is for example being in CRM, SCM and ERP systems.
For large organizations with a complex IT landscape having a MDM hub is usually the only sensible solution.
However for many midsize and smaller organizations, and even large organizations with a dominant ERP system as well, the choice is often naming one of the application databases to be the main master data hub for a given master data domain as customer, supplier, product and what else is considered a master data entity.
In such cases you may apply things as data quality services as described in the post Lean MDM and other master data related services as told in post Service Oriented MDM.
There are arguments for and against both approaches. The probably most used argument against the MDM hub approach is that why you should solve the issue of having X data silos with creating data silo X + 1. The argument against naming a given application as the place of master data is that an application is built for a specific purpose and therefore is not good for other purposes of master data use.
Where do you put your master data? Why?
Very good point Henrik. We see many organizations trying to cram the whole customer journey in 1 silo, such as CRM. Trying to shoehorn marketing, sales, support, financials, social media, logistics, demographics Master Data into 1 transaction application that was designed to run a particular tasks, seems counter productive, counter intuitive, and if not bad practice.
It reminds me of the big NO-NO for doing advanced analytics right on the ERP. These projects always led to vast amounts of customizations that ended up crippling system performance, costing a fortune in ad-hoc consulting and making upgrades an acute pain.
Having developed, sold and taught in the field, I feel much better knowing my data safe in an independent hub that will survive ERP changes and even MDM solution switches.
Nurtured Master Data is yours, no your vendor’s and should never go away, regardless of systems changes.
Thanks for adding in Gauthier. I like the shoehorn metaphor for the argument for the MDM hub and against the application approach.
You have a brought into very good point which i had to learn during the project execution in a very hard way. For mid-size organizations that are having less complex system landscape and containing few master data systems, it makes more sense to keep the ERP itself as the master data Hub given that many ERP systems now comes with strong master management tools including data governance (SAP MDG built on top of ECC) resulting in data quality adherence ensured at early point of the data life cycle provided the customizations done in ERP packages are limited.
MDM Hub is a perfect fit for scenarios to manage master data where organizations are in a long term transition phase from legacy systems to packaged ERP applications. For master data attributes that will eventually retire, its more wiser for these attributes to be housed in MDM Hub rather than customizing the ERP packages to house these attributes.