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What is MDM or Master Data Management and why is it important?

Recent years have seen the arrival of new players such as social networks and mobile devices, as well as the strong trend towards Service Oriented Architecture (SOA) or Software as a Service (SaaS). This diversification of sources and applications makes it more difficult for companies to obtain reports and comply with current legislation. This is where MDM comes into its own.

What exactly is MDM, why is it important for your company to implement it and what are its advantages? In this article we will answer all your questions about this concept.

What is MDM?

Let’s start by defining what MDM actually is. Behind this acronym stands the expression Master Data Management. In short, it is a set of methods, utilities and patterns that allow companies to unite all their critical data in one place: the master file.

MDM ensures that the various lists of master data are in complete harmony. In other words, MDM techniques manage to eliminate any inconsistencies between the different types of critical data.

Master Data Management practices are fundamental to ensure data consistency. MDM methods ensure that information is kept standardised, clean and correctly integrated. The use of master data makes things easier when using multiple applications and platforms.

What types of data are there in master data management or MDM?

In the following sections, we explain what types of data are commonly handled by companies. When initiatives such as MDM are implemented, this data will be integrated into it. Of course, not all companies will need the same information. However, no matter what industry they are in, most companies store the following types of data.

Unstructured data

This is information that comes from sources such as emails, digital documents, the company intranet or other marketing data.

Transactional data

In this case we refer to data that is related to company transactions. This is usually information that comes from sales, deliveries or monetary transactions. It also includes data from invoices, deliveries or complaints, among others.


Metadata refers to information about other data. It can be located in a formal repository or in XML files. Metadata are also descriptions of fields within a database or activity log files, also known as logs. In short, metadata is data related to other data.

Hierarchical data

Hierarchical data is of great importance within MDM. It stores the relationships between other data. It is possible to define the hierarchy between the different elements of a database.

Master data

Master data is the critical data of a company and is usually related to four main concepts: people, things, places and concepts. Within each of these it is possible to find other subject areas or entity types. To understand this better, let’s take an example. A customer can be placed within the field “people”. However, it is also possible to do the same for an employee. And this segmentation can be even deeper if the company has, for example, preferred customers and minor customers.

MDM, why it is so important

Master Data Management is a really important technique. Implementing MDM in your company has clear benefits that increase the importance of these methodologies. In some circumstances, moreover, we can say that MDM is not only important, but mandatory.

Master file, its correct management avoids errors

We have already explained that MDM techniques achieve consistency between the different master data of a company. As this information is used within a company by various applications and departments, a data failure can bring down the whole system and cause a widespread error.

Customer-facing errors have fatal consequences. MDM is very important because it prevents discrepancies in information and, as a result, the actions taken by different departments are successful. Without the correct management of critical data, it is easier to make mistakes and, as a consequence, lose customers.

The role of MDM when merging companies

Another area where it is useful to apply master data management methodologies is in the merger of two companies. This is a common occurrence, especially when both companies are looking to grow. Of course, it is a real challenge to ensure that the information stored matches and is fully consistent after a merger.

Data duplication

MDM also prevents duplication of information. It is possible that information about the same customer is stored in different databases. If the customer service department uses software as a service, it will have to retrieve the data for each customer when needed. What criteria should the programme follow to obtain the requested data? Which database should be chosen? MDM is crucial to avoid such situations.

The MDM and the road to master data consistency

After this analysis, all the questions we raised at the beginning have been solved. We now know what MDM is, what types of data companies handle and what the benefits of Master Data Management are. It has even become clear that a company’s critical data must be managed in such a way that it is consistent. Applying the MDM suite of methodologies in companies is becoming increasingly necessary. Proper data management is vital to avoid customer errors or to eliminate any trace of duplication. For this reason, when it comes to facilitating mergers between companies, MDM is essential.

More about DEYDE

DEYDE was founded in 2001 in Spain, along with its core service. They offer name normalisation, postal address standardisation and coding, duplicate identification and geo-enrichment of postal addresses. Ten years later, they developed MyDataQ Global Service and offer Data Quality services worldwide. Fifteen years after its foundation, they were already present in Portugal, Italy, Mexico, Colombia and Chile (