If you haven’t yet implemented a Master Data Management (MDM) solution you typically holds master data in dedicated solutions for Supply Chain Management (SCM), Enterprise Resource Planning (ERP), Customer Relation Management (CRM) and heaps of other solutions aimed at taking care of some part of your business depending on your particular industry.
In this first stage some master data flows into these solutions from business partners in different ways, flows around between the solutions inside your IT landscape and flows out to business partners directly from the various solutions.
The big pain in this stage is that a given real world entity may be described very different when coming in, when used inside your IT landscape and when presented by you to the outside. Additionally it is hard to measure and improve data quality and there may be several different business processes doing the same thing in an alternative way.
The answer today is to implement a Master Data Management (MDM) solution. When doing that you in some degree may rearrange the way master data flows into your IT landscape, you move the emphasis on master data management from the SCM, ERP, CRM and other solutions to the MDM platform and orchestrate the internal flows differently and you are most often able to present a given real world entity in a consistent way to the outside.
In this second stage you have cured the pain of inconsistent presentation of a given real world entity and as a result of that you are in a much better position to measure and control data quality. But typically you haven’t gained much in operational efficiency.
You need to enter a third stage. MDM 3.0 so to speak. In this stage you extend your MDM solution to your business partners and take much more advantage of third party data providers.
The master data kept by any organization is in a large degree a description of real world entities that also is digitalized by business partners and third party data providers. Therefore there are huge opportunities for reengineering your business processes for master data collection and interactive sharing of master data with mutual benefits for you and your business partners. These opportunities are touched in the post MDM 3.0 Musings.
Liliendahl on Data Quality 
Interesting thoughts Henrik. This idea of extending your MDM solution to business partners is something we, at Verdantis, do suggest to our clients, especially the bigger ones. In my experience, there is still a lot of hesitancy in this plus a desire to keep one’s data as gated as possible. Have you faced such questions? And how do you tackle them?
Thanks.
Indeed Vipul, not everyone is convinced yet and even not many of the MDM vendors are yet most likely do to the hesitancy they sense at their clients. A good way of convincing is by the example meaning presenting success stories. At some point this approach emerges as the only solution to overcome challenges. I am working with such a scenario right now, and it has been disappointing to see the lack of commitment from MDM vendor side.
Thanks for the synopsis, Henrik. Extending the border of MDM beyond the enterprise to third parties allows you to capture additions and changes to master data at the point closest to the best authority of that data. In addition to being experts, those parties are aware of changes first, so allowing them to update records online improves data quality. Finally, since they receive a product or service from your firm, they are motivated to maintain the data. Of course, caution must be exercised in determining which fields to allow third parties to maintain because your systems may have downstream business rules that depend on them.
Thanks for commenting Jim. I agree about having gates for allowing data to be committed in your master data hub. Orchestrating that means that your data stewards typically are going from typing to controlling.
Excellent article and certainly the way to go forward for many businesses out there!