Chapter 10 Master and Reference Data

In any organization, certain data is required in all business areas, processes and
systems. The overall organization and its clients benefit if this data is shared and all
business units can access the same customer lists, location codes
geographic, business unit lists, delivery options, parts lists, codes of
cost accounting centers, government tax codes, and other data used for
manage the business

People who use data generally assume that there is a level of consistency across the
organization, until they see disparate data.

In most organizations, systems and data evolve more organically from

what data management professionals would wish for. Particularly in organizations
large, various projects and initiatives, mergers and acquisitions, and other business activities
and as a result multiple systems that essentially perform the same functions, isolated
one another. These conditions inevitably lead to inconsistencies in the structure of
data and data values between systems. This variability increases costs and risks. Both
They can be reduced through the management of master data and reference data.

Compliance with the organization's data requirements: multiple areas within a

organizations need access to the same datasets, with the assurance that the
data sets are complete, current, and consistent. Master data often forms
the basis of these data sets (for example, to determine if an analysis includes all the
clients depend on having a consistently applied definition of client.

Data quality management: data inconsistencies, quality issues and

Lags lead to wrong decisions or missed opportunities; Master Data
Management reduces these risks by allowing a consistent representation of the entities.
criticisms for the organization.

Management of data integration costs: the cost of integrating new data sources
In an already complex environment, it is greater in the absence of master data, which reduces variation in
the way critical entities are defined and identified

Risk reduction: master data can enable the simplification of the architecture of
data exchange to reduce costs and risks associated with a complex environment.

The controllers for managing reference data are similar. Reference data
centrally managed allow organizations to:

Meet data requirements for multiple initiatives and reduce risks and costs of the
data integration using consistent reference data

Manage the quality of reference data

While data-driven organizational initiatives focus on transactional data

(increase in sales or market share, reduction of costs, demonstration of compliance)
the ability to leverage such transactional data largely depends on the
availability and quality of master and reference data. Improve the availability and the
The quality of master and reference data has a spectacular impact on overall quality.
of data and business trust in data. These processes have additional benefits
for an organization, including the simplification of the IT landscape, the improvement of efficiency and the
productivity, and with these, the potential to improve the customer experience.

Differences between master data and reference data

The different types of data play different roles within an organization. They also have
different management requirements. A distinction is often made between Transaction and Data
masters, as well as between Master Data and Reference Data. Malcolm Chisholm has proposed
a six-layer data taxonomy that includes metadata, reference data, data of
business structure, transaction structure data, transaction activity data and
audit transaction data (Chisholm, 2008; Talburt and Zhou, 2015). Within this
taxonomy, defines master data as an aggregation of reference data, data of
business structure and transaction structure data

Reference Data:
Reference data, for example, code tables and descriptions, are data that are used
only to characterize other data in an organization, or only to relate data
in a database with information beyond the organization's limits.

Business structure data:

for example, a chart of accounts allows reporting commercial activity by responsibility

commercial.

Transaction structure data:

Transaction structure data: for example, customer identifiers, describes the
things that must be present for a transaction to take place: products, customers,
suppliers.
Chisholm's definition distinguishes master data from transactional activity data.
that record details about transactions, and the transaction audit data that
they describe the state of transactions, as well as the Metadata, which describes other data
(Chisholm, 2008). In this regard, Chisholm's definition is similar to the definition of the
DAMA Dictionary: master data is "the data that provides the context for the data
from business activity in the form of common and abstract concepts related to
activity. Includes details (definitions and identifiers) of internal and external objects
involved in commercial transactions, such as customers, products, employees, suppliers and
controlled domains (code values) "(DAMA, 2009).

