A core attribute in customer master data when dealing with business entities is assigning values for your customers/prospects industry vertical (or Line-of-Business or market segment or whatever metadata name you like).
When handling this particular data element you will come across many of the classic different options in data and information management.
Unstructured versus structured
Many early CRM (Customer Relationship Management) implementations offered a free text field for the industry vertical. While this approach may have been good for the free flow in data entry it of course has created havoc when business intelligence was applied to the CRM data. Countless cleansing projects have been done (and is going on) around in order to fix this basic mistake.
Most data entry forms today having an industry vertical value has a value list to choose from.
Your list versus an external standard
Having a list of your own tends to fulfill the data quality principle of fit for purpose of use while an external standard tends to fulfill the data quality principle of reflecting the real world construct.
The main weaknesses of a list of your own are that it requires continuous manual based maintenance and may cause conflicts. Deep down into a discussion on the Initiate MDM blog Julian Schwarzenbach offered a good example saying:
“I have also come across ‘flip-flop’ data – which is typically subjective data where two users cannot agree what the correct value is and it keeps getting changed between two values. This could be the classification of a customer by market sector where two different territories are reflecting different capabilities in their territories.” – Link here.
The main weaknesses of an external standard are that they seldom offer the granularity you need and for global data the different standards (SIC versions and different national NACE implementations and others) are a pain in the…
One versus several values
Many companies have more than one distinct activity. Catching only one (the primary) value for each company is keeping it simple, stupid. Having more than one value in relevant cases is adding complexity but may lead to better decisions.