Many people understand that Master Data includes both the structural data of
transaction as business structure data. David Loshin's definition of Data
masters largely align with these types. Describe master data objects as
central commercial objects used in different applications within an organization, along with
its metadata, attributes, definitions, roles, connections, and associated taxonomies. The objects of
Master data represents those "things" that are most important to an organization: those that
they are recorded in transactions, reported, measured, analyzed (Loshin, 2008).
Master data requires identifying and/or developing a reliable version of truth for each
instance of conceptual entities such as product, place, account, person or organization and
maintain the validity of that version. The main challenge with Master Data is the resolution of
entities (also called identity management), the process of discerning and managing associations
between data from different systems and processes. The entity instances represented by rows of
Master data will be represented differently in all systems.
Management works to resolve these differences in order to consistently identify
instances of individual entities (i.e., specific customers, products, etc.) in different
contexts. This process must also be managed over time, so that the
Identifiers for these master data entity instances remain consistent.

Reference data and master data share conceptually similar purposes.

Both provide a critical context for the creation and use of transactional data.
Reference data also provides context for master data). They allow that
Data is understood meaningfully. It is important to highlight that both are resources.
shared resources that must be managed at the business level. Having multiple instances of the same
Reference data is inefficient and inevitably generates inconsistencies among them.
inconsistency leads to ambiguity, and ambiguity introduces risks for a
organization. A successful reference data or master data management program
involves the full range of data management functions (data governance, data quality,
metadata management, data integration, etc.).

Reference data also has characteristics that distinguish it from other types of data.
masters (for example, business structure and transactional data). It is less volatile. The
reference datasets are generally less complex and smaller than those
transactional or master datasets. They have fewer columns and fewer rows. The
Challenges of entity resolution are not part of reference data management.

The approach to data management differs between Reference and Master Data:

Master Data Management (MDM) involves control over the values and identifiers of
master data that allows for consistent use, across all systems, of the most accurate data
and timely information about essential business entities. MDM's objectives include ensuring
the availability of accurate and current values while reducing the associated risks
ambiguous identifiers (those identified with more than one instance of an entity and
those that refer to more than one entity.
Reference data management (RDM) involves controlling the defined domain values.
and its definitions. The objective of RDM is to ensure that the organization has access to a
complete set of accurate and current values for each represented concept.

A challenge of reference data management is the ownership or responsibility of the definition and
maintenance. Some reference data originates outside the organizations that
USA. Some cross the internal boundaries of the organization and may not be owned by a single
department. Other reference data can be created and maintained within a department,
but they have potential value elsewhere in an organization. Determining the
responsibility for obtaining data and managing updates is part of RDM. The lack of
accountability introduces risks, as differences in the benchmark data can
cause misunderstandings in the context of the data (like when two business units have
different values to classify the same concept.

Since master and reference data provide context for transactions, they give
shapes the transaction data that enters an organization during operations (for
example, in CRM and ERP systems). They also frame the analysis carried out on the data of the
transaction.

Reference date:
As noted, the reference data are all the data used to characterize or classify.
other data, or to relate data to information external to an organization (Chisholm, 2001).
The most basic reference data consists of codes and descriptions, but some data from
References can be more complex and incorporate assignments and hierarchies. The data from
references exist in practically all data warehouses. The classifications and categories
They can include states or types (for example, Order status: New, In progress, Closed,
Cancelled). External information may include geographic or standard information (for example,
Código de país: DE, US, TR).

Reference data can be stored in different ways to meet different needs.

needs. For example, data integration (e.g., data mappings for standardization or
data quality controls) or another functionality of the application (e.g., synonym rings
to allow for searching and discovery). It may also have specific considerations
from the device's user interface (for example, multiple languages). Use of techniques of
common storage:

Code tables in relational databases, linked by foreign keys to others

tables to maintain referential integrity functions within the database management system
data

Reference data management systems that maintain business entities, values

permitted, of future state or obsolete, and term mapping rules to allow for greater use
wide range of applications and data integration

Object Specific attribute metadata to specify allowed values with a focus on

API or access to the user interface.

Reference data management involves the control and maintenance of domain values.
defined, definitions and the relationships within and between domain values. The goal of Reference
Data Management is to ensure that the values are consistent and current across different
functions and that the data is accessible to the organization. Like other data, the data
Reference requires metadata. An important metadata attribute for the data of
reference includes its source. For example, the governing body of the standard reference data of the
industry